A transition technology bridges the gap between the old and the new. Once legacy technologies and incumbent business models stop producing the desired results, a transition mode starts. However, energy technology is moving too fast for any prolonged transition mode. Its speed of development has cost the big legacy players in certain markets dearly.
In Germany, for example, energy companies have always had strong backing from the government, and strong leverage through their oligopoly. So while ministers contemplated a greener future, they continued to place bets on coal and on atomic power.
However, through a mix of strong public opinion - significantly reinforced by the Fukushima disaster - and falling prices in the renewables industry due to technological progress, the Energiewende (energy transition) suddenly accelerated. The big players found themselves in existential crisis. Their hesitance to embrace the new energy world proved to be their Waterloo.
In Bangladesh, the energy policy realm could not be more different. Yet a closer look at the two countries reveals plenty of scope for mutual learning, from past mistakes and future technologies. Here are three arguments why Bangladesh should avoid a lengthy transition mode.
1. The danger of energy lock-in effects - don’t bet on transition technologies combined with old business models, but leapfrog instead
Bangladesh has adopted the strongest declaration of climate action - a target to use 100% renewable energy by 2050. It is among the countries most vulnerable to the adverse effects of climate change. But given that its electricity supply is already unreliable - peak demand cannot be met, and in rural areas only 42% of the population have access to electricity - this declaration seems daunting.
However, Bangladesh, unlike Germany a decade ago, is clear about where it is heading. The challenges today are whether the country can learn from mistakes made by others, and how far it can afford to continue betting on transition technologies. The transition technology dilemma is not just a question of letting existing fossil fuel or nuclear power plants run a little longer. Rather, the majority of such power plants have not yet been built.
The country faces the very real risk of locking itself into outdated transition technologies and business models, ignoring lessons for which others have paid dearly. Every proposal to build a new power plant should be carefully weighed against its lifespan, and against the path on which the country is embarking.
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2. Solar energy is the superior choice based on cost, food, health and safety
By 2021, the government of Bangladesh plans to develop 13.3 GW from new coal plants, but less than 2 GW from solar energy. Their main justification is cost and availability of land. In contrast, a recent study on clean energy investment opportunities for Bangladesh found that there is far more utility-scale and rooftop solar panel potential than previously estimated. Without displacement of communities, conversion of cropland, air or water pollution, premature deaths, public health costs or inflationary fuel prices, rooftop solar panel systems on commercial and residential buildings could provide 17% of current peak demand (2 GW) at dozens of urban locations across the country.
3. Bangladesh has been a new energy pioneer all along
The new energy world is fuelled by the 5Ds: decarbonization, decentralization, democratization, digitization and disruption. Since the Paris Agreement, there is a general global consensus on how this decarbonization process will shape up in coming years. Moreover, the more the world community is exposed to the adverse effects of climate change, the more it will embrace new energy.
As the planet decouples carbon emissions from economic growth, the old paradigm of centralization - where electric power is produced far away from where it is used - will also change. This will bring a democratization of energy generation and consumption, where prosumers will be the key actors disrupting conventional business and delivery models, empowered through digitization that allows automated payment for electricity trades. In The 3 Stages of a Country Embracing Renewable Energy, Christoph Burger and Jens Weinmann divide this transition path into three phases, at a country level:
First phase: A country focuses mainly on promoting renewable energy sources, possibly with secondary objectives of establishing a domestic manufacturing base.
Second phase: The share of renewables in the energy mix reaches a level where grid operators have to intervene more frequently to keep the grid in balance. The landscape of utility companies is undergoing significant transformations.
Third phase: The electricity supply industry sees first-hand how their sector is transformed from being a public infrastructure towards a truly private one, where solutions are customized for each producer and consumer.
The general consensus would place Bangladesh behind the first phase, given its mediocre total installed renewable energy capacity to date. Germany would be in the second phase, and so far no country in the world would be in the third phase.
I disagree. I would put Bangladesh in all three phases at the same time. Public discourse focuses on problems described in the second phase. However, the country hasn’t even seriously started to embrace the first phase, despite strong political commitments. Incumbent government institutions struggle to move past the legacy mandate of grid extension at any cost. This debate exacerbates economic pressure on communities trapped on the waiting list for a grid connection that is often inferior to that which a solar system can offer.
Nevertheless, while this debate rages in the national hubs, rural Bangladesh has quietly joined the global avant-garde in embracing the 5Ds. Many villages have jumped ahead very quickly and embarked directly on the third phase. Under the leadership of the Infrastructure Development Company Ltd. (IDCOL), more than 20 million people today produce their own electricity from completely decentralized solar home systems. Recent studies show that, on average, the quality of their electricity supply is superior to that of the national grid in adjacent areas. So why is the country trying to jump back from the third phase to the first phase?
While the political arena in Dhaka is still stuck in discussion on a net-metering policy, it is startling that in rural Bangladesh, solar peer-to-peer microgrids, based on existing solar home systems, have long been established. This is a micro energy transition, so to speak. Power can flow freely between houses and small businesses, all necessary appliances can be run, and surplus power is traded based on net-metering and mobile money in real-time. Overnight, remote villagers become solar entrepreneurs, trading electricity for income. These rural Bangladeshis are the prosumers, having embraced the 5Ds and the full cycle of the third phase.
The global energy transformation can no longer be stopped. The question is: what will drive it - community initiative, entrepreneurial disruption or adaptation by traditional suppliers? Manufacturers and businesses not only have to face it, but manage it effectively. National and industrial competitiveness is at stake. The energy transition in Germany was a societal movement, initiated by its citizens, and only later did political calculus pave the way for larger uptake of renewables. If the people in the capital of Bangladesh understood the benefits of solar the way people do in rural areas, a similar momentum could be gained. And with it, a giant leapfrog over transition phases.
ME SOLshare Ltd is a member of the World Economic Forum's 2018 class of Technology Pioneers. Explore this year's full cohort of Technology Pioneers here.