Power sector urgently needs a realistic financial framework

Energy security is often discussed in abstract terms—megawatts, fuel mix, transition pathways, and long-term targets. But for most people, energy security is painfully simple: can you cook today, can your children study at night, will hospitals function, and will businesses run without disruption?

Let me ask you to imagine something very ordinary. Your home has no electricity and no gas for one or two days. Life immediately becomes difficult. Now imagine that situation expanding into a nationwide grid failure. The headlines would say, "The country plunged into darkness." But if such disruptions persist and turn into a prolonged crisis, the consequences for the economy, social stability, and daily life would be devastating.

The real question, therefore, is not whether energy transition is fashionable or globally discussed. The question is whether we are preparing adequately so that such crises do not occur.

In Dhaka and across the country, the gas crisis has become routine. In many households, gas is unavailable from early morning until afternoon. Even when supply resumes, the flame is barely usable. As a result, almost every family now keeps LPG cylinders as a backup.

But even that backup has started to fail. Recently, LPG cylinders became scarce. I saw a post on social media where a woman said she had to buy a cylinder for Tk4,800—after searching all day—when the usual price is Tk1,200 to Tk1,400.

This cannot be called a normal energy supply system, let alone energy security.

One day, a junior colleague told me he could not come to the office. The reason? His LPG cylinder had run out. At first, I did not understand the connection. Later, I realised he had spent the day going from market to market searching for a cylinder.

These are not isolated anecdotes. They reveal a deeper truth: energy security in Bangladesh is far from stable.

As incomes rise and development progresses, people naturally use more electrical appliances. Our parents once cooked with firewood, then kerosene stoves. Those are now gone. Gas stoves replaced them, then LPG, and now electric cooking devices are becoming common.

Suddenly telling people they cannot use these technologies—and joking that we may have to return to firewood—is not progress. It is regression.

Whether we call it energy security, energy transition, or energy transformation, the first condition remains the same: can the system meet people's basic energy needs?

We can talk endlessly about solar energy, emissions reduction, cost efficiency, and environmental benefits. But people's immediate concerns are far more basic—tonight's meal, electricity for children's studies, uninterrupted power for hospitals, emergency services, and operating theatres.

Before promoting advanced solutions, we must first ensure that existing technologies and current demand are reliably served. Unfortunately, while Bangladesh wants to align with global energy trends, our foundation remains weak. Attempting a major transition on such a fragile base will only create further crises.

Take the LPG crisis. One major reason is reduced imports, reportedly down by around 100,000 metric tonnes. Geopolitical complications, including difficulties in sourcing from Iran, were known risks. The government should have prepared alternatives in advance—diversifying sources, guiding private importers, or importing directly if necessary. The absence of preparation is what turns foreseeable risks into sudden emergencies.

Second, policy decisions in the power sector have been deeply flawed. Power plants were installed one after another without ensuring fuel supply. As a result, around 42% of installed capacity now remains idle, yet capacity charges still have to be paid. The Bangladesh Power Development Board (BPDB) is burdened with losses of around Tk12,000 crore and struggles to clear its dues.

Without financial stability, there can be no energy stability. BPDB must have the capacity to purchase and distribute electricity sustainably. Shifting the burden of inefficiencies onto consumers through repeated tariff hikes—when consumers are not responsible for these policy failures—is neither fair nor sustainable.

We urgently need a realistic and sustainable financial framework for the power sector. Inefficient and idle power plants must be phased out as contracts expire. At the same time, Bangladesh must resist rushing into expensive LNG contracts pushed by powerful countries—especially when foreign exchange reserves are under pressure and spot prices remain volatile.

Fixing the financial base of the energy sector is no longer optional; it is a necessity.

This brings us to renewable energy. Much has been said about Bangladesh falling behind in renewables. Is the rooftop solar programme failing?

Not entirely—and this is where some good news deserves attention.

Renewables are often reported as a share of installed capacity—around 4 to 4.5%. But if we look at actual electricity usage, the picture is different. Over the past year, electricity purchased from renewable sources increased by more than 100%—from around 1,100 million kilowatt-hours to about 2,200 million kilowatt-hours. By contrast, electricity from other fuels grew by only 2 to 7%.

So while capacity growth has been slow, utilisation has increased significantly.

The government has also taken two important initiatives. One is the National Rooftop Solar Programme for government buildings—schools, colleges, universities, hospitals, and ministries. This alone has the potential to generate around 3,300 megawatts.

However, implementation quality is critical. At CPD, we have emphasised the need for pilot projects. Who will maintain these systems? Who will clean the panels? Who will ensure quality standards? Across Dhaka, many rooftop panels already produce little or no electricity due to poor maintenance.

At the same time, net metering is expanding rapidly. Export-oriented industries, in particular, are installing rooftop solar to meet global commitments of sourcing 15 to 20% of their energy from renewables by 2030. Currently, around 207 megawatts of electricity is being generated through net-metered rooftop solar systems.

A new renewable energy story is quietly emerging—in households, industries, and institutions.

So is Bangladesh's energy future dark? No. Our long-term goal should be to move away from coal, diesel, furnace oil, and even LNG, and to generate electricity from cleaner and cheaper sources—solar, wind, waste-to-energy, and hydropower.

Consider Kaptai hydropower, which produces electricity at around 50 paisa per unit. There is potential for additional small hydropower projects there. Yet instead of prioritising such low-cost options, we hear discussions about building more nuclear power plants even before the first one is fully operational. That should concern us.

Compared to Bangladesh, India and Pakistan are far ahead in renewable energy deployment. In Pakistan, repeated grid failures and payment crises pushed people to install rooftop solar on their own, supported by Chinese technology and low-interest financing. India has a dedicated Ministry of New and Renewable Energy, while in Bangladesh, SREDA remains a relatively small unit under the power ministry.

Frequent leadership changes—11 executive chairpersons in 15 years—reflect a lack of institutional ownership. In India, state governments actively promote renewables through net metering and feed-in tariffs, making rooftop solar financially attractive.

Even India, heavily dependent on coal, has set a net-zero target of 2070. Bangladesh, with far less coal reliance, has greater flexibility—but lacks long-term, realistic planning.

Energy transition and economic transition are deeply intertwined. Bangladesh's future growth is likely to remain low- to medium-tech, labour-intensive, and moderately energy-intensive. Projections of 60 to 90 gigawatts of electricity demand are therefore unrealistic. CPD estimates demand will be closer to 30 gigawatts by 2040.

Inflated demand projections serve vested interests by justifying excessive power plant construction, many of which then remain idle. Energy has become one of the most politically captured sectors in the country, shaped by domestic and foreign pressure groups.

Breaking this cycle requires strong political commitment, gradual bureaucratic reform, and institutional restructuring of BPDB, PGCB, SREDA, and BERC. Their mandates must be revised, and training and recruitment aligned with energy transition goals.

Change will not happen overnight. But it must be continuous and incremental.

Finally, climate risks are no longer theoretical. Sea levels are rising—parts of Inani Beach are already disappearing. Northern regions face desertification and water scarcity. Agriculture, fisheries, health, education, and food security are all under threat.

Bangladesh may not be a major global emitter, but as a global citizen, we have a responsibility not to worsen the crisis. If we continue relying on dirty energy, we lose the moral ground to demand climate justice.

Energy transition is not a luxury. It is a necessity—for economic stability, social well-being, and ultimately, for survival.

The writer is an Economist and the Research Director at the Centre for Policy Dialogue (CPD)

Abridged from an interview on TBS Future by TBS' Executive Editor Shakhawat Liton.