JICA must integrate Bangladesh’s new power and energy master plan: analyst
The Japanese agency is urged to put Bangladesh’s best interest first.
The Bangladesh government recently released its 8th Five Year Plan (8FYP) and it seems to provide strong evidence that the government has changed its thinking on power development since 2016, according to a report by the Institute for Energy Economics and Financial Analysis (IEEFA).
According to the reports author, energy finance analyst Simon Nicholas, if the new Integrated Energy and Power Master Plan aligned to the government’s five-year plan, the country will abandon coal and increase LNG commitment in favour of cheaper low emission renewables.
“The 8th Five-Year Plan clearly acknowledges Bangladesh’s power overcapacity problem as well as solutions to address it. The financial sustainability of the power system is currently seriously jeopardised by heavy subsidization and ballooning capacity payments to fossil fueled power producers, stretching the power system’s already weakened financial position,” Nicholas said.
Nicholas added that increased reliance on expensive imported coal and LNG is a burden the government simply can’t afford going forward.
He pointed out that the Japan International Cooperation Agency (JICA), Japanese developers of Bangladesh’s new Integrated Energy and Power Master Plan. have the platinum opportunity to align their thinking with what he called ‘insightfulness’ of the government’s 8th Five-Year Plan.
Specifically, Nicholas suggested that JICA:
- Prioritize grid investments to make better use of existing power capacity
- Prevent the continued over-build of new power capacity by relying on more realistic power demand growth forecasts
- Significantly scale up of renewable energy ambition to benefit from the rapid decline of lower cost solar and wind tariffs and to meet demand growth and energy efficiency goals
- Plan for the roll out of power storage technologies like batteries that can store renewable energy
- Abandon the expensive pipeline of coal-fired power plants yet to begin construction and limit further additions of large power plants, meaning JICA should not provide funding for the Matarbari 2 coal power proposal – this project should be amongst those cancelled
- Not replace coal power proposals with price-volatile LNG-fired power given LNG’s expense and that its full life cycle emissions are comparable to that of coal.
He added that Bangladesh’s five-year economic plan correctly identifies the various issues and opportunities faced by the power system and insists that the new energy and power master plan being developed by Japan must now reflect this new energy reality.
“The previous power master plan also prepared by Japan is not fit for purpose and risks the financial sustainability of the power system. The new 8th Five-Year Plan recognises this. Japan must not prepare another power plan in its own interests rather than in the best interests of Bangladesh,” Nicholas said.
Nicholas added JICA would be aware that Japanese trading houses and financial institutions have been accelerating their exit from fossil fuel financing.
“If JICA funds coal power and creates a plan for more high-cost LNG-fired capacity in Bangladesh it will be worsening overcapacity and increasing the likelihood of power tariff increases for consumers,” the analyst observed.