Energy security needs a pragmatic approach

What does energy security mean for a country? In layman's terms, perhaps it simply means being able to secure energy at an affordable price so that it can meet its economic and other needs over the long term. I sincerely believe it does not need to be more complicated than that.

Having established the "what", let me attempt to explain, once again in simple terms, how we can achieve it.

In the immediate term, in power generation, harnessing the most efficient fuel cost appears to be the lowest-hanging fruit. However, taxation on energy and multilayered subsidies make it difficult to see the true fuel cost of power. The argument that such taxation is necessary to demonstrate a higher tax-to-GDP ratio also seems frail to me.

Most countries that provide substantial subsidies for power and energy tend to avoid imposing such taxation because it can become circular: it affects the financial capacity of the authorities purchasing power and energy, which can ultimately contribute to disruptions in supply.

We are no longer living in a unipolar world. In a multipolar world, geopolitics can be unpredictable. Therefore, having a diversified power generation portfolio — gas, coal, HFO, imports, renewables, nuclear and others — is a blessing.

However, frictions created by energy taxation and multilayered subsidies can affect fluid and efficient decision-making. This is an area that warrants immediate pragmatic attention.

Renewables remain relatively insignificant in Bangladesh's overall power and energy portfolio today, but they cannot be left unattended as we look to the future.

Strengthening LNG infrastructure

Our LNG (liquefied natural gas) import infrastructure needs immediate attention and should be rapidly expanded. Our own supply of relatively cheap natural gas is declining and is expected to be exhausted well before 2040.

The shortage of gas is already keeping a significant portion of gas-fired power generation capacity, industries and fertiliser plants idle. Addressing this constraint quickly would not only provide much-needed relief to industries and fertiliser production, but also unlock idle gas-based power generation capacity, making the overall system more cost-efficient.

It is important to recognise, however, that implementing such infrastructure can take several years.

At the same time, retiring inefficient power generation capacity must become a genuine part of the agenda as we move towards greater reliance on imported LNG. Our lone nuclear power plant also remains yet to become operational. It is imperative that it begins generating electricity as soon as possible.

Looking beyond imported energy

Energy imports require foreign currency and create a drag on economic growth. While it is impossible for Bangladesh to sustain its economy without imported energy, we need to actively and seriously pursue the exploration of indigenous energy resources.

Deep-sea gas exploration, therefore, needs to be given appropriate priority urgently. In doing so, global best practices should be adopted in managing expectations. Precedent should not become the sole determinant in future contracts; otherwise, I fear we may struggle to attract sufficient interest from global companies.

Bangladesh also has domestic coal reserves, alongside a significant coal-fired power generation portfolio. Extraction of this resource should therefore be considered, adopting the best available engineering practices, while the logistics required to transport the coal to power generation facilities should be developed concurrently.

However, there is an important consideration here. Our coal reserves are located in North Bengal, which is essentially the country's breadbasket. Any extraction must therefore be handled with considerable care, balancing energy needs with food security and environmental concerns.

Renewables need a realistic policy framework

Renewables remain relatively insignificant in Bangladesh's overall power and energy portfolio today, but they cannot be left unattended as we look to the future.

Alongside utility-scale solar, rooftop solar, battery energy storage systems (BESS) and other distributed solutions also need policy attention. Simply removing taxes on solar panels and related equipment will not be enough.

The structure of day-and-night tariffs, as well as future policies governing how much rooftop solar can be connected to residential networks, should also be examined.

Utility-scale solar power plants require significant amounts of land, which inevitably creates a potential conflict with food security. It may therefore be prudent to determine the maximum amount of utility-scale solar capacity that can realistically be developed while maintaining a sensible balance with the country's food-security needs.

The subsidy question

We also need to establish a cap on the per-capita subsidy that the country can afford as the cost of power generation and energy continues to rise.

A smart policy framework is necessary because, as we import more energy, costs are likely to increase. Without affordability, sustainability cannot be ensured.

Of course, every reasonable effort should be made to minimise the impact on consumers and the economy. Nevertheless, the reality remains that energy costs are likely to rise. The government will have to continuously monitor this and strike a balance between the economy's capacity and its growing demand for power and energy.

There are many other issues that are relevant to ensuring energy security, but I have focused here on those I consider most important. I have also intentionally kept my observations largely qualitative and avoided numerical estimates, as these can become contentious.

Before I conclude, I cannot emphasise enough how critical — and difficult — it is to manage energy and power for a growing economy of almost 20 crore people, particularly when per-capita income is around $2,800.

Ultimately, capacity in policymaking, implementation and building consensus among the people may be the most important elements of all. Nothing can be achieved without them, and providing energy security is no exception.