Coal Has Played a Critical Role in Bangladesh’s Poverty Alleviation

Although Bangladesh has several fuel options in small scale applications, it does not have too many options in terms of utility-scale power production. In terms of baseload electricity production, the available viable options are: coal (domestic and imported), nuclear, LNG, and cross border.

Currently, 65% of the power in Bangladesh is being produced at Tk2.5 per kWh with an average domestic gas price of $1.5 per MMBtu for the power sector. Nuclear power is definitely affordable but the very high initial cost and long project time will not solve the immediate problem. 

That fundamentally leaves us with coal. If domestic coal is produced at $70 per ton, electricity can be produced at Tk5 per kWh. The landing cost of $100 per ton of imported coal can produce the same at Tk6 per kWh.

The average electricity price around the world varies from $0.01 per kWh (Iran) to $0.35 per kWh (Germany). Considering the global average price, electricity price in Bangladesh is fairly low ($0.06 per kWh).

Although, Bangladesh just reached the lower-middle-income country threshold, addressing extreme poverty requires a sustainable economic growth that demands electricity to be supplied at an even more affordable rate. 

So far, Bangladesh possesses global competitiveness in attracting investment due to its cheap labor and energy. That balance is now challenged for the acute shortage of primary energy.

Both India and China are providing cheap electricity heavily based on coal-fired power plants that have 61% and 73% share of their generation respectively. If the average electricity price in Bangladesh exceeds these countries by a large margin, even cheap labor will not be able to attract investment. 

Without coal, Bangladesh cannot provide affordable and internationally competitive energy for foreign or even domestic investment.

Coal also has some additional advantages. There is an abundant supply from multiple sources. Due to fuel shifts and efficiency improvements, the global demand for coal is also decreasing, keeping the price low and stable. 

From a technology perspective, the cost of coal-fired baseload electricity is also much less sensitive to price variation, which is second to nuclear fuel only. Energy security is based on three As: Availability, accessibility, and affordability. 

Coal is the best fuel to ensure all three requirements of energy security in Bangladesh. The primary energy supply opportunities, technology options, economy of the country and many other factors determine the path towards energy security for a particular country. 

That is why what is good for Iran or Canada may not be relevant for Bangladesh.

There is a strong debate going on all over the world regarding the promotion of renewable energy. Lots of examples are given about countries that are retiring old coal-fired power plants and increasing renewable options of the electricity generation.

In fact, some renewable options have become competitive or even cheaper than fossil fuel, especially utility level solar PV and land-based wind. However, the world renewable energy generation is largely dominated by hydro, which contributes to 96% of total production. 

However, the dominance of hydropower is very country-specific. Unfortunately, there is no hydro or wind resource in Bangladesh. Similarly, geothermal or biomass is also not available. That only leaves us with solar, which we have in abundance. 

Two possible utility level solar technologies that can be used are solar PV and solar thermal. Both of these options require large areas (3.5 acres per MW), but solar thermal is also prohibitively expensive at this point. 

To install a 1GW solar PV, that will only give power during the day, will require almost 4,000 acres of land. The solar PV is economically viable where there is plenty of unusable lands (ie the deserts in Gujrat, Nevada, UAE, etc). 

Still, Bangladesh has been successful in distributing solar systems, especially solar home systems (SHS) in remote or non-grid areas. The best possibility of solar energy lies in the distributed systems using small lands, factory rooftops, etc. and not in large-scale industrial applications. 

This is not to undermine the possibilities of utility-scale solar PV. The definition of utility-scale is debatable. This brings us back to coal as the most immediate and viable option for electricity production in Bangladesh. 

There will always be a debate on whether coal is the solution to energy poverty. More than 13 million people in Bangladesh have no access to electricity and almost half of the population has limited access to modern facilities for lighting, cooking, and heating. 

For implementing the local SDG goals, electricity supply must be provided at a more affordable rate.

At the global platform, China has pulled more than 650 million people from poverty through coal power since the 90s. Coal has also played a critical role in India’s poverty alleviation. 

Coal still plays a crucial role in these two countries, but at the same time, China and India are now the leading investors in renewable energy. 

Bangladesh needs coal power plants to meet its development goals. The question is, at what cost? The greatest concern in the country for coal-based power plants is the environmental damage it creates. 

The only solution to that concern is to adopt clean coal technology and ensure that all internationally recommended measures are taken into consideration to minimize pollution to an acceptable level. 

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