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Bangladesh To Scale Back Coal
Bangladesh To Scale Back Coal
Bangladesh To Scale Back Coal
coal
Jessica Casey, Editorial Assistant Monday, 12 October 2020 12905
This is a blow for thermal coal exporters in Australia, Indonesia and South
Africa who were hoping that a growing Bangladesh market post-2025
would help fill the void stemming from declining demand in more mature
Asian economies such as Korea and Japan.
“While this is still a significant increase above the existing low coal
demand levels, had the coal power generation pipeline been developed as
per the 2016 master plan, annual coal demand growth would have been
almost three times greater, potentially reaching 50 million t by 2040,” said
Steve Hulton, Rystad Energyʼs Senior Vice President and Head of Coal
Research.
Payra Phase 1, the countryʼs first imported coal-fired power plant, began
commercial operation of its first 660 MW unit in May 2020 and is currently
test firing the second 660 MW unit which completes Phase 1 with 1320
MW of capacity at a cost of close to US$2 billion. The plant is owned by
the Bangladesh-China Power Co. Ltd (BCPCL), a joint venture between
Bangladesh's state-run North West Power Generation and China National
Machinery Import and Export Corp. The plant has a planned theoretical
efficiency of 48% and is expected to consume around 4.5 million tpy of
thermal coal sourced from Indonesia and Australia.
Even with the government pullback from coal, Rystad Energy believes that
that Payra Phase 2 (an additional two units totalling another 1320 MW) will
also proceed. The Bangladeshi government has already reportedly agreed
to take a hard loan of US$1.5 billion from China for development funding.
In total, coal-fired electricity generation capacity in Bangladesh is
predicted to reach 7.3 GW by 2025 and stay flat at this level. This is
approximately 75% less by 2040 compared to what would have been built
under the previous plan.
There is only very limited coal mining carried out in Bangladesh, but the
northern districts are estimated to contain more than 2.5 billion t of good
quality, bituminous coal. However, there is major opposition to large-scale
developments due to competing land interests with agriculture and water
supply concerns.
With the signalled change in energy policy direction, the big question for
Bangladesh is how to replace the planned coal-fired power generation
with alternative sources. A possible solution could be increased gas-for-
power projects on top of what is already planned, therefore driving even
higher LNG imports, or developing greater renewable energy generation
capacity and associated grid transmission infrastructure investment.
Currently, Bangladeshʼs plans for renewable energy are definitely more
modest than many of its regional neighbours and there is plenty of room
for growth in this sector.