In a groundbreaking report released by BloombergNEF (BNEF), it has been revealed that Bangladesh is on the cusp of a significant energy transformation, with solar power set to become the country’s most economical electricity source. The BNEF report emphasizes that embracing renewables, particularly solar energy, will not only meet the nation’s surging electricity demand but also reduce emissions while safeguarding energy security.
Bangladesh has long grappled with energy challenges stemming from its heavy reliance on fossil-fuel-based thermal power plants. This dependence has not only strained the country’s energy security but also depleted foreign currency reserves and exacerbated local pollution. The report underscores that any further expansion of fossil-fuel thermal power plants would exacerbate these issues and jeopardize both energy security and affordability.
Contrastingly, the BNEF report highlights that the cost of electricity generation from newly established solar power plants is already competitive with new coal and gas power plants in Bangladesh. According to BNEF’s analysis, the levelized cost of electricity (LCOE) for a new utility-scale solar project in Bangladesh presently ranges from $97 to $135 per megawatt-hour (MWh), compared to $88 to $116/MWh for combined cycle gas turbines (CCGT) and $110 to $150/MWh for coal power plants. Thanks to ongoing cost reductions in solar technology, by 2025, solar energy will emerge as the most economical choice. Furthermore, by 2030, solar combined with battery storage will achieve a lower LCOE than new thermal power plants.
Additionally, the BNEF report predicts that electricity generated from onshore wind, paired with batteries, will also surpass the cost efficiency of new thermal plants by the mid-2030s.
Caroline Chua, co-author of the BNEF report, asserted, “Deploying renewables presents economic and environmental benefits for Bangladesh,” said Caroline Chua, co-author of the report. “Renewables can improve the country’s energy security by lowering dependence on LNG and coal imports while also creating new job opportunities. Our sensitivity analysis shows that even if fossil fuel prices decline, renewables will still be more economical than thermal power plants.”
Despite the cost competitiveness of renewables, Bangladesh has been contemplating the construction of more thermal power plants, with the expectation that these plants can transition to cleaner fuels like hydrogen or ammonia after 2030. However, BNEF’s analysis dispels this assumption, showing that retrofitting thermal power plants for hydrogen or ammonia will not be economically advantageous compared to investing in renewables. By the early 2030s, newly established utility-scale solar power plants will be more cost-effective than operating existing thermal power plants. A similar trend will emerge for onshore wind by the early 2040s.
Isshu Kikuma, the co-author of the BNEF report, cautioned, “Building more thermal power plants on the assumption that they can be retrofitted for clean hydrogen or ammonia in the future, will saddle Bangladesh with significant financial risk. Bangladesh is better off accelerating deployment of renewables and limiting additions of thermal power plants.”
Shahriar A. Chowdhury, Director of the Centre for Energy Research at the United International University in Bangladesh, stressed, “In the recent past, the growth and interest of renewable energy like solar and wind have accelerated in Bangladesh, and have gradually become more cost-effective options for electricity generation. In contrast, technologies like hydrogen, ammonia, and carbon capture, which are highlighted in the draft Integrated Energy and Power Master Plan (IEPMP), have no similar track record till now. Therefore, proven technologies like solar and wind should be focused in any power or energy sector master plan of the country, with clearly defined significant shares in the energy mix. It appears from the draft IEPMP that the country’s Renewable Energy potential has been ignored or underestimated. The IEPMP should highlight the needs of the present and predictable future, and outline the strategy to fulfill the energy needs of Bangladesh, while not making commitments to industries and technologies which evolve rapidly and unpredictably.”