Bangladesh power use grows as searing heat eclipses economic disruption

Bangladesh power use grows as searing heat eclipses economic disruption

By Sudarshan Varadhan and Gabrielle Ng

Bangladesh's electricity demand grew 7% over three weeks of deadly nationwide protests that disrupted industrial and commercial activity, data showed, as households cranked up air-conditioners to cool down amid searing heat.

Protests against quotas in government jobs led to widespread disruptions in economic activity from July 16, and longtime Prime Minister Sheikh Hasina fled the country on Aug. 6.

Despite the protests, Bangladesh's power demand rose to an average of 316 million kilowatt-hours per day, 7% higher year-on-year, data from its grid regulator showed, despite most economic activity coming to a halt.

That was slower than the increase of 10.1% in the June quarter - when scorching heatwaves baked the country - but faster than the 3.3% rise during the cooler March quarter.

The data shows how growth in electricity use in Bangladesh, which has had the highest rate of power demand growth over the last decade among countries with over 100 million people, is being driven by households impacted by extreme weather.

The residential sector-driven growth in electricity consumption is in contrast to other developing Asian nations such as India and Vietnam, where industrial consumption has been central to power demand growth.

Bangladesh, home to over 170 million people, is the world's second-largest garment exporter behind China, supplying global retailers including Walmart, H&M and Zara.

"Power demand in Bangladesh will continue to increase despite political volatility as it is primarily driven by households," said Shafiqul Alam, lead energy analyst in Bangladesh at the Institute for Energy Economics and Financial Analysis.

"We are facing lengthy and hotter summers compared to the past, which has increased cooling demand in households," he said, adding that residential demand has grown at over twice the rate of industrial demand in the last decade.

Data from the International Energy Agency shows the share of electricity use by industries in Bangladesh slipped to 44.8% in 2019 from 56.7% in 2010, with households drawing more power from the grid than industries in 2020 and 2021.

Analysts and industry experts say the nature of power consumption will ensure sustained demand for fossil fuel imports, as local production is insufficient and due to the country's renewable energy output being among the lowest in the world.

"Utilisation of coal-fired plants will likely increase due to a fall in global prices of coal, and contribution of gas in power generation will trend slightly lower because of coal prices remaining competitive," Alam said.

Higher residential power use has pushed Bangladesh to boost imports of thermal coal, which rose 26.6% to 6.22 million metric tons during the first seven months, data from analytics firm Kpler showed, as coal-fired power generation nearly tripled in the same period.

On the other hand, imports of liquefied natural gas (LNG) - its main power generation fuel - grew at a much slower rate of 2.6% during the same period, Kpler data showed, as coal ate into the share of natural gas-fired generation.