Implement 'No Electricity, No Pay' Policy Instead of Capacity Charge: Prioritize the Development of Renewable Energy

Key Findings and Recommendations

Bangladesh spends a huge amount of money every year on paying capacity charges in the power sector. A total of BDT 1,47,556 crore has been spent on capacity charges in the last 16 years, with which four  Padma bridges or two metro lines can be constructed (Gabtoli to  Narayanganj). Moreover, the energy sector has to pay about 17% more capacity charges in FY 2023-24, a huge expenditure that has put additional pressure on foreign exchange reserves. The key findings of this study are: 

▪ Despite the overcapacity, the power sector of the country has become weaker and more fragile due to the purposeful extension of the rental power plants till 2026 at the latest. 

▪ Because of inadequate funding, renewable energy has been consistently overlooked in spite of the nation's enormous potential. Positive policies like "No Electricity, No Pay" are in place in this sector and may have benefited the economy of the country.

▪ All diesel and furnace oil-based power plants that are at “break-even” or have made a profit should be retired early.

 ▪ Those power plants which generate power less than 40% of the time should be shut down.

 ▪ Investments in renewable energy, particularly rooftop solar and wind power, must rise while investments in fossil fuel-based power facilities must decrease.

 ▪ The 'No Electricity, No Pay' policy has to be implemented in the approval of any new power plant.