April 5, 2024
DHAKA – The Bangladesh government recently increased power tariffs for all consumer categories due to the upheavals caused by a significant gap between power generation costs and corresponding revenue. It also revised the natural gas price for power generation. While inflationary pressures will likely remain high in the wake of electricity and gas price hikes, different energy consumers will now find clean energy investment more compelling.
A brief survey of around 40 industries by the Institute for Energy Economics and Financial Analysis (IEEFA) indicates that the industry sector has significant untapped energy efficiency potential. This is despite the fact that a good number of the surveyed industries have already installed efficient lights, motors and fans, variable-frequency drives, waste heat recovery boilers, etc. However, a considerable proportion of the surveyed industries are not utilising waste heat produced by their captive generators. Only a small number of industry samples use engine jacket water in chillers and water heaters. If all industries gradually install waste heat recovery boilers and start using engine jacket water in chillers and water heaters, they can save significant energy consumption per annum on an aggregate basis.
The survey also finds that cutting costs and reaching sustainability targets are the two main drivers influencing industrial energy efficiency investment. Therefore, the recent increase in electricity tariffs—around 9.9 percent per kilowatt-hour (kWh) for medium and large industries—and gas price—2.5 percent per cubic metre for captive power generation—will likely motivate industries to foster energy efficiency further.
Bangladesh’s household sector consumed 55.69 percent of the grid electricity produced in FY2022-23. As such, increasing energy efficiency in this sector holds significant importance. Although many households are already accustomed to buying efficient appliances, 120W ceiling fans are still in the market when energy-efficient 35W ceiling fans are available. Perhaps people who can purchase efficient fans are unaware of the economics of using fans that consume less energy.
A ballpark assessment shows that the payback period of a 35W ceiling fan costing Tk 6,490 has now come down to 3.3 years for a household with a monthly energy consumption of around 150kWh (assumptions: 10 hours of operation for 310 days a year and five percent VAT on energy bills). The payback period was 3.5 and 4.1 years in March 2023 and December 2022, respectively. Similarly, the payback for the same fan is now 3.1 years for a household consuming around 250kWh of energy per month. Such a financial return should motivate households to use ceiling fans with lower wattage.
Households battling high energy tariffs should, therefore, assess the energy consumption of different appliances and their respective purchase prices to make prudent investment decisions.
The recent power tariff adjustment is a boon for rooftop solar expansion, both in industries and commercial buildings. They can now enjoy more savings per kWh of energy.
While the first movers had less savings, the lucrative rooftop solar should now make inroads into all industries and commercial buildings with enough space and load-bearing capacity. Regulatory intervention will further catalyse the accelerated adoption of energy efficiency measures and rooftop solar.
The Sustainable and Renewable Energy Development Authority (SREDA), established in 2014 on the back of the growing need to promote renewable energy and energy efficiency in Bangladesh, has notable tasks ahead. As the combined rooftop solar capacity, under both net-metered and non-net-metered systems, is less than 200MW, SREDA can take a more proactive role through its solar help desk to assess what holds back industries and other establishments from investing in rooftop solar systems.