Energy planning from A to Z
Thursday, 19 July 2007
Enayet Rasul
Improved energy planning at the soonest is proving to be more and more an absolute imperative for Bangladesh in the backdrop of its growing energy needs to expand its economy, fast and mindless depletion of its main energy source, inadequate attention and actions in relation to conservation and optimum utilisation of energy and non development of some vital sources of energy.
Indeed, the smooth supply of energy is seen as the Achilles heel impeding the faster economic growth of the country. Power is central to economic activity. But this power supply is substantially short of even prevailing demand not to mention the potential higher demand in the future. In this situation of power insufficiency, investment operations are understandably lagging from a lack of confidence from otherwise able investors that they would not be able to run their new enterprises under a situation of power shortage.
Thus, there is a pressing need to increase power supply but that involves choices like how to produce the power, whether from burning gas the availability of which is dwindling or by using coal the reserves of which are vast and remain largely untapped. The stepped up use of coal for power production is a tempting one. But that too has to be weighed against environmental needs. Even the traditional coal using countries are winding up their large scale coal uses and opting for relatively cleaner fuels for power production. Thus, it needs evaluation whether coal should be largely exported and proceeds from it utilised to import cleaner fuels such as petroleum or even to set up nuclear power plants. It appears that nuclear power is more cost-efficient and its application these days has become a lot safer than what used to be the case in the past. This is the reason why a boom is noted in building nuclear power plans in the US and elsewhere.
Besides, there is also the bright potential of developing off-grid power all over the vast rural interior of Bangladesh where the population is largely concentrated. Supplying conventional power through a nationwide grid in these areas can be less economical compared to a self sustaining community based approach through solar electricity production at individual or village levels. Similar possibilities are there for using biofuels, power produced from wind and even hydro-electricity in some areas. A great deal of the power needs of the future can be met by developing these non conventional sources of energy.
There are opportunities also for conservation of power or optimum use of power by popularising the use of special bulbs and appliances that can be helpful in conserving power. Presently, a vast amount of resources are wasted from direct import of refined fuel oils. But adding to capacities of the local refineries and overhauling them, local refining capacities can be much increased . In that case, a big saving can be made as the need to import refined fuel oil will be reduced substantially.
All of these plans and more must become the part of an integrated exercise. The sooner this comprehensive plan is drawn up and its implementation proceeds, the better for the economy in all respects. The present piecemeal attempts at addressing the energy needs are increasingly turning out to be a wasteful and hazardous experiences.
The energy sector in the country, presently, is a source of worry for short, medium and long term planning. The state of the sector is causing serious concern both at the macro and micro levels of the economy. The macro level concerns are mainly due to the inseparable vital links between economic growth and investments on the one hand and the energy situation on the other. The micro level anxieties are from existing entrepreneurs finding it hard to cope with dwindled energy supply and the disincentives that have been created for further investments by them in different fields from these conditions of paucity of energy.
It is imperative to address the overall energy situation under a carefully considered master plan that would address all sides to the development of energy sources. The plan needs to be formulated and implemented at the fastest in view of the worsening energy related conditions. Once it is firmed up and clear signals are received about its full implementation, the same will raise investors' confidence and accelerate the growth momentum in the economy. Essentially, such a comprehensive plan for the energy sector must be an 'integrated' one forging relationships in developmental activities between the energy sector's sub sectors to lead cumulatively to a desired outcome.
For example, the augmentation of power generation is the biggest need in the power sub-sector. But this task must not be conceived of and attempted in isolation . Power plants that produce power in Bangladesh are predominantly gas based. For a long time, the inability to supply the gas fed power plants adequately resulted in their installed capacities not being fully used. The conditions in this respect have improved somewhat --very recently--after the going into operation of a major gas field operated by a foreign company.
But this is still piecemeal strategy. There will have to be comprehensive plans to know what the effective demand for electricity is in the country and what would be that demand, say, twenty years from now. More significantly, it has to be similarly known how much of that power would be aimed for production by using gas. And then it would be very important to take stock of whether this amount of additional gas would be produced in the coming years in tandem with installation of capacities to produce power from gas. In that case, matching investments will have to be made in the gas sub-sector in exploration and production activities to find new deposits of gas and getting it ready for supply to the power plants. In sum, there will have to be synthesis in the operations of the two major sub-sectors in the energy sector--power and gas -- so that the main goal of energy availability for the users can be smoothly and progressively met.
The integrated policies in the energy sector must also examine and clearly prepare a vision and guideline for the development of energy sources in the other sub sectors such as coal, non conventional power from wind, sun's rays, nuclear power, biofuel, etc. Steps to be taken for the development of all of these energy sources should also be an integral part of the integrated plan for the development of the energy sector as a whole. For instance, plans should provide clear projections of the energy requirements of energy to be met by the non conventional sources so that the same do not conflict with planning objectives in the areas of the conventional sources of energy.
According to reports, the country's lone crude oil refining plant, Eastern Refinery Limited (ERL) currently produces 1.4 million tons of refined fuel oil and other petroleum products whereas the annual demand for the same is 3.7 million tons. Thus, when production at ERL has been remaining static or stagnant in the face of rising demand, the state owned Bangladesh Petroleum Corporation (BPC) has had no other option in this situation than importing directly huge quantities of refined oil and other products from international markets at the soaring prices. Clearly, the energy costs for the country could be much lower if the ERL had been functioning at higher capacity.
According to various projections, the country's demand for refined oil and other petroleum products would reach some 6.6 million tons by 2010. In order to meet this demand, ERL needs to set up its second refining plant at the fastest apart from carrying out the urgent balancing, modernization and overhaul of the existing plant. Government must mobilize funds from donors or take loans on emergency basis for the ERL's expansion and overhauling . The government may decide to have long term contracts with suppliers of crude oil to get the same at stable prices. But for receiving and storing of crude oil also, the capacities of the ERL will have to be much increased and improved.
Meanwhile, the country's own gas production must be increased and also exploration activities to find more hydrocarbons. It seems that pockets of oil in the existing gas fields have been already found. Some of this oil, known as condensate, is already in use. More condensate can probably be found in the existing gas fields and turned into fuel oil for various uses. A major aim should be to use a bulk of the produced gas in the country's road transportation sector by replacing the use of imported diesel, petrol and octane with compressed natural gas (CNG). The rate of CNG conversion of vehicles will have to be speeded up for the purpose and the number of CNG fuelling stations also must be simultaneously set up in greater number so that the CNG converted vehicles can be serviced smoothly.
Improved energy planning at the soonest is proving to be more and more an absolute imperative for Bangladesh in the backdrop of its growing energy needs to expand its economy, fast and mindless depletion of its main energy source, inadequate attention and actions in relation to conservation and optimum utilisation of energy and non development of some vital sources of energy.
Indeed, the smooth supply of energy is seen as the Achilles heel impeding the faster economic growth of the country. Power is central to economic activity. But this power supply is substantially short of even prevailing demand not to mention the potential higher demand in the future. In this situation of power insufficiency, investment operations are understandably lagging from a lack of confidence from otherwise able investors that they would not be able to run their new enterprises under a situation of power shortage.
Thus, there is a pressing need to increase power supply but that involves choices like how to produce the power, whether from burning gas the availability of which is dwindling or by using coal the reserves of which are vast and remain largely untapped. The stepped up use of coal for power production is a tempting one. But that too has to be weighed against environmental needs. Even the traditional coal using countries are winding up their large scale coal uses and opting for relatively cleaner fuels for power production. Thus, it needs evaluation whether coal should be largely exported and proceeds from it utilised to import cleaner fuels such as petroleum or even to set up nuclear power plants. It appears that nuclear power is more cost-efficient and its application these days has become a lot safer than what used to be the case in the past. This is the reason why a boom is noted in building nuclear power plans in the US and elsewhere.
Besides, there is also the bright potential of developing off-grid power all over the vast rural interior of Bangladesh where the population is largely concentrated. Supplying conventional power through a nationwide grid in these areas can be less economical compared to a self sustaining community based approach through solar electricity production at individual or village levels. Similar possibilities are there for using biofuels, power produced from wind and even hydro-electricity in some areas. A great deal of the power needs of the future can be met by developing these non conventional sources of energy.
There are opportunities also for conservation of power or optimum use of power by popularising the use of special bulbs and appliances that can be helpful in conserving power. Presently, a vast amount of resources are wasted from direct import of refined fuel oils. But adding to capacities of the local refineries and overhauling them, local refining capacities can be much increased . In that case, a big saving can be made as the need to import refined fuel oil will be reduced substantially.
All of these plans and more must become the part of an integrated exercise. The sooner this comprehensive plan is drawn up and its implementation proceeds, the better for the economy in all respects. The present piecemeal attempts at addressing the energy needs are increasingly turning out to be a wasteful and hazardous experiences.
The energy sector in the country, presently, is a source of worry for short, medium and long term planning. The state of the sector is causing serious concern both at the macro and micro levels of the economy. The macro level concerns are mainly due to the inseparable vital links between economic growth and investments on the one hand and the energy situation on the other. The micro level anxieties are from existing entrepreneurs finding it hard to cope with dwindled energy supply and the disincentives that have been created for further investments by them in different fields from these conditions of paucity of energy.
It is imperative to address the overall energy situation under a carefully considered master plan that would address all sides to the development of energy sources. The plan needs to be formulated and implemented at the fastest in view of the worsening energy related conditions. Once it is firmed up and clear signals are received about its full implementation, the same will raise investors' confidence and accelerate the growth momentum in the economy. Essentially, such a comprehensive plan for the energy sector must be an 'integrated' one forging relationships in developmental activities between the energy sector's sub sectors to lead cumulatively to a desired outcome.
For example, the augmentation of power generation is the biggest need in the power sub-sector. But this task must not be conceived of and attempted in isolation . Power plants that produce power in Bangladesh are predominantly gas based. For a long time, the inability to supply the gas fed power plants adequately resulted in their installed capacities not being fully used. The conditions in this respect have improved somewhat --very recently--after the going into operation of a major gas field operated by a foreign company.
But this is still piecemeal strategy. There will have to be comprehensive plans to know what the effective demand for electricity is in the country and what would be that demand, say, twenty years from now. More significantly, it has to be similarly known how much of that power would be aimed for production by using gas. And then it would be very important to take stock of whether this amount of additional gas would be produced in the coming years in tandem with installation of capacities to produce power from gas. In that case, matching investments will have to be made in the gas sub-sector in exploration and production activities to find new deposits of gas and getting it ready for supply to the power plants. In sum, there will have to be synthesis in the operations of the two major sub-sectors in the energy sector--power and gas -- so that the main goal of energy availability for the users can be smoothly and progressively met.
The integrated policies in the energy sector must also examine and clearly prepare a vision and guideline for the development of energy sources in the other sub sectors such as coal, non conventional power from wind, sun's rays, nuclear power, biofuel, etc. Steps to be taken for the development of all of these energy sources should also be an integral part of the integrated plan for the development of the energy sector as a whole. For instance, plans should provide clear projections of the energy requirements of energy to be met by the non conventional sources so that the same do not conflict with planning objectives in the areas of the conventional sources of energy.
According to reports, the country's lone crude oil refining plant, Eastern Refinery Limited (ERL) currently produces 1.4 million tons of refined fuel oil and other petroleum products whereas the annual demand for the same is 3.7 million tons. Thus, when production at ERL has been remaining static or stagnant in the face of rising demand, the state owned Bangladesh Petroleum Corporation (BPC) has had no other option in this situation than importing directly huge quantities of refined oil and other products from international markets at the soaring prices. Clearly, the energy costs for the country could be much lower if the ERL had been functioning at higher capacity.
According to various projections, the country's demand for refined oil and other petroleum products would reach some 6.6 million tons by 2010. In order to meet this demand, ERL needs to set up its second refining plant at the fastest apart from carrying out the urgent balancing, modernization and overhaul of the existing plant. Government must mobilize funds from donors or take loans on emergency basis for the ERL's expansion and overhauling . The government may decide to have long term contracts with suppliers of crude oil to get the same at stable prices. But for receiving and storing of crude oil also, the capacities of the ERL will have to be much increased and improved.
Meanwhile, the country's own gas production must be increased and also exploration activities to find more hydrocarbons. It seems that pockets of oil in the existing gas fields have been already found. Some of this oil, known as condensate, is already in use. More condensate can probably be found in the existing gas fields and turned into fuel oil for various uses. A major aim should be to use a bulk of the produced gas in the country's road transportation sector by replacing the use of imported diesel, petrol and octane with compressed natural gas (CNG). The rate of CNG conversion of vehicles will have to be speeded up for the purpose and the number of CNG fuelling stations also must be simultaneously set up in greater number so that the CNG converted vehicles can be serviced smoothly.