It could also help wean the country off its expensive import dependence. The report surveys 51 industries with 124 gas-fired captive generators with a combined generation capacity of about 250 megawatts (MW) to find solutions to reduce the country's LNG demand growth.

"An insatiable appetite for gas could lock Bangladesh into a vicious cycle of spiralling prices and supply issues pertaining to LNG, and threaten to stall its economic transformation," said the report's author, Shafiqul Alam, Lead Analyst – Bangladesh Energy of IEEFA. Alam examines the nation's brief, turbulent relationship with imported LNG, and how the once cheap fossil fuel quickly became an economic burden.

What seemed a safe bet when Bangladesh started importing cheap LNG in 2018 began to unravel a year later with Covid-19 and its supply-chain disruptions. Then came the global fuel price shocks brought on by Russia's invasion of Ukraine in 2022, compounded by domestic economic woes.

"The plan to import sufficient energy for development was not designed to cope with the high level of volatility in the international fuel market, depreciation of the local currency and weak fiscal conditions," he said. Nonetheless, different industries and the power sector have embraced LNG. For instance, industries use gas in their manufacturing process and for captive power generation in the absence of reliable grid electricity. Therein lies the problem, and one of the solutions, the report found.

"Low efficiency in gas-fired captive power generation consumes a significant amount of gas annually. This is despite the average efficiency in captive generation increasing to 35.38% from 30% in the last decade,"

Alam said. "Additionally, a significant percentage of industries do not utilise the waste heat released by these generators." The report found that by replacing the vast stock of ageing, inefficient generators with more efficient models already available, and harnessing the waste heat produced by generators for other applications, Bangladesh could reduce the demand for imported LNG by a massive 50.18 billion cubic feet a year, or 21%, representing an annual saving of $460 million.

While replacing generators will require significant upfront investment, this capital outlay can be recouped within 1.5 to five years. The payback of investment in waste heat recovery is only about one year, the study found. The alternative is to spend far more on building additional infrastructure to cope with the increasing local demand for fossil fuel imports against a global backdrop of tightening regulations to produce environment-friendly products.

Alam said, "As the era of cheap energy comes to an end, with the government likely to make energy pricing more competitive in the foreseeable future, enhancing energy efficiency will be financially more rewarding. "Any complacency in undertaking energy-saving measures will likely erode the competitiveness of industries in the international market," he added.

The policy foundations for such a shift already exist in Bangladesh. For instance, energy auditing of designated consumers, including industries, is mandatory. The Sustainable and Renewable Energy Development Authority (Sreda), established to accelerate the deployment of clean energy, may design measures to swiftly scale up energy efficiency.

However, greater support, incentives and access to finance are essential to drive the country's energy sector towards a more secure and sustainable future, the report found. Notably, slow progress in deploying renewable energy and a lack of investment in developing local resources, have put Bangladesh at a fundamental disadvantage as it does not produce enough energy.

News Link: Energy efficiency measures can save Bangladesh $460m a year in LNG imports: IEEFA report