Changing scenario of power sector in Bangladesh, Bhutan, India and Nepal sub-region-Part I

In an era of rapid globalization, South Asia has still remained one of the least integrated regions in the world especially in the arena of power and energy. The South Asian countries have been confronting numerous challenges, including power shortages, erratic electricity supply, under investment in renewable energy, and energy access problems. In addition to these, other difficulties such as growing populations, rising electricity demand, frequent and extreme climate events like massive floods and record-breaking heat weaves have only exacerbated the existing problems.

 Given such challenges, it is important that the South Asian countries make efforts towards enhancing regional consultation and collaboration in the power sector to address the pressing issues and create an enabling situation for optimum utilisation of hydropower and other renewables available in the region. The Bangladesh, Bhutan, India and Nepal (BBIN) platform, which is a sub-regional grouping of South Asian Association for Regional Cooperation (SAARC), is one such initiative that has gained some momentum in recent years. The BBIN sub-regional architecture was floated by India in 2015 for expanding cooperation in areas like water resource management. and connectivity of power and transport, and infrastructure. 

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Energy reserves, usage and consumption patterns in BBIN sub-region

The countries in the BBIN sub-region primarily rely on fossil fuels for generating electricity. While India is mainly dependent on coal as source of power generation, Bangladesh depends on natural gas. Although Nepal and Bhutan have maximum dependence on hydropower, both the Himalayan nations import power to meet their requirements. The total power installed capacity of South ASIA, which is one of the fastest-growing regions of the world, has increased from meagre 190 gigawatt (GW) in 2010 to 449 GW in 2020. Reports say about 85% of this total capacity lies in India. The total capacity of South Asia comprises coal (49%), renewable energy (21%) and large hydro (14%).

South Asia has abundant renewable energy resources. The region’s hydropower potential is estimated to be 350 GW, of which only 18% has been harnessed. The region also has around 939 GW of solar power, of which only 3.8% is being tapped, and about 1,289 GW of wind power potential, of which only 3% is developed. Reports suggest that electricity production in South Asia has increased exponentially from 340 Terawatt hours (TWh) in 1990 to 1,500 TWh in 2015. Bangladesh has achieved 100% electrification in 2021, while Bhutan attained this in 2019. India has attained 99.94% electrification on March 31, 2019, and according to the Government of Nepal’s Economic Survey 2019/20, in mid-March 2020, 90% of the country’s population had access to electricity.     

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A number of recent reports and studies found that the BBIN countries have considerable similarities in terms of socio-economic development. However, their electricity production, usage and consumption patterns are different from each other. While India relies heavily on coal, accounting for 49.10% of its power generation, natural gas contributes 46.53% of Bangladesh’s total electricity generation. Bhutan and Nepal on the other hand, produce 99.70% and 96.20%, of their electricity from hydropower, respectively. Bhutan has the cheapest electricity price in the BBIN sub-region ($ 0.036 per Kilowatt hour or KWh), while India has the highest ($ 0.08 per KWh). In Bangladesh, the current electricity price is $ 0.051 per KWh. In Nepal, the price of electricity was $ 0.044 in December 2022.

The four developing countries of the BBIN sub-region are far behind the developed nations in terms of access to clean, reliable and affordable energy, particularly power. There also exit substantial diversities in social and economic criteria of the BBIN countries. While India has the largest population, Bhutan is the country with lowest population in the region. Among the BBIN countries, Bhutan has the highest per capita electric consumption followed by India. Bhutan’s low population compared to other countries in the sub-region is the prime factor behind its high per capita electricity consumption.

Several studies and reports reveal that the per capita electricity consumption in the BBIN countries has increased between fiscal year (FY) 2011-12 and FY 2022-23 even though less compared to average world per capita consumption. The rise in electricity consumption among the BBIN countries between FY 2011-12 and FY 2022-23 is shown below:

Source: Data compiled from various reports and studies.

The above table clearly indicates that the per capita electricity consumption in Nepal is lowest followed by Bangladesh among the BBIN countries compared to the world average in the given period. Only Bhutan and India have somewhat higher consumption. Bangladesh is yet to address some lingering issues in the power sector resulting in low per capita consumption which will be discussed later. Nepal’s very low per capita electricity consumption is attributed to the country’s dependency on fossil fuels in the transportation, cooking and agricultural goods processing sectors.

Reports suggest that the Government of Nepal has set an ambitious goal to enhance per capita electricity consumption to 700 KWh by 2024 and transition from gasoline powered vehicles to electric vehicles by 2031. India too seeks to become a 100% electric vehicle nation by 2030. Similarly, Bangladesh intends to reduce carbon emissions by 22% before 2030. In the emerging scenario, both Bhutan and Nepal could play a pivotal role in meeting the carbon emissions minimisation targets of India and Bangladesh with their enormous hydropower potentials.   

Rising electricity demand in the BBIN countries 

The demands for electricity in the BBIN countries are expected to increase over the next decade resulting from economic growth and rising per capita income and energy consumption. Reports suggest that the electricity demand in the region has been growing by more than 5% annually over the last two decades and is likely to be more than double by 2050. According to a 2013 Integrated Research and Action for Development (IRADe) study titled “Prospects for Regional Cooperation on Cross-Border Electricity Trade in South Asia”, the region’s electricity demand would go up to 19.22 lakh GWh by 2020 from 9.71 GWh in 2010. The IRADe study’s projected demand in the BBIN sub-region is shown below:

Recent reports suggest that the electricity demand in South Asia is now rising by around 10% each year. India’s power demand, according to the Energy and Resource Institute and Energy Transition Commission India, by 2030 would be 2,040 TWh to 2,857 TWh. In terms of business as usual (BAU) scenario, India’s Central Electricity Authority (CEA) projects electricity demand to grow at about 5% until 2036-37. Similarly, as per Bangladesh’s Power Sector Master Plan (PSMP), 2016, the country’s electricity requirement would be 41,890 Megawatt (MW) by 2030 and 82,292 MW by 2041.  

The demand for electricity in another BBIN country Bhutan grew by 6% annually between 2010 and 2021 due to the expansion of industries and factories in the southern region. The Royal Bhutan Government’s Department of Renewable Energy (DRE) in the Economic Affairs Ministry says the country’s electricity demand has been increasing and this is quite unpredictable as more industrial units are coming up. As per DRE’s forecasts’, the power demand in Bhutan could grow by 400% by 2030 if the demand peaks. It has noted that the high energy demand could peak at 25,270.42 GWh in 2030 from 5,000 GWh in 2022, indicating a fivefold increase. As a result, Bhutan will have to step up power generation capacity to a great extent in the coming years. 

Similarly, the demand for power in Nepal is also growing steadily over the years. As per Nepal Government’s Water and Energy Commission forecasts, the country will need 19,151 MW of power by 2040. This is 8.5 times more than Nepal’s present installed power generation capacity. Considering the growing electricity demand, Nepal has stepped up efforts to augment the generation capacity utilising the country’s vast hydropower resources. In recent years, Nepal has made significant progress in the power sector including becoming a near power surplus country.

Dr Rupak Bhattacharjee is an Assam-based independent public and foreign policy analyst. He can be reached at:  [email protected].