# Presentation: 706367

## Forecasting Electricity Availability in Bangladesh

- Zia Haq
- US Department of Energy
- Energy Information Administration
- June 10 - 14, 2001

## Scope of Analysis

- Analysis and review of Bangladesh energy situation based on published material
- Conservative view of planned capacity additions
- Bangladesh’s generation needs from a national and regional perspective
- Construct scenarios and analyze range of outcomes with spreadsheet-based tool
- Mid-term projection - through 2010

## Scope of Analysis

- Not an attempt to predict exact numbers
- No bias in terms of commercial interests, donor preferences
- Forecast does not predict short-term volatilities
- Only grid-connected, “commercial” energy is counted

## Outline of Seminar

- Historical data and present situation
- Projects in the pipeline
- Electricity generation forecast under three scenarios – reference, high economic growth, low economic growth
- Electricity supply forecast under two scenarios – capacity factor business-as-usual, and capacity factor improving
- Impact of electricity consumption on natural gas reserves
- Comparison of forecasts
- Regional perspective – India, Nepal, Pakistan, Sri Lanka
- EIA products of relevance – AEO, IEO, STEO
- Conclusions

## Challenges in Conducting Any Analysis

- Availability and reliability of data is a issue
- Energy is a high visibility sector – national security and political implications
- 60 – 70% of total consumption is off-grid and comes from biomass
- Rural/urban division, affluent/poor division
- Forecasts are data-driven and sensitive to assumptions

## Historical Data and Current Situation

- Primary energy consumption
- Electricity sector current situation
- Electricity sector management issues
- Privately owned small generators
- Natural gas sector current situation
- Transmission and distribution issues

## Primary Energy Consumption

**Million tonnes oil equivalent**

- Source:  BP

-   Commercial energy only, not off-grid

## Electricity Sector Current Situation

- Generation growth 7%/year over last 10 years
- 1% growth in GDP needs 2 – 2.5% growth in power sector
- 80% of population does not have access to electricity, access in rural areas 10%
- Historically power plant construction lead time has been 8-9 years, it could be 2-3 years

**Gross generation (kWh/person)**

- 53

- Nepal

- 93

- Bangladesh

- 313

- Sri Lanka

- 438

- Pakistan

- 454

- India

## Electricity Sector Strategic Issues

- Managing system losses
- Average plant capacity factor 46.6% (1997, based on gross generation), range from 0.55% to 89.6%
- Reserve margin – operational capacity/peak demand, should be 15-20%
- Tariff structure – subsidization of electricity and natural gas
- Managing the IPP’s – payments, contracts, land, infrastructure
- Introducing competition – unbundling assets
- Regulatory needs – environmental, worker safety, consumer protection
- Import of fuel oil for electricity generation puts pressure on foreign currency reserves

## Privately Owned Small Generators

- Diesel-based
- System sizes 16 kW and up
- Used for minimal power during load-shedding or in village markets
- Capital costs ~$1,000/kW
- Small-scale IPP’s

## Natural Gas Sector Current Situation

- Present consumption ~900 mmscfd (1999)
- Consumption growth rate 9 – 11%/year
- 93% of population does not have access to natural gas
- Proven reserves about 32.1 TCF (USGS) in 20 fields, mainly on-shore
- Gas export to India remains a contentious issue
- Loss in gas distribution system could be high
- Gas subsidization to agricultural and fertilizer sectors may be a continuing issue

## Transmission and Distribution Issues

- Reliance of Western zone on imported fuels leads to unnecessary burden on foreign exchange reserves
- T&D maintenance challenges – flooding, security, age
- T&D system upgrade versus system expansion remains a difficult choice

## Projects in the Pipeline

- Fossil
- Hydroelectric and other renewables
- Nuclear
- What to count as anticipated new capacity?

## Recent and Planned Capacity Additions - Fossil

## AES - Haripur

- Capital cost $556/kW
- Funding AES, ANZ Grindlays, WB-PRG
- Simple cycle operation 235 MW, 04-01
- Combined cycle operation 360 MW, 10-01
- Electricity rate climbs to 5.05 cents/kWh from 2.07 cents/kWh - due to early start?
- AES willing to pay Petrobangla $1.17/1000 cft for gas, compared to originally agreed $2.04/1000 cft
- Is this situation sustainable?
- Is the gas available?

## New Capacity Additions – Hydroelectric

## Electricity Generation Forecast

- Historical trend in GDP and electricity generation
- Two-parameter correlation: Generation = function(GDP, generation intensity)
- Spread-sheet-based
- Transparent
- Can easily change values to evaluate different scenarios
- Rough estimate
- Allows evaluation of impacts on natural gas resources
- 3 demand scenarios (reference, high economic growth, low economic growth)
- 2 plant-by-plant scenarios (capacity factor – business as usual, capacity factor improving)

## GDP and Electricity Generation – Historical Trend

**Electricity Generation (Million kWh)**

**GDP at Constant Market Price (Billion 1984 Takas)**

-   GDP at constant 1984 price growth rate: 4.34%/yr (1983-1999)
-   Electricity generation growth rate: 9.12%/yr (1983-1999)

## GDP – History and Forecast

**GDP at Constant Market Price (Billion 1984 Takas)**

-   Reference:  4%/yr real GDP growth
-   High economic growth:  5%/yr real GDP growth
-   Low economic growth: 3%/yr real GDP growth
-   India: projected 4.9%/yr real GDP growth through 2020, Source:  IEA

## Electricity Generation Intensity

**Generation Intensity (change in generation/change in GDP)**

-   Reference:  -1%/yr change in intensity
-   High economic growth:  +1%/yr change in intensity
-   Low economic growth: -3%/yr change in intensity
-   What happened in 1988 and 1997?
-   Why the negative trend? Is the economy becoming more energy efficient?  Are customers going off-grid?

## Electricity Generation – Demand Forecast

**Gross Generation (Million kWh)**

-   Gross generation needs 23 TWh to 38 TWh by 2010 if GDP (real) is to grow at 3%/yr to 5%/yr
-   Does not address meeting unmet load – assumption is that current levels of load-shedding continue through 2010
-   Only a generation forecast, not a consumption forecast

## Plant Capacity Factor: Business-as-usual

**Gross Generation (Million kWh)**

-   Existing plants continue to function at slightly reduced capacity factors due to aging and lack of maintenance
-   Plants with capacity factors <50% see reduction, >50% see increase
-   New capacity:  AES-Haripur, and Meghnaghat-I
-   3 IPP barge-mounted plants counted as operational

## Plant Capacity Factor: Improving

**Gross Generation (Million kWh)**

-   All plants (except hydro) improve their capacity factors from current levels to 85% by 2010
-   Hydro (Karnafuli) improves capacity factor from 36% to 45% by 2010
-   New capacity:  AES-Haripur, and Meghnaghat-I
-   3 IPP barge-mounted plants counted as operational

## Generation Per Capita: CF-BAU

**Gross Generation/person (kWh/person)**

-   Population growth rate 1.6%/year
-   India 454 kWh/person, Pakistan 438 kWh/person, Sri Lanka 313 kWh/person
-   “Capacity factor: Business-as-usual” does not meet low economic growth needs – load-shedding will become worse, may cause GDP to decline

## Generation Per Capita: CF-improving

**Gross Generation/person (kWh/person)**

-   Population growth rate 1.6%/year
-   India 454 kWh/person, Pakistan 438 kWh/person, Sri Lanka 313 kWh/person
-   “Capacity factor: improving” case meets “reference case” and “low economic growth case” demands but not “high economic growth” scenario

## Natural Gas Consumption (Annual) - History

**Natural Gas Consumption (Billion cubic feet)**

-   Anomalies in 1988 and 1997 may have been caused by changes in consumption in fertilizer sector

## Natural Gas Consumption & GDP

**Annual Natural Gas Consumption (Billion Cubic Feet)**

**GDP at Constant Market Price (Billion 1984 Taka)**

-   What happened in 1988 and 1997?

## Natural Gas Consumption Intensity

**Consumption Intensity (change in generation/change in GDP)**

-   What happened in 1988 and 1997?  Same trend in electricity generation intensity
-   Reference:  +1%/yr change in intensity
-   High economic growth:  +3%/yr change in intensity
-   Low economic growth:  -1%/yr change in intensity

## Natural Gas Production (Annual)

**Natural Gas Production (Billion cubic feet/year)**

-   Annual natural gas production 610 bcf to 1,270 bcf by 2010
-   Does not address unmet load
-   Assume losses held steady at 5.65% of consumption through 2010 (1999 proportions)

## Natural Gas Production (Cumulative)

**Natural Gas Production (Trillion cubic feet)**

-   Cumulative production ~9 TCF to ~11 TCF by 2010
-   Extension of trends through 2020 results in 17 to 47 TCF of cumulative production

## Comparison of Forecasts

- WEFA Ltd., “China and Indian Subcontinent Reports”, December 1996 – China, India, Pakistan, Bangladesh
- World Bank “Bangladesh 2020: A Long- Run Perspective Study”, June 2000
- Government of Bangladesh, “Power Sector Master Plan”, January 1996

## WEFA Forecast

- Electricity generation required 25 TWh by 2010, 47 TWh by 2020
- Real GDP growth rate 3.8 – 4.6%/yr, 2000-2020
- Generation intensity growth rate 1.6 – 2.4%/yr, 2000-2020
- Assumes that system losses will be reduced to 20% by 2020
- Strengthening the transmission system
- Cracking down on electricity theft
- Assumes that existing obsolete capacity can be rehabilitated

## WEFA Forecast Capacity Additions

- By 2000, 2-3 privately financed projects will have been developed resulting in addition of 600 MW of CCGT capacity
- 2000-2020, 300 MW of CCGT in Sylhet, and 300 MW of coal capacity at Barapukuria
- To sustain 6-7%/yr annual growth in electricity demand, need 4.3 GW of effectively available capacity by 2005 rising to 10 GW by 2020

## World Bank Forecast

- 1% growth in GDP needs 2 – 2.5% growth in power supply
- World Bank vision of what can be achieved:
- 7-8%/yr GDP growth rate through 2020
- 14-20%/yr growth rate in electricity generation through 2020
- Total installed capacity 10 GW by 2020, renewables 200 MW by 2020
- Natural gas production 700 BCF/yr by 2001
- $15 billion total investment in power sector needed by 2020
- Heavy demand on biomass due to increasing population resulting in depletion of resources
- Biomass depletion has already started to occur in Haor areas

## “Power Sector Master Plan” Forecast

- GDP growth rate
- Low scenario: 5.24 – 6.65%/yr (2000 – 2020)
- Reference scenario: 6.7 – 8%/yr
- Generation demand 18.3 – 19 TWh in 2000, 31 – 39.75 TWh by 2010, 62 – 92.4 TWh by 2020
- Peak demand 3.7 – 3.8 GW by 2000, 6.1 – 7.8 GW by 2010, 11.8 – 17.6 GW by 2020
- Generation per capita: 141 – 146 kWh by 2000, 203 – 260 kWh by 2010, 351 – 523 kWh by 2020

## Generation from local gas 15 TWh by 2020, local coal 2 TWh by 2020, and local hydro 1.3 TWh by 2020
Imported fuels provide 44 – 74 TWh of generation by 2020
Imported fuels account for 70.5 – 80.2% of electricity generation needs by 2020

- Imported fuels provide 44 – 74 TWh of generation by 2020
- Imported fuels account for 70.5 – 80.2% of electricity generation needs by 2020

- “Power Sector Master Plan” Forecast

## Comparison of Forecasts

- Forecasts presented here closely match the WEFA and World Bank forecasts
- Differences with respect to T&D loss improvements
- Differences with respect to rehabilitation of old generation units
- Agreement on WB environmental implications
- Differences with PSMP
- GDP growth rate forecast
- Implication and sustainability of large fuel import content

## Case Studies - India

- Background
- Dabhol
- Cogentrix
- Other smaller projects
- Renewable energy
- Electricity forecast by International Energy Agency (IEA)

## India - Background

- World’s 6th largest energy consumer
- Gas consumption 800 BCF in 1999, projected to reach 1.7 TCF in 2005 and 2.7 TCF in 2010
- Plans major infrastructure investments to keep up with demand
- Imports of LNG by sea to support power projects being encouraged by GOI
- World’s 3rd largest producer of coal, relies on coal for >50% of total energy needs
- Coal still has to be imported
- Total installed capacity 103,445 MW (1999)

## India – Natural Gas

- Qatar, RasGas main supplier of LNG through import terminals
- 12 prospective LNG import terminals being planned at Jamnagar, Dahej, Pipapov, Hazira, Trombay, Dabhol, Mangalore, Cochin, Ennore, Kakinada, Gopalpur, and Paradeep
- Oman and Abu Dhabi to supply LNG via terminal at Dabhol
- Pipeline through Iran (South Pars) either sub-sea or through Pakistan possibility

## India – Transmission and Distribution Losses

-     1996/97
- *  1995/96
- Source:  Indian Planning Commission

-   Wide variability of T&D losses
-   Data available from http://www.indiainfoline.com

## India – Capacity Factor of Major Gas Plants

-   Source:  The CEA, Indiainfoline estimate
-   Wide range of capacity factors
-   Majority of plants are over 70% capacity factor

## India – Power Plant Capital Costs

- Data on 48 projects with tech-economic clearance
- These plants represent 25,456 MW of capacity and approved costs of Rs 1,007 billion in the pipeline
- Natural gas, coal, hydel, and liquid fuels
- Sizes ranging from 106 MW to 2,015 MW, in 11 states
- Assuming currency exchange rate of 47 Rupees = 1 US$
- Average capital “approved cost” $832/kW, standard deviation $125/kW
- Source:  The CEA, Indiainfoline

## Projects With Techno-economic Clearance

**Capital Cost ($/kW)**

**Number of Projects**

## India – Power Plant Capital Costs

- Natural gas plants average cost $715/kW, standard deviation $93/kW
- Coal-fired power plants average cost $935/kW, standard deviation $60/kW
- Hydel plant average cost $776/kW, standard deviation $93/kW
- Liquid fuel power plants average cost $786/kW, standard deviation $18/kW

## Dabhol - Background

- Enron $3 billion project in Maharashtra
- Phase I – 740 MW operational, Phase II – 1,444 MW 2001, total 2,184 MW project
- Phase I fueled by Naphtha, Phase II fueled by imported LNG to begin 12-01
- Total project cost: $1,374/kW
- 9 year construction lead time for Phase I
- Biggest foreign investment in India
- Largest gas-fired power plant in the world according to Enron

## Dabhol - Status

- MSEB in default since November 2000 - $48.3 million, out of which $17 million subsequently paid by MSEB
- Average tariff Rs 4.94/kWh but should be Rs 4.02/kWh at full CF, but currently about Rs 8/kWh
- Enron has invoked GOI counter-guarantee to attempt to collect payment
- GOI will not pay $21.6 million Dec. 2000 bill until Enron pays penalty of $86.5 million for “certain technical violations”
- Enron and MSEB headed to Indian arbitration court
- Enron-India meeting in London April, 2001 – Directors authorized DPC to issue notice of termination to supply power to MSEB
- PPA may be re-negotiated
- Most of Enron’s other investment plans in India remain frozen

## Dabhol – What Went Wrong (1)?

- Electricity from Dabhol costs 300% more than from other plants in MSEB
- Naphtha fuel costs have increased due to rising international oil prices
- Bills are calculated in Rupees, but tied to $, Rupee value has fallen
- PPA called for MSEB power purchase at CF 90%, but MSEB can only buy 10-20% of power from Dabhol while paying fixed charge payment
- Electricity Regulatory Comission requires MSEB to buy cheapest power first

## Dabhol – What Went Wrong (2)?

- Power not needed in Maharashtra – temporary effect?
- Demand dropped 2% despite 6% growth in GDP – energy efficiency, changing GDP composition, and growth in service industries
- WB had concluded project not economically viable – too much power at too high a price
- Long history of electricity cross-subsidies, 90% of customers pay subsidized electricity
- T&D loss in Maharashtra 33%
- Delinquent bills amounting to > $1 billion remain uncollected

## Dabhol – What Is Going to Happen?

- Bills since December 2000 have been in arrears, the debt continues to grow
- MSEB will have to pay 75% of fuel costs in Phase II even if it buys no power
- In 2001, total MSEB bills to Enron estimated to be $1 billion/year
- 22% tariff levied on imported fuels

## Forecast by International Energy Agency

- GDP growth rate of 4.9%/yr (1997-2020)
- Population growth rate of 1.2%/yr (1997-2020)
- Energy intensity forecast – uncertain
- Could be higher due to energy intensive industry and infrastructure
- Could be lower due to greater role of services and less energy intensive industries

## Issues Being Faced by India

- Concerns with increasing energy imports (oil, natural gas, coal)
- Management of subsidies for petroleum and electricity (agricultural sector)
- Introducing competition in electricity sector through privatization of SEB’s and industry assets
- Reducing T&D losses
- Increasing plant capacity factors

## Nepal - Background

- Population: 24.7 million, population growth rate: 2.5%/yr
- Generating capacity: 316 MW (99) – 83% hydro, 17% thermal
- Hydro technical potential 83,000 MW, economic potential 44,000 MW
- PV for rural electrification
- Power distribution and development
- ADB loan (12-99) $50 million (total project $94.5 million) for rural electrification and improved power distribution
- Aggressive expansion of power projects underway

## Nepal - Projects

## Pakistan – Background

- Population 141.6 million, growth rate 2.8%/yr
- Real GDP growth rate 2.3%/yr projected in 2001
- Generating capacity 17 GW (Thermal 71%, Hydro 28%, Nuclear 1%)
- Rising net oil imports
- Proven gas reserves 21.6 TCF
- Sharif government demanded reduction in rates from IPP’s from 6.6 cents/kWh to 4.5 cents/kWh, new price of 5.6 cents/kWh settled on 12-00
- Coal find in Tharpakar desert could be exploited in future

## Pakistan – Natural Gas

- Annual production 800 BCF, all domestically consumed
- Interested in pipelines to import gas from neighboring countries
- Pakistan will permit pipeline from Iran to India, Pakistan will earn transit fees and can tap into the pipeline, but India reluctant
- Pakistan unlikely to be included in Dolphin Project – Qatar’s North Dome gas field to UAE and Oman by undersea pipeline from Oman
- Pipeline linking Turkmenistan with Daulatabad in Pakistan via Afghanistan being investigated but unlikely to happen

## Pakistan - Nuclear

- 2 nuclear power generation facilities currently in operation, third plant under construction, expected to come on-line before 2010
- Chasma nuclear power plant - 325 MW came on-line, March 2001

## Pakistan – Projects

-   Major expansion being hampered by political uncertainties

## Sri Lanka - Background

- Population 19.2 million
- Electricity generation capacity 1,600 MW (71% hydro, 29% oil)
- Dependence on imported oil
- Dependence on hydro – impacted by drought
- Subsidization of petroleum and electricity
- Possible off-shore oil and gas resources not being explored due to terrorist threat

## Sri Lanka - Projects

## Regional Considerations

- Excess hydropower in Nepal, Bhutan
- Bangladesh-India power exchange (150 MW)
- Shortages of power everywhere – Bangladesh could generate electricity using natural gas and export electricity
- Regionally integrated T&D grid
- Implementation of capacity addition programs
- Attracting and retaining the interests of private partners in energy sector

## EIA Products of Relevance

- Annual Energy Outlook (AEO)
- International Energy Outlook (IEO)
- Short-Term Energy Outlook (STEO)
- Country Analysis Briefs (CABs)
- Special studies – Climate change, multi-pollutant control

## Conclusions

- Areas of work
- Potential for capacity growth
- Major issues facing Bangladesh power sector
- Natural gas sector challenges
- You can fix the problems and improve your system

## Areas of Work

- Increase new plant capacity factor
- Rehabilitate existing plants
- Manage system losses
- Promote renewable energy, rural area power systems, off-grid power

## Potential for Capacity Growth

- Natural gas – significant potential, but utilization remains sensitive issue
- Coal – limited potential
- Renewables – significant potential
- Photovoltaics – Grameen Shakti installed 160 kW off-grid for rural electrification
- Wind – moderate potential in coastal areas
- Biogas – significant potential
- Industrial cogeneration – significant potential
- Hydroelectricity – some room for expansion, uncertain environmental impacts
- Nuclear – low potential
- Petroleum – low potential

## Major Issues Facing Power Sector

- Plugging the holes
- Attracting and retaining private sector investments in energy
- Unbundling generation, transmission, and distribution assets, and allowing private sector to compete
- Global climate change and other environmental issues – biomass resource depletion, sea-level rise

## Natural Gas Sector Challenges

- USGS reserve estimate 32.1 TCF
- Three levels of reserve estimates: discovered reserves, recoverable reserves, and marketable reserves
- Approximate estimate:  Recoverable reserves = 60% of discovered reserves
- Approximate estimate:  Marketable reserves = 75% of recoverable reserves
- Gas reserve pressure - how much of the gas is at what pressure?  Can start high and decline unexpectedly
- Give some thought to what would happen when you run out of natural gas

## Success Stories in the Bangladesh Power Industry

- The 1.5 person utility – power in the bazaar
- The battery repairman – reverse engineering
- Making money when the power goes out
- Growth of UPS, stand-by power, battery power, diesel gen-set markets
- The success of electric cooperatives - REB

## Success Stories Common Themes

- Lean and mean
- Private capital, talent, and initiative
- Best practices with no training
- Collective responsibility
- Opportunistic
- Part of the solution or competitor?

## Rural Electrification Through PV – Grameen Shakti

- 17 – 50 W photovoltaic panel/battery systems
- Grameen Shakti financing to reduce up-front capital cost
- Lighting (commercial, residential), fans, black and white television
- Expansion to electric water pumping, vaccine refrigeration possible

## Where Do We Go From Here?

**Resources**
-   Natural gas
-   Coal
-   Renewables

**Market**
**  **Unmet needs
-   Poverty alleviation
-   Economic growth

**Institutional challenges**
-   Line loss
-   Subsidization
-   Revenue collection
-   Introducing competition

**Technical constraints**
-   Ageing plants
-   Ageing t&d system
-   Floods