Liquefied natural gas (LNG) and coal prices have shot up recently in Asian markets. Analysts believe that the sharp rise in coal and LNG prices will prompt the expansion of renewable energy in the long run.
Spot LNG prices have nearly doubled since the post-winter low of $5.60 per million British thermal units (mmBtu), which is at $10.95 recently.
Bangladesh government, over the last 11 years, has undertaken a considerable number of projects to enhance use of renewable energy. It has set a target to generate more than 1400MW of electricity from renewable energy by 2022. To this end, the work on some 27 power plants is now underway.
As part of the government initiatives for green development in Bangladesh, 10 proposed coal-fired power plants with an estimated capacity of 9346 megawatts (MW) of electricity were scrapped at the end of June.
State Minister for Power, Energy and Mineral Resources Nasrul Hamid has said renewable energy would be the main fuel in future. It would ensure future energy security. According to the power system master plan, the share of renewable energy in the fuel mix is increasing. Some 40 percent of electricity will come from renewable energy by 2041.
A recent report compiled by Australia's science agency CSIRO and the Australian Energy Market Operator showed that the current capital cost of building a new coal-fired power plant using higher-grade fuel was about $4,450 per kilowatt. A combined cycle gas-fired plant came in $1,801 per kilowatt, while large-scale solar was $1,408 and onshore wind was A$1,951.
An integrated solar plant with two hours of battery storage had a capital cost of $2,139, above the cost of a combined cycle gas plant - but less than half of a new coal-fired plant.
These power plants do not have additional fuel consumption. No more workers are required for management. As a result, they are more affordable than coal and gas-fired power plants. The use of renewable energy will not have a negative impact on climate change too.
The benchmark weekly index for Australian high-grade thermal coal at Newcastle Port, as assessed by commodity price reporting agency Argus, rose to a decade high of $121.48 a tonnes in the week to June 4. That level is almost triple the 2020 low of $46.37, plumbed last September at a time when many Asian economies were locked down as part of efforts to combat the coronavirus pandemic.
Lower-grade Indonesian coal also performed well, in mid-June at $55.04 a tonne, up 143% from its low point in September ,2020.
Already, coal-fired and natural gas-fired power plants struggle to compete with renewables such as solar and wind, even when battery back-up storage is factored in.
Several Asian countries, have recently signalled an end to coal-fired power plants, and the likelihood of new plants reliant on imports is rapidly retreating.
LNG producers view their fuel as a more climate-friendly alternative to coal. But while capital costs are competitive with renewables , any utility opting for gas-fired plants based on LNG imports faces risks not apparent with opting for renewables instead.
According to the IRENA report last year, the generation cost per unit of solar power plants is on an average 6.8 cents (Tk 5.78). The generation cost of wind power is 5.3 cents (Tk 4.50) on land and 11.5 cents (Tk 9.77) at sea. However, the generation cost of newly solar power plants will be 3.9 cents (Tk 3.31), which is 43 percent less than the cost in 2019.
‘The generation cost per unit from fuels like oil and coal is 6.6 cents (taka 5.61),’ the report says.
According to the report, not only generation, but also the construction cost of renewable energy-based power plants has come down. In 2010, per unit generation cost of a solar power plant was $4,695, which was only $995 in 2019. The land-based wind power plant construction cost in 2010 was $1,849, which is now at $1473.
Besides, there is no capacity payment or plant rent in solar power plants. If there is no electricity, there is no payment.
Experts believe that proper planning would make it possible to generate around 80 to 100 percent of the Bangladesh’s total electricity from renewable sources by 2050.
According to research reports from the University of California, Berkeley in the United States and the University of Technology Sydney in Australia, it is possible to generate 53,000 to 156,000 megawatts of electricity from solar power in Bangladesh alone. Besides, 1.5 lakh MW can be generated from windmills, 3,500 MW from biogas.
Dipal Chandra Barua, President of Bangladesh Solar and Renewable Energy Association (BSREA) told the Bangladesh Post, “We can generate at least 2,000 MW of electricity by 2021 from solar irrigation pumps and rooftop solar panels alone. By doing so, the goal of generating electricity from renewable energy within the next year will be achieved effortlessly.”
“There are more than 16 lakh irrigation pumps in Bangladesh out of which 13 lakh pumps (shallow) are operated by diesel. Farmers can be provided small size solar irrigation pumps at subsidized rates. The government will subsidize 60% of the cost of solar irrigation pumps and provide the remaining 40% in the form of low interest and long-term bank loans,” he added.
According to an international report, If renewable energy-based power plants were built instead of the world's 500,000 megawatts of coal-fired power plants, it would save $23 billion a year and reduce carbon emissions by 180 billion tonnes. In that case, the world's total carbon emissions will be reduced by five percent.