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Power plants producing less electricity than capacity



Tue, 25 Jun 24

The country has a total installed capacity of 26,364 MW in power plants. Amidst an intense heatwave on April 30, the highest electricity generation recorded was 16,477 MW. Typically, the production ranges from 10,000 to 12,000 MW, and during nighttime, it increases to 14,000 to 15,000 MW. This means that even on the highest production days, about 10,000 MW of capacity remains idle daily. On average, 37% of power plants are not utilized. This raises the question of whether such a high number of power plants was necessary.

Despite this, new power plants are still being constructed, and efforts are underway to import electricity from abroad. But why? The government surely has a rational explanation for this. However, if the justification is merely increased costs and dollar expenditure, a more thoughtful approach is necessary.

Electricity imported from abroad must be paid for directly in dollars. Additionally, fuel import costs need to be met in dollars. The government is finding it increasingly difficult to cover fuel costs for the new gas or coal-fired power plants being constructed domestically. Despite this, new power plants are still being built. The government has a plan to achieve 60,000 MW of electricity generation under Vision 2041. But is it feasible to ensure the utilization of such a vast amount of electricity?

If we look back at the electricity production and supply in 2009, the country produced 4,000 MW of electricity at that time, with hourly load-shedding indicating a net demand of 8,000 MW. Now, considering this summer's peak demand, even on the day of maximum production at 16,477 MW, there was still at least 1,500 to 2,000 MW of load-shedding. This implies that the net demand for electricity has risen to 18,477 MW over the past 15 years, creating a new demand of 10,477 MW. On average, this amounts to a new annual demand of about 700 MW, although electricity calculations are not that straightforward.

The government asserts that there is a 10% annual increase in electricity demand due to new households, factories, and industries. Hence, it is crucial to increase production accordingly. However, the government has already extended grid electricity to almost all areas, completing this task by 2020. Therefore, future residential demand is unlikely to grow significantly. The remaining sector is industrial; however, it is challenging to create new demand here. Industry owners generally prefer self-generated electricity to run their operations, as they lack confidence in grid electricity. This is not their fault, as grid electricity is unreliable and expensive, leading large industrialists to produce their own electricity using gas from Petrobangla.

Consequently, new power plants might remain idle. Despite multiple discussions between the government and industrialists, no productive outcome has been achieved. No power distribution company has been able to provide uninterrupted electricity to the industries. Due to this, industrial electricity consumption in the country has not increased as expected.

Looking at the power generation regions, there are 36 power plants in the Dhaka region. The latest additions are two large gas-fired power plants: Unique Meghna ghat with 584 MW and Summit Power with 589 MW. Out of the 36 power plants in Dhaka, 18 are gas-fired, 17 run on furnace oil, and one is solar-powered. Four of these plants were rental power plants, which have now been kept under a "no electricity, no payment" condition after their contract expiration. Interestingly, some of these plants previously operated at less than 10% of their capacity annually but are now required to sell at least 20% of their output, thereby increasing the costs within the power generation system.

The total capacity of such plants in the Dhaka division is 400 MW. This situation is not unique to Dhaka but is seen across other regions as well. In Chittagong, there are 23 power plants, with a 100 MW plant operating under the "no electricity, no payment" option. Similarly, in Comilla, there is a 55 MW plant, in Mymensingh a 50 MW plant, in Khulna two plants with a combined capacity of 155 MW, in Barishal a 33 MW plant, and in Rajshahi a 50 MW plant.

Nationwide, with about half of the power plants sitting idle, questions arise about retaining old power plants after their contracts have expired. However, the Power Development Board (PDB) seems indifferent to these concerns, resulting in substantial annual losses for the government. According to the PDB, a subsidy of 400 billion BDT was required last fiscal year. Although the finance division provided this subsidy as a loan, the PDB has never repaid it, marking a significant loss for the government. Therefore, the PDB needs to assess the necessity of power plants before construction; otherwise, the country will face enormous losses from investing in idle power plants.

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