Energy price hikes make clean energy compelling for Bangladesh

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