Energy
Bangladesh's energy sector has seen tremendous expansion and transformation in recent years, owing to the country's developing economy and rising energy consumption. Bangladesh is actively attempting to diversify its energy mix, improve energy security, and increase energy efficiency, all while addressing sustainability and environmental issues. As a result, there are several opportunities for companies interested in investing in or collaborating with the Bangladeshi energy sector.
Market Insights:
• Bangladesh's energy demand has been steadily increasing due to population growth, industrialization, LDC graduation and urbanization. According to World Bank In the past decade, national energy demand has increased on average 10 percent annually and the demand for energy is projected to increase by more than two times by 2030.
• Natural gas has traditionally been the primary energy source in Bangladesh, but the country is looking to reduce its dependence on gas and diversify its energy mix. This includes investments in renewable energy sources such as solar, wind, and hydroelectric power.
• A National Solar Energy Roadmap, drafted in 2020 with the United Nations Development Programme, calculated that 6,000 MW could be generated from solar by 2041 in a business-as-usual scenario - and with aggressive policies, as much as 30,000 MW.
• Rooftop solar has gained momentum, as it does not require land acquisitions, an earlier study estimated that 5,000 MW could be generated from solar plants on industrial rooftops. There are now more than 30 large-scale rooftop solar PV plants, mostly mounted on factories. Besides garment and textile manufacturing, other sectors like steel and electronics are also venturing into rooftop solar. Bangladesh has the fifth highest number of jobs in solar PV, according to the International Renewable Energy Agency (IRENA).
• With 100+ Special Economic Zones forming all over the country. The country has the potential to source electricity in a much higher capacity.
Market Scenario:
Over the last decade, natural gas has remained the dominant and cheapest source of energy for Bangladesh, which enjoyed domestic reserves. A decrease in the number of explorations, combined with rising demand, has depleted gas supplies. This has increased the country's reliance on imported LNG and Heavy Fuel Oil (HFO).
The present fuel mix of Bangladesh's power plants (more than 80%) is dominated by natural gas, oil, coal, and diesel. Due to current energy prices and the predicted depletion of natural gas resources within the next ten years, the Government of Bangladesh intends to minimise reliance on domestic natural gas. This is accomplished by increased use of imported liquefied natural gas (LNG), increased imports of energy from neighbouring countries, and increased use of renewable resources, particularly solar power.
Currently the Integrated Energy and Power Master plan is being developed addressing the bottlenecks and going beyond analysing the needs for keeping up with the demand of the population. Besides rooftop solar generation, solar plants and on-shore wind energy plants have been and are being set-up. Others that are in the process of feasibility studies are off-shore and near-shore wind farms.
Opportunities:
• All sorts of energy efficiency products, equipment and renewable energy generation is encouraged
• Smart grids, smart meters and others are being adopted in the energy generation and distribution systems.
• Rooftop solar on BOT, BOOT and other modalities are on the rise.
• Companies that will start power generation commercially after June 2024 but before 2025 will get 100% tax exemption for the first five years, half for the next three years, and 25% for the next two years.
• The income of foreigners working in the aforementioned power plants, interest on their foreign debt, royalties, technological know-how and technical assistance, and capital gains through the transfer of its shares have all been made tax-free.
• There are opportunities for reviving ageing brown fields, developing onshore gas fields, upgrading roads, waterways and infrastructure to facilitate fuel transport and constructing terminals and pipeline infrastructure to transport imported LNG and drilled natural gas to distribution hubs.