Mr. X is a very smart senior officer in a company. His room is well decorated, air conditioned, brightly lit, and glass windows are covered by expensive blinders. The air conditioner (AC) of his room starts running from one hour before he enters the room and until his assistant switches it off in the evening, long after he leaves the office. All the ways for natural air and light to enter his room have been carefully blocked.
Mr. X is not aware of how much power he could have saved if he had allowed natural lights and air to enter his room. Even though he has heard of it, he does not care because it is the company that pays for the electricity bills. This is the case mostly with all public and private sector offices in the country. The situation in the industrial sector is even worse. For example, fertilizer, cement, steel, textile, pharmaceutical, ceramic, glass, the most power consuming sectors, are often alleged to be running inefficiently in terms of power or energy consumption. The question is, can we change the situation? If yes, how?
Bangladesh is the second fastest growing economy of 2016 with a growth rate of 7.1% (International Monetary Fund). Despite many hurdles, it has maintained 6% growth on an average since late nineties till date. This growth is accompanied by a significant decline in poverty, an increase in employment, greater access to health and education, and improved basic infrastructure. As a result, the once poor country is now considered a middle income one. After decades of sustained growth, it now attempts to become upper middle-income country, the next level of prosperity, by 2021. To achieve this objective, it needs to maintain annual GDP growth of 7.5%-8% and overcome major obstacles and cash on the new opportunities brought about by changing global circumstances. Undoubtedly, investment in energy infrastructure that fuels the economic growth is one of the major requirements to maintain the projectedgrowth.
Given the current scenario in Bangladesh, the primary energy demand-supply gap is enlarging (2011-12: 6,066 MW supply against 7,518 MW of demand, 2013-14: 7,356 MW supply against 9,268 MW of demand). To align the demand and supply as well as to support the future pressing needs of keeping around 8% economic growth, the government has been endeavouring to boost up power generation capacity. The government, in the Seventh Five Year Plan (2016-2020), has placed the improvement of energy efficiency as a priority issue. Following this policy, Sustainable and Renewable Energy Development Authority (SREDA) was established in 2014 through SREDA Act, 2012 which incorporates Energy Efficiency and Conservation (EE&C) and promotion of Renewable Energy (RE) technologies as its primary objectives. SREDA has now become functional and is working to achieve its goals.
Until now, a significant portion of natural gas as the important source of primary energy is being consumed by the power sector. Only 63% of the total population have access to the electricity and per capita electricity consumption is around 311 kwh (the World Bank, 2016 estimate). Within 2021, more electricity would be consumed by the population given the current birth rate (2.14%) resulting in larger population as well as the increased demand for power due to increase in per capita income. Therefore, to give more people access to electricity and to feed strong growth appetite of the economy, it is inevitable to improve electricity generation capacity of the country. In this regard, given our limited sources of energy, introduction of energy efficient equipment and machineries can work as a mechanism to fix out the demand supply gap in energy consumption. Moreover, the high demand in energy with respect to relatively small supply and limited sources of energy (natural), energy efficient technologies will reduce the demand supply gap in energy. According to the British Petroleum Statistical Review of World Energy 2014, the total natural gas proved reserves of Bangladesh as of 2013 is 200 million toe. The reserves to production rate is 12.6 years. Referring to this data, indigenous gas supply is expected to increase, only up to the next few years. The production, however, will soon reach its peak and then decline unless new gas fields are found and can be extracted. Otherwise, with respect to the demand which will continue to grow, Bangladesh will have to import natural gas in order to keep its installed facilities running. Introduction of energy efficient technologies can be a sustainable solution or supplement in this situation.
As a first step in implementing energy efficient technologies, SREDA with the assistance of JICA has drafted an energy efficiency and conservation master plan which sets out a target to cut down the energy consumption per capita GDP by 15% in 2021 (Bangladesh FY 2020 as compared to 2013 as the baseline). Given certain assumptions, 7,482 GWh of electricity (equivalent to power generated annually by 2000 MW power station) will be saved. If Bangladesh fails to follow the energy saving path, the GoB would have to additionally invest on the construction of power station possibly with the capacity of 2000 MW. JICA has signed a concessionary loan under its $100 million Energy Efficiency and Conservation Promotion Financing Project to establish energy efficient technologies as its aid policy for the People's Republic of Bangladesh. Both the Government of Bangladesh and JICA realised the need to fundamentally improve the energy scarcity which is becoming a serious impediment for the economic and industrial growth, from both demand and supply sides. Furthermore, JICA's analysis of Aid for Bangladesh (April 2013) stipulates the need for stable supply of power as the priority issue for assistance. A concessionary loan is considered as an incentive as well as a must to attract attention of the industries to go energy efficient. Usually, the energy efficient technologies are a bit more expensive than the conventional technologies. As a result, the developers do not get immediately interested to replace their conventional technologies with costlier energy efficient technologies, neither do they want to buy them for new factories for the same reason.
JICA's concessionary loan has three components: industry and commercial sector component (component I: energy efficient equipment at factory, office, and commercial facility etc.), building sector component (component II: energy efficient equipment in buildings), home appliances component (component III: energy efficient listed home appliances). These concessionary loans are being channelled through two implementing financial institutions Bangladesh Infrastructure Finance Fund Limited (BIFFL) and Infrastructure Development Company Limited. BIFFL as an implementing financial institution provides A-type loan at 4% interest rate to industrial and commercial sector (Heat Exchanger Replacement of Urea Fertilizer Plant, Chemical Fertilizer Plant, Black Liquor Boiler in Paper and Pulp, Spinning Machine in Textile and Garments etc.) and building sector (Heat Reflective Glass, Elevator etc.). It provides B-type loan at 8% interest rate to residential and small business (Refrigerator, Air Conditioner etc.). The loan tenor is tailor-made based on the need of the industries or sector.
The soft loan is meant to attract the energy intensive sector to transform themselves into energy efficient and thereby saving our scarce and valuable energy resources. Side by side, energy saved has a direct impact on the protection or improvement of our environment which is under tremendous stress due to unplanned industrialisation and lack of environmental compliance. So far, the responses from the industries towards BIFFL's soft loan for energy efficient technologies are good. However, the potentials seem much larger specially in the textile, RMG, spinning, steel, cement, commercial buildings, ceramic and glasses, food processing industries. Over and above all, the awareness about energy efficient technologies and the financial benefits they can yield is the key for the industries to become energy efficient. BIFFL along with JICA and SREDA will keep pursuing the energy intensive industries to avail the soft loan being offered by BIFFL to transform their industries.
Finally, coming back to the caption - one unit of power saved is worth two generated is a popular saying among the people and organizations that are working for a greener planet and sustainable development. One unit saved means one unit is not required to be generated which also saves the cost for fuel of generation as well as maintenance. If each consumer of power cares for saving a unit of power each day that would save Megawatts in total without making any additional investments, and that power can be used by the industries for more productive purposes. Let us begin our energy efficiency movement right away and be an agent for change ourselves.
The writer is executive director & CEO, Bangladesh Infrastructure Finance Fund Limited. Email: [email protected]