Environmental News from Bangladesh:
- Bangladesh is paying hundreds of millions of dollars in incentives to private electricity producers every year for electricity that’s going unused, a government report indicates.
- The country’s grid has the capacity to supply nearly 60% more electricity than consumers demand, which the government must pay for even if it means paying producers to remain idle.
- Despite the glut, the government is embarking on several large-scale power projects, including seven coal-fired plants and up to two nuclear plants, which will nearly double its total capacity by 2030.
- Energy policy observers say this building spree is “ridiculous” and pushes the country into risky territory as the costs of incentives and subsidies balloon.
A glut of electricity-generating capacity means Bangladesh is paying hundreds of millions of dollars in incentives to power producers that aren’t churning out any electricity, according to a government report.
The country’s total installed capacity — the combined output of all its power plants working at full capacity — is 22,031 megawatts, while the total demand for electricity in the country is just 13,792 MW. That’s according to the Bangladesh Power Development Board’s (BPDB) 2020-21 annual report and puts the country’s electricity overcapacity at nearly 60%.
Under the terms of its various agreements with power producers, the government pays the latter, what’s known as a capacity charge, meant to ensure electricity is always available on tap, even if it means paying them to remain idle. For the 2020-21 fiscal year, the capacity charge paid to 37 private power producers amounted to the equivalent of $1.35 billion, the BPBD report says.
During the same period, the government also paid out the equivalent of $1.39 billion in subsidies to state-owned electricity utilities, the report says.
These figures make the government’s plans to continue adding capacity “ridiculous,” says Hasan Mehedi, secretary-general of the Bangladesh Working Group on External Debt, a group of NGOs and activists. Mehedi adds the actual overcapacity is more than the estimate as electricity consumption declines during the winter months (to about 8,000 MW, according to the BPBD report).
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