September 2009, Dhaka, Bangladesh

Preface

This study was jointly financed by Power Sector Development Technical Assistance project of the World Bank and GTZ, Dhaka. The principal objective of the work was to present to the Government of Bangladesh a document that provides a menu of opportunities for energy efficiency and demand side management in the energy sector. Dr. Ijaz Hossain of the Chemical Engineering Department of BUET was the team leader, while Dr. Saiful Huque of the Renewable Energy Research Centre, University of Dhaka and Dr. Mahbubur Rahman of the Petroleum and Mineral Resources Engineering Department of BUET were members of the Study Team. The Study Team was assisted by Dr. Grayson Heffner, an international consultant. Staff from the World Bank (Arun Banerjee, M. Iqbal, Zubair Sadeque, and Ashok Sarkar) and GTZ (Otto Gomm and Dr. Khurseedul Islam) provided guidance and comments in the preparation of this report.

Contents

1.0 INTRODUCTION ....................................................................................  9

2.0 BACKGROUND ......................................................................................  9

3.0 OBJECTIVE .............................................................................................  12

4.0 METHODOLOGY ....................................................................................  12

5.0  DESCRIPTION OF ENERGY PRODUCTION AND CONSUMPTION ....   13

5.1  Energy and Power Overview................................................................... 13

5.2  Industrial Gas and Captive Power Sector................................................. 16

5.3  Household Gas Sector............................................................................... 16

5.4  Transport Sector (CNG) ........................................................................... 16

6.0   ENERGY EFFICIENCY POTENTIAL ..........................................................  17

6.1 Electricity and Gas Demand Side Management through
             increased use of Renewable Energy Resources................................... 17

6.2  Demand and Supply Side Energy Efficiency: Electricity Sector............... 17

6.3   Industrial Energy Efficiency Improvement............................................... 19

7.0   APPLICATION OF CARBON FINANCE THROUGH CDM  INTO ENERGY EFFICIENCY OPPORTUNITIES .....21

 

8.0        ENERGY EFFICIENCY AND RENEWABLE ENERGY OPTIONS ...  22

9.0        LIST OF TEMPLATES ............................................................................  23

9.0        SUMMARY OF ENERGY SAVINGS .....................................................  62

10.0      BARRIERS ...............................................................................................  64

11.0      INSTITUTIONAL ARRANGEMENTS .......................................................  67

12.0      FINANCING ARRANGEMENTS ...........................................................  69

13.0      RECOMMENDATION FOR POLICY MAKERS ...................................  72

14.0      ACRONYMS AND ABBREVIATIONS .......................................................  77

15.0      REFERENCES .........................................................................................  79

 

1.0 Introduction

The objective of this report is to propose a roadmap for the Government of Bangladesh that identifies an overall framework together with a pipeline of cost-effective and replicable projects that would support accelerated energy efficiency investments in Bangladesh. The work presented here was undertaken by a team of national and international experts and jointly overseen by World Bank and GTZ. The overall framework and specific project descriptions contained in this report (see Project Templates) are expected to lead to feasibility studies and detailed project proposals which could then be financed by the private sector or multilateral and bilateral donors. By providing preliminary data and information on (a) estimated costs, (b) potential financing options and (c) replicability for 19 energy efficiency related projects, the report proposes an action plan for implementation that can be pursued in the short- and medium-term.

In the past several energy efficiency related activities had been initiated by the Government. Most significant is the creation of the Energy Audit Cell in the early eighties. The Audit Cell did some very good pioneering work in the area of energy efficiency through their audits of selected energy intensive industries. But due to lack of patronage and commitment nothing much was achieved in concrete terms. The principal reason behind the failure of all past energy efficiency efforts has been the low gas and electricity prices. The situation has been aggravated by high system losses, which is nothing but theft of gas and electricity. These two facts have worked as great disincentives to energy efficiency improvement in Bangladesh.

The need to rationalize energy prices by setting it close to its true economic cost has been suggested in many reports. This study has also looked into the pricing issue, and wherever relevant has highlighted the need to increase the price of a particular fuel to allow energy efficient measures to be undertaken.

2.0 Background

Bangladesh is facing a dual energy crisis with the same root cause. The most apparent crisis is a power shortage evidenced by frequent load shedding in both urban and rural areas. As shown in Figures 1 and 2, even though the installed capacity reached 5000 MW in 2004, the available capacity was only 3800 MW. The present generation shortfall exceeds 1000 MW during peak hours. The more potentially severe crisis will emerge in the medium term - a gas production shortfall and the need to begin importing gas or products (e.g., fertilizer) produced with gas as a feedstock. As can be seen from the Figures 3 and 4, there has been a growing reliance on natural gas for many important end uses, including for power generation. This growth cannot be sustained without significant new domestic production or access to imported gas.

Both these crises have the same root cause - very rapid growth in energy demand and insufficient public or private sector investment in new production capacities in both gas and power sectors. Although the power shortage has partial remedies for certain consumers - e.g., captive power plants installed by the industry - these remedies tend only to exacerbate the larger problem of insufficient gas production relative to gas demand growth. The other key factor contributing to the increasing demand-supply gap is inefficiencies across the generation, transmission/distribution, and end-use (demand) components of the electricity and gas sectors. Both energy efficiency and renewable energy offer partial solutions to the problems of global climate change and pressing energy needs for development.

Please download full Report :