A review of renewable investment and power system operational issues in Bangladesh

Generation investments, especially large-scale variable renewable energy, requires careful scrutiny of the state of the power system. Power system planning and operations in a developing country like Bangladesh can often achieve significant improvements in economics and security of supply, through modest and prudent investments. A review of the Bangladesh power sector is presented in this paper that highlights: (a) changes to dispatch protocols to undertake fuel-constrained dispatch optimization and ancillary services co-optimization and pricing; (b) issues related to the allocation of natural gas between sectors; and (c) a technology neutral investment framework. The study uses an hourly dispatch and ancillary services co-optimization model that also optimizes short to medium term investment decisions. The results demonstrate Bangladesh can: (a) reduce its production costs by 63% through more efficient dispatch; (b) reduce production costs by 77% by using an additional natural gas quota of 212 mmcfd (or a 23% increase); and (c) should have invested in power import and baseload gas/coal rather than expensive solar PV projects (proposed in 2011 at substantially higher cost at the time). When a carbon price is imposed in the model, the implied break even cost to justify the solar program is very high – in excess of $150/tonne.