The Bangladesh government has recently announced an increase in power tariffs across all consumer categories, a move prompted by the growing disparity between the costs of power generation and the revenue generated from it. This adjustment also includes a revision of natural gas prices for power generation. While these changes are expected to maintain inflationary pressures due to the surge in electricity and gas prices, they are also making the prospect of investing in clean energy increasingly attractive for various sectors.
A study conducted by the Institute for Energy Economics and Financial Analysis (IEEFA) on around 40 industrial units revealed a significant untapped potential for energy efficiency improvements. Although many industries have adopted measures such as efficient lighting and waste heat recovery systems, a considerable number still do not utilize the waste heat from their generators, missing out on substantial energy savings.
The recent hike in electricity and gas prices, with electricity tariffs for medium and large industries up by approximately 9.9 percent per kilowatt-hour and gas prices by 2.5 percent per cubic meter, is poised to accelerate investments in energy efficiency. These adjustments are vital in encouraging industries towards sustainable and cost-effective energy use.
For households, which consumed over 55 percent of grid electricity in the fiscal year 2022-23, the energy efficiency drive is equally important. The market still offers 120W ceiling fans, even though more energy-efficient 35W models are available, suggesting a gap in consumer awareness regarding the long-term savings these appliances offer.
The tariff adjustments also signal a golden opportunity for the expansion of rooftop solar installations across industrial and commercial sectors. Despite the initial cost, the return on investment is becoming increasingly favorable, thanks to the savings on energy bills. Regulatory support and incentives are critical to encouraging the adoption of these green technologies.
The Sustainable and Renewable Energy Development Authority (SREDA), with its mandate to promote renewable energy and energy efficiency, has a significant role to play. By facilitating knowledge exchange and monitoring energy audits in the industrial sector, SREDA can drive the widespread adoption of clean energy solutions.
However, financing remains a challenge. Despite the Bangladesh Bank’s refinancing scheme and the Infrastructure Development Company Limited’s (IDCOL) initiatives, there is a pressing need for more accessible and substantial funding to meet the demand for clean energy projects. Strategic financial policies and partnerships with multilateral development banks could provide the necessary boost.
As Bangladesh faces these energy sector challenges, the shift towards energy efficiency and renewable energy not only presents a path to mitigate the impacts of rising energy costs but also opens the door to sustainable economic and environmental benefits for the nation.