Falling solar power prices can help ease an energy crunch in Bangladesh, where an over-dependence on fossil fuels has drained foreign-exchange reserves and jeopardized electricity supplies, BloombergNEF said in a report.
Solar on its own is set to become the cheapest source of power in the South Asian nation by 2025, thanks to declining technology prices, BNEF said in the report published Monday. By the end of the decade, solar plus batteries, which will be crucial to displace fossil fuels, will be cheaper than new coal or gas power plants, it said.
That could help Bangladesh, where 97% of electricity is generated from fossil fuels, to decarbonize. But instead, the nation is still planning more coal- and gas-fired generation and is counting on more of the relatively cleaner gas to help reduce emissions.
The South Asian nation is heavily reliant on gas, which accounts for around half of its electricity mix. Gas-fired power production was historically supported by the nation’s domestic reserves, but these are now depleting making it dependent on imports.
Russia’s invasion of Ukraine last year highlighted the dangers of a reliance on overseas gas as prices skyrocketed, leading to rolling blackouts in Bangladesh and the shutdown of a major thermal power plant. The impact of Covid-19 and the country’s rising energy import bill also drained foreign-currency reserves, increasing the urgency to diversify the energy portfolio.
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“By limiting thermal power plant additions and deploying more renewables, Bangladesh can bring down energy costs and emissions while improving the country’s energy security,” said BNEF analyst Isshu Kikuma. “Investing in renewables can create more opportunities and support the country’s economic growth.”
To limit emissions, the country is exploring co-firing coal power plants with ammonia and blending hydrogen with natural gas. Both these technologies will burden the economy, according to BNEF, while solar is becoming a truly affordable and climate friendly option.
--With assistance from David Stringer.