Tuesday, August 3, 2010

Energy Situation in Bangladesh

The energy situation in Bangladesh continues to deteriorate. Government has acted recently to improve the availability of gas which should improve conditions. This is the third in a series of four articles that reviews briefly the issues and possibilities. In the first of this series the availability and prospects for natural gas were discussed with the conclusion that there were prospects for some increases, but significant increases were far in the future. The second article covered the challenge of increasing the generating capacity of the power sector. The conclusion was that so long as the Government relied on the state enterprises to generate the electricity there would be perpetual shortages; the success of the Awami League in their first government was based on the introduction of the IPPs. Government owned plants are inefficient, poorly operated, and difficult to finance and construct. In this article the alternative fuels besides natural gas are reviewed. There are six possibilities: Hydroelectricity, heavy fuel oil, coal, nuclear, accessing neighbours surpluses and renewable methods such as wind and solar. We review briefly the advantages and problems of each. In the short run there is little that can be done. The only fuel that can be delivered immediately is heavy fuel oil in amounts needed to provide a significant increase of power. So we are talking about the long run here, after 3-4 years.
Hydro electricity: In Bangladesh the very flat landscape means that there are few sites suitable for dams to generate hydroelectricity. Good hydro power plants require both a large flow of water and a large drop of the water over a short distance. While there are rivers with large water flows there is little fall in the level of the river, and no really good dam sites. Major hydro sites are found outside Bangladesh in the foothills of the Himalayas; but development of such sites to benefit Bangladesh requires the agreement of the Indian, Nepalese and Bhutan Governments. So far it has proved impossible to utilise power from such sites. In the very long run one might expect the emergence of a regional management of the hydroelectric energy but we are very very
far from achieving such an outcome.
But there are other problems: there is widespread opposition to hydroelectric project from the environmental movements in the world. This anti large dam movement is very strong in India and Nepal and is certainly alive and well in Bangladesh. Any serious attempts to develop major projects would immediately bring strong protests from such people. Realistically there is no possibility of significant hydroelectric energy over the next 15 years other than the possibility of imports from India but these will be limited as India's hydropower development is limited in the east.
Heavy fuel oil and diesel: This is being proposed and planned for use in Bangladesh as alternatives to natural gas. PDB has not indicated that they have done careful homework on the cost implications of such an approach. There are tenders out for the dual fuel plants; until these are available the cost implications of use of this fuel are uncertain. The cost increases arise from the use of heavy fuel oil or diesel as the fuel and the increased cost of equipment in order to provide for the ability to use both fuels. In addition storage facilities are needed for the heavy fuel oil or diesel. Finally, unlike the gas fired plants which are run off natural gas with a price controlled by the Government, using heavy fuel oil exposes the operator to changes in the market price. The use of heavy fuel oil or diesel in dual purpose facilities may be a sound approach for small facilities that can be completed in the near future, but large projects cannot be operated this way when there is much cheaper coal and natural gas available. One should only commission large gas fired plants when there is sufficient gas available for the lifetime of the plant. Large dual fuel plants present tricky operational problems.
Coal: Three approaches to using coal for power plants have been discussed: Import coal, mine coal using underground methods, mine coal using open pit methods. There are a few comments that have to be made: (1) Coal causes pollution from green house gas emissions; but Bangladesh should not be asked to increase its cost of electricity by not using coal when it is now one of the nations with the least pollution of the atmosphere. (2) Coal does not provide a short term solution; it will take 4-5 years to have plants running and either mines in operation or facilities for handling coal imports constructed and operating. (3) Domestic coal production from open pit mines requires very careful treatment of the resettlement problem and very careful treatment of the ground water management.
a. Import coal: Expensive; requires considerable handling facilities and constant dredging. Cost varies with the international market. I estimate that the fob price will be $70/mt during the next few years and the transport cost to deliver to a power station in Bangladesh will add another $10/mt. Hence I think imported coal will average something of the order of $80/mt over the next five years. Indian coal is imported by truck and costs about $70/mt at the border. [Official invoice value is $40-45/mt; rest is paid through hundi system] Storage and transport by road will be expensive and unless there is strict regulation, tear up the roads. Finally Indian coal does not meet Bangladeshi's environmental standards.
b. Domestic production through underground mining: Expensive; amount that can be extracted from the ore body is only one fifth what can be taken using open pit mining [given the geology of northwest Bangladesh]. Less disturbance of population compared to open pit mines. However, based on the existing mine at Barapukuria the cost is above $100/mt. [Some costs are hidden.] Within in limits one can make a fixed price, long term contract for domestic coal.
c. Domestic production through open pit mining: Lots of coal and relatively cheap. With existing royalties the cost is about $50-55 per mt; another dollar is needed to move the coal to the power plant assuming that the plant is near the mine. The open pit method in the one case that is carefully studied displaces about 8,000 households; the total cost of resettlement, rehabilitation, repair of damage to infrastructure, etc. is included in the cost of the project. Of the three ways to use coal for power, large open pit mines are the most efficient and provide the lowest cost fuel for the power system.
Nuclear: Nuclear plants for generating electricity are a tricky option for Bangladesh, given the high population density and the elaborate safety concerns that go with. Nuclear power electricity is rather expensive as the process of approvals and clearances is so slow that money is tied up in structures and fuel agreements for a long time. Electricity from a nuclear plant is not particularly cheap. While the fuel is cheap, the cost of the plant and all of the associated safety aspects lead to nuclear plants being perhaps twice the cost of a gas or coal plant per unit of capacity. Nuclear plants are probably needed in Bangladesh, starting in fifteen years with a build up in their number during years 25-50. After 30 years the coal will be largely used or committed to existing coal fired plants. The natural gas supply will be uncertain and it will be necessary to use nuclear as the base load unless the hydro can be developed. Bangladesh cannot take the chance on the hydro developments actually going forward. Starting to develop nuclear plants, learning the engineering and management skills that go with that, and developing the safety related skills is an important step forward. But the use of nuclear energy will not solve the problems of providing power over the next ten years.
Regional energy sharing: Small steps have been taken to obtain electricity from India. This is a good idea but one would like to know the price before building transmission lines! In any event South Asia is a power deficit area. It will take time to build up the generating capacity for a regional grid and long negotiation over prices. Significant supply from a regional grid is far away. While there is progress now, Governments come and go. Over the past six decades no significant cooperation has been achieved until the last few months. It is too early to conclude how this will work out.
Renewable energies: Solar driven electrical energy is certainly the rage. There is no doubt greater use of solar energy is an important step forward. However, the full costs are yet to be known. For example battery lifetime in Bangladesh climatic condition is not fully documented. Losses from hailstorms and other violent storms unknown. Of course the basic investment is still rather high for the amount of energy that is produced. The large amounts of electricity needed in Bangladesh cannot come from renewable sources. In my calculations energy requirements call for adding [including replacement] 11-12,000 MWs of capacity over the next decade. We cannot count on renewable sources for more than 1,000 MWs. Costs for renewable will remain high unless battery costs can be reduced.
How might 14,000 MWs be fueled? Here are my rough estimates:
1. Natural gas—5-6,000 MWs; 2. Coal—6-7,000 MWs; 3. Regional—.5-1,000 MWs; 4. Renewable, hydro—.5-1,000 MWs
During the next four years the only available fuels are gas, diesel, and heavy fuel oil. The country is stuck. Starting in the 4th year coal can be available in sufficient volume to provide a secure baseline electricity supply with gas used partly for base load and partly for peaking. Coal is probably cheaper than gas even after allowing for the environmental costs. After ten years new sources - nuclear, hydro, and renewable will be needed in large amounts.

No comments:

Post a Comment