Electricity surplus

Industrialists prefer captive power

Despite a huge surplus of electricity in the national grid, the entrepreneurs choose to rely on the electricity  either generated by themselves or captive power to run their industries .They attribute their dependence  on captive power to limitation of transmission and distribution system.

The electricity tariff is increasing almost every year due to the increase in overall power generation cost.

As a result, the daily expenditure of people is increasing and the amount of government subsidy is also rising. Export-oriented products are losing their competitiveness in the global market due to rising production costs.

Bangladesh has now attained the capacity to generate around 21,239 megawatts of electricity. However, currently the demand is on average 10,000 to 12,000MW. Bangladesh has now become a power-surplus country from a power-starved one.

According to international standards, not more than 10 percent electricity should be kept surplus. That means, around 7,000 to 8,000 MW of electricity may remain idle in the country. 

Currently, there are around 2,907 captive power plants having the capacity of producing 3707 MW of electricity. Of these, around 2500MW captive power is gas-based and its gas consumption is 480mmcfd. The government is supplying gas at low cost to the captive power plants.

An official said the captive power plants are not so efficient. Its efficiency is only 15 percent, whereas national power plant efficiency is 55 percent. 

Industry owners say that they want uninterrupted and quality power supply for smooth production and operation. But the state-owned power distribution companies cannot ensure it. Its voltage fluctuates almost all the time. This disrupts production and damages products, which has led to huge losses for many traders. In addition, voltage fluctuations damage factory equipment and shorten their lifespan. These barriers and losses in production push up the price of the product, which also has an impact on the retail consumer level. And due to rising costs in export-oriented industries, Bangladeshi products are lagging behind in price competition in the global market. That’s why they are using captive power. Although captive electricity cost is more than that of the grid electricity, they are relying on it. 

A survey by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) found that factories in Gazipur still do not have an average of 438 hours of electricity a year. The annual load shedding in Savar, Narayanganj and Chattagram is 330, 292 and 338 hours respectively. Factories lose between taka 35 lakh to taka 55 lakh a year due to load shedding and voltage fluctuations.

State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said there is no problem with power generation now. But it is a big challenge to supply  uninterrupted and reliable electricity. The power division has already started discussions with entrepreneurs to increase the use of electricity in industry and commerce. Initiatives have already been taken to solve their problems and demands.

According to Power Division, many private power plants are idle due to lack of demand in the country. Even if they are not generating electricity, the government has to pay capacity charge. In the latest 2019-20 financial year, the government has given capacity charges of around Tk 9,000 crore to private power plants. From 2013-14 financial year to 2018-19 financial year, capacity charge of Tk 61,462 crore has been given to private power producer. Meanwhile, in the last 10 years, the government has subsidized at least Tk 52,260 crore in the power sector.

“There has been a lot of improvement in power generation in the country. Our generation capacity surpasses our demand. For now, there is no need to increase the generation capacity,” energy expert professor Dr. Izaj Hossain told Bangladesh Post.

“The government must pay attention to the transmission and distribution system to ensure uninterrupted power supply,” he insisted.

“Currently, there are 3,000-megawatt captive power plants in various factories. If the transmission system improves, the government can sell this 3,000-megawatt power to them and the both win,” Izaj Hossain said.

When contacted, Md. Nurul Alam, Additional Secretary (planning) of Power Division told Bangladesh Post ‘those industrialists who already have installed captive power   cannot use grid power instead of their own generated power instantly. Because they have already invested there.  Hope, they will shift to grid power from their captive power after a certain period.’ 

‘We assure all industrialists that we have surplus electricity as well as efficient and reliable power. However, there has some limitation in distribution system. We are working. Hopefully, we can overcome it within a couple of years,’ he added.