Bangladesh forced to shut biggest coal units in heatwave due to lack of coal

Bangladesh has been forced to shut both units of its biggest coal-fired power plant due to a lack of coal, as the country swelters through yet more power outages during heatwave conditions.

The China-funded “ultra-supercritical” 1.32GW Payra Power Plant was only inaugurated in March of 2022, as part of Bangladesh’s goal of achieving full electricity coverage.

Just over a year later, however, and Reuters reported on Monday that the country has been forced to close both units due to a coal shortage.

Nasrul Hamid, Bangladesh’s minister of state for power, energy and mineral resources, told Reuters that the country is hoping to restart the plant by the last week of June.

“There is no alternative other than to cope with the shortage,” Hamid said. “We will have to bear with this for another two weeks.”

Maximum temperatures rose to nearly 38°C in the city’s capital on Sunday, with ongoing heatwaves likely for the rest of this week.

The soaring heat has brought with it soaring electricity usage, with a senior power ministry official telling Reuters that when demand peaked at noon on Monday it outstripped supply by 18%.

“Only rain can give us some relief as power demand decreases when it rains,” the unnamed official said.

Adding to Bangladesh’s power woes has been damage caused by Cyclone Mocha, in May, which forced the closure of both the country’s floating liquefied natural gas terminals.

The situation in Bangladesh demonstrates the increasing volatility in the global fossil fuel sector, especially for countries without their own supply of coal.

The Institute for Energy Economics and Financial Analysis last year warned that Bangladesh’s long-term plan to become increasingly reliant on imported coal as well as imported gas has been exposed as a major energy security risk.

As was pointedly highlighted by the threat of gas shortages following Russia’s invasion of Ukraine, the price volatility of fossil fuels risks the lives and livelihoods of entire countries.

The pending power cuts in Bangladesh also threatens one of the world’s leading textile sectors, which accounts for over 80% of the country’s exports, supplying big-name retailers such as Walmart, Gap, H&M, VF Corp, Zara, and American Eagle Outfitters.

In turn, a drop in these exports will exacerbate the country’s issues around its dollar reserves, which according to Reuters have plunged by nearly a third in the 12 months to the end of April. It is this seven-year low in Bangladesh’s dollar reserves which is hampering the country’s ability to pay for fuel imports.

IEEFA says the Payra coal plant – the first of a fleet of new plants to be completed in Bangladesh – was the largest single contributor to the increase in the Bangladesh Power Development Board’s independent power producer costs in FY2020-21 – well before the huge spike in coal prices in 2022.

It says that a focus on renewable energy, especially solar power, has long been advised as a better path forward for Bangladesh than its ongoing efforts to build more coal power generation.

“Since then, there has been very little progress on renewables. A target to reach 10% renewable energy generation by 2020 was missed by a long way,” IEEFA says.