BPDB hopes to save Tk3,500cr with solar energy

A new study has found that Bangladesh Power Development Board (BPDB) could save Tk 3500cr by implementing tendered solar projects that could be able to help the allying financial book of the state owned power generating agencies.

"The state-owned organisation could able to save $23 million per month and $273 million annually by substitute the solar from coal, LNG and HFO fired power plants," BPDB's data shows.

Citing the facts, a senior official of BPDB said that they found it out when they received lower tariff rates in tenders compared to all such previous facilities in northern Bangladesh, Chattogram region, Mymensingh area, Sylhet, Khulna and Dhaka regions.

Power, Energy and Mineral Resources Adviser Muhammad Fouzul Kabir Khan expressed optimism that the prices of electricity and energy in Bangladesh would come down in future through increasing the production of renewable power on priority basis and ensuring efficiency in the field.     

Fouzul Kabir said that hundreds of unnecessary projects, including some costly ones, were taken during the previous government but returns from such projects were poor.

After taking the charges, the incumbent administration took various initiatives to make power and energy production and supply systems cost effective and under one such step his ministry reviewed contracts with Independent Power Producers (IPPs) to eliminate capacity payment clauses.

The adviser said the government also officially repealed the "Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010," also known as the Quick Rental Act. 

"We have taken various initiatives to reduce power generation as well as project implementation costs in the power and energy sector. We're now discussing with the power plant operators how they can offer a lower tariff, as there is a big gap between their tariff rates," he said.

"The government should award the low tariff solar projects immediately to avoid capacity charge by the solar projects as they do not have the capacity payment provision and also ensure that they are executed in time," says energy expert Professor M Tamim, vice-chancellor of Independent University, Bangladesh (IUB).

The interim government planned to reduce the overall power generation cost by 10 per cent, which would save more than Tk 110 billion per year. In line with the idea, the government is planning to award around a dozen solar-based power-plant projects to cut the cost of electricity price and reduce the dependency of fossil fuel.

In the latest tenders, the BPDB received tariff rates of 7.89 US cents per kilowatt-hour (1 unit) for the solar plants to be built in northern Bangladesh, which is around 24.31 per cent lower than those of 10.42 US cents for the similar projects that achieved LoIs during the previous government, official said.

Also, the BPDB received tariff rates of 7.95 US cents per unit for the plants to be built in the Chattogram region.
The rates are around 34.33 per cent lower than those of 12.10 US cents for the similar LoI-winning projects during the Awami League rule.

The BPDB got tariff rates of 8.88 US cents per unit for the plants to be built in the Mymensingh area.

The rates are around 10.58 per cent lower than those of 9.93 US cents for similar projects during the past regime.

Moreover, the BPDB received tariff rates of 9.06 US cents per unit for the plants to be built in the Sylhet region.

"The rates are around 8.31 per cent lower than those of 9.88 US cents for the similar LoI-winning projects during the previous government. The BPDB has not yet opened tenders for the plants to be built in the Khulna and Dhaka regions," official said.

"We got better tariff rates in the tenders and are expecting to award those as soon as possible," Adviser Fouzul Kabir Khan said adding that "Solar-based projects are now our priority."

He said the tenders to implement solar power plants across the country were floated to cut prices from the previous ones.
Recognising the issue, the government is planning to award around a dozen solar-based power-plant projects as it has received lower tariff rates in tenders compared to all such previous facilities.

"Government held up around three dozen solar projects which were initiated during the previous Awami League regime and awaited the final nod from the authorities, however, the previous government had issued letters of intent (LoIs) in favour of the plant sponsors under the now-defunct Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act 2010 (amended 2021),".

But no implementation agreements (IAs), power purchase-agreements (PPAs), or land-lease agreements (LLAs) were signed with the project sponsors.

"Instead of awarding the projects, we floated tenders to get lower tariff rates. After receiving that, our targets have been achieved," said the adviser.

"The average bidding tariff is less than the previously issued LoIs against three dozen solar projects," a senior BPDB official added.

The tariff rates of the plants in these regions that obtained LoIs during the previous government were 9.98 US cents and 10.00 US cents, respectively.