Bangladesh will not be able to meet its 2020 renewable energy goal but will rather double its fossil fuel imports, according to energy market intelligence firm Wood Mackenzie.
Bangladesh had set a target to produce 10% of its energy from renewables in 2020. Renewables are expected to make up only 2% of total electricity generation this year, 6% by 2030 and 16% by 2040.
Energy demand, however, is expected to grow. Wood Mackenzie predicts the country’s total energy demand to rise with 27% to 55 Mtoe between 2020 and 2030. This is due to due to urbanisation and an increase in textile and fertiliser industries.
Growing working age population, electrification needs in the power industry and rising income levels will spur energy demand as well in the upcoming decade in Bangladesh.
This will force the country to double its fossil fuel imports to 32 million tonnes of oil equivalent between 2020 and 2030.
Prakash Sharma, head of markets and transitions at Wood Mackenzie in the Asia Pacific, said: “Bangladesh needs a reliable baseload capacity for its electrification needs. Coal and LNG imports are thus important to support this as domestic coal struggles with the economics of quality production, while domestic gas is on a steep decline. LNG and coal account for most of the incremental fossil fuel imports between 2020 and 2030.”
“Power demand has grown 6% annually in the last decade, higher than average GDP. The trend is likely to continue in the future due to low per capita electricity consumption.”
“At the moment, about 60% of power generation in Bangladesh comes from domestic gas supply, which is depleting. To meet this gap, additional capacity will be required as early as 2022.”
Consequently, gas prices in the country raised by 35-40% in 2019 year-on-year to reflect the cost of supply amid rising LNG demand. Wholesale power prices also hiked in Q1 this year. Hence, prospects of Bangladesh securing low-priced spot LNG in H2 2020 is good news for the gas and power sector.
Sharma said: “Still, the country’s gas demand is expected to peak this year to 27 Mtoe.”
Coal demand, on the other hand, is set to rise over fourfold to 12 Mtoe between 2020 and 2030.