A nnivers ar y

alloping demand for

power and mounting constraints in its generation
forced Power Development Board
at times to impose power cuts all
over the country. The user industries specially the process industries have also been forced to go
for captive power plants to tide
over the situation. Electric power
generation is still predominantly a
state controlled subject. Of late,
however, government has taken
up building lots of power plants of
their own as well as liberalized
private power generation for
bridging the demand-supply gap.
The installed capacity has by now
exceeded 10,000 MW mark
(10,264 MW in December, 2013)

Syed Abdul Mayeed

June 16, 2014

163

inclusive of 500 MW import from India

through DC Regional interconnector.
The fact that private industries use captive power answers the question of financial viability. For, the benefit in
terms of prevention of marginal loss of
production outweighs the cost of captive power generation. Industries which
have a high value added for electricity
input will naturally insulate themselves
through standby power.
Context of Captive Power Plants
Unfortunately, there is no dependable
record of the total capacity of Captive
Power generation in the country owing
to the fact that the records are not properly maintained by any Authority. However, it is estimated that the total
installed capacity would be around
3000 MW i.e. around 30% of the total
installed capacity of the country. The
captive power plants are mostly run by
natural gas (70%) and the rest by
HSD/HSFO (30%). As most of the captive plants are used as stand by source,
they are operated at a low plant factor
(25-30%) while the process industries
usually run their captive plants more in
hours. Most of these plants are IC engine
driven but there are few gas and steam
turbines as well. During FY 2012-2013,
Gas based Captive Power Plants consumed 3.235 billion CM. The average
efficiency of these plants is less than
30%, while the gas and steam turbines
are even less. On the other hand, the investment costs per KW of Captive
Power Plants are comparatively higher
than the large capacity conventional
power plants feeding power to the national grid.
Captive Power Plants - National
Perspective
From the national point of view, the issues are somewhat different. Here the
objective of the policy maker will be efficient resource allocation. The alternatives differ for short and long runs. In the
short and medium run, power cut is
given and the alternatives may be to
impose a uniform power cut on industries.
impose an optimal power cut, minimizing production loss and unemploy-

ment.
allow for
captive
power generation.
However, in
the
long
run, power
cut is not a
constraint,
since extra
capacity or
reserve margin can be
provided
for. Growing
demand and
persistent
funds constraint are
not
sufficient arguments
to
necessitate
the continuance
of
power cuts,
since utilities can segment
the
market, promote Private
Power generation and
equilibrate
the demand
and supply
by increasing tariffs.
Thus,
the
long run alternatives
are whether
to satisfy a
certain level
of peak demand by additional grid capacity or by
captive power. The alternatives have to
be compared at the margin and therefore it is not the average cost of electricity at the high tension (HT) terminal or
the HT tariff that is relevant, but the marginal (average incremental) cost of electricity. This has to be compared with the
cost of captive generation at the given
level of demand for captive electricity.

In cost-benefit terms, the benefit of captive power generation is not the saving
in loss of production but the saving by
not producing grid electricity since this
is the next best alternative.
However, for the national economy, one
Taka invested in a captive plant is much
more wasted than if it is put into a large
power plant. Larger sized power plants
are more efficient and less expensive on

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165

per MW basis.
This should reduce the hesitation
in
expediting
power generation programs
by the Government itself.
If the scarce
funds do not
go into relatively efficient
power plants,
they will be
tapped
in
scarce natural
gas or imp o r t e d
HSD/HSFO
based mostly idle captive power plants
built with relatively higher cost since
there is no alternative.
A Typical Example
Dhaka Export Processing Zone (DEPZ)at
Savar, Dhaka houses a number of export
oriented industries, the electricity supply of which are primarily met by a
Power Plant promoted by BEPZA itself
& established by a private power company inside the DEPZ premises. Few industries also have their captive power
plants.
Here are lists containing few typical figures of gas based Captive power plants
in operation inside Dhaka EPZ premises. The lists show several standby
(Table I) as well as full time power plants
(Table II). The total installed capacity is
around 65 MW out of which owners
operate around 34 MW in total on full
time basis, individual unit capacities
ranging from as low as 280 KW to 1750
KW, from their smaller power plants of
comparatively lower efficiencies. They
find their operating cost apparently
lower (!) than the BEPZAs large sized
(say 100 MW), more efficient (45%) reliable power plant located beside their
industries and chose to keep the later as
standby. A typical exercise shows that
while considering the 34 MW captive
power plants in operation in DEPZ at a
Plant Factor of 70% for a period of one
month, the BEPZA power plant pro-

= Heat Rate
KJ/KWHR
Heating Value
of
Gas
KJ/SCFT
=
120,000
KJ/KWHR
950 KJ/SCFT
=
12.632
SCFT/KWHR
=
0.358
m3/KWHR

duces 8.6 million Kwh more electricity

with the same amount of gas consumed
by the above captive power plant (Annexure I). BEPZA power plant investment cost is around USD 600/KW as
against small capacity power plants
which is in the range of USD 750/KW
or above.
Annex 1
The different IC engines used in captive
power has unit capacities ranging from
as low as 280 KW to as high as 1750
KW. Total installed captive generation
capacity under continuous operation in
Dhaka Export Processing Zone (DEPZ)
is approximately 34 MW.
Considering a typical 800 KW IC engine, the efficiency can often be found
to be below 30%. For this study, efficiency has been considered to be 30%.
The heating value of gas is 950 KJ/SCFT
(LHV).
From the above information, Heat
Rate of a typical IC engine can be calculated, as follows:
Heat Rate KJ/KWHR
= (3600) Efficiency %
= (3600*100) 30
= 120,000 KJ/KWHR
Volume of Gas required per KWHR
can be calculated as follows:

Fuel Consumption for

captive generation capacity
under continuous operation = 0.358
m3/KWHR
BEPZA Power Plant employs state-ofthe-art reciprocating engines with operational efficiency of 45%.
Heat Rate of engines employed by
BEPZA Power Plant can be calculated,
as follows:
Heat Rate KJ/KWHR
= ( 3600) Efficiency %
= (3600*100) /45
= 80,000 KJ/KWHR
Volume of Gas required per KWHR
can be calculated as follows:
Using Heating Value of Gas as 950
KJ/SCFT
Volume of Gas
= Heat Rate KJ/KWHR Heating Value
of Gas KJ/SCFT
= 80,000 KJ/KWHR 950 KJ/SCFT
= 8.421 SCFT/KWHR
= 0.238 m3/KWHR
Fuel Consumption for BEPZA Power
Plant = 0.238 m3/KWHR
To produce 34 MW in one calendar
month, volume of gas required by captive generation in DEPZ can be calculated as follows:

Using Heating Value of Gas as 950

KJ/SCFT

Assumptions:
Capacity (34 MW) = 34000 KW
Running Hours in a month = 720 Hours
Plant Factor =
70%

Volume of Gas

Generation in 1 Month

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166

= Capacity x Running Hours in a Month

= 34000 x 720 x 70%
= 17,136,000 KWHR
Total Volume of Gas required for
Generation in 1 Month by Captive
= Generation in 1 month x Fuel Consumption
= 17,136,000 KWHR x 0.358
m3/KWHR
= 6,134,688 m3
With the same Volume of Gas
(6,134,668.000 m3), amount of power
that can be produced by BEPZA Plant
can be calculated as follows:
Generation by BEPZA
= Volume of Gas used by Captive Per
Unit Fuel Consumption of BEPZA
PLANT
=6,134,668.000 m3 0.238 m3/KWHR

= 25,776,000.000 KWHR
Thus Generation by BEPZA Power Plant
when compared with Captive Generation stands as:
50% more efficient
50% more generation by utilizing
same volume of gas per month
8,640,000 KWHR of additional generation per month
In consideration of optimum utilization
of scarce natural gas and best use of
fund on a national economy point of
view, all the industries inside DEPZ
should full time receive electricity from
the BEPZA power plant and keep their
captive power plants as standby.
Conclusion
Unit based captive power generation

means pressure on scarcer Natural Gas,

lower efficiency, loss of economies of
scale and a built-in capacity underutilization. The findings of a typical real
life example illustrated above sufficiently confirm that. Though it might apparently seem involvement of a
somewhat reduced lumpiness in investment and affording quick capacity addition in case of captive power plants
but nevertheless on a national economy
point of view, in the present context of
Bangladesh, operation of gas operated
captive power plants should be discouraged at all levels where grid power is
available save & except for feeding few
critical emergency loads.
EP

Syed Abdul Mayeed;

Former Chairman, BPDB

June 16, 2014

167