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Electricity has been the foundation of economic


growth of a country, and constitutes one of the vital infra-
structural inputs in socio- economic development. The
world faces a surge in demand for electricity that is driven
by such powerful forces as population growth, extensive
urbanization, industrialization, and the rise in the standard
of living. In the past three decades, numerous studies have
been conducted to examine the relationship between
electricity consumption and Industrial Development. The
overall findings show that there is indeed a strong
relationship between electricity consumption and Industrial
Development. For example, Ferguson et al. (2000)
examined the issue in over one hundred countries, and
found that as a whole there is a strong correlation between
electricity consumption and Industrial Development. This
fact is also quite true for Bangladesh.

The purpose of this report is to establish a thorough


and direct relationship between electricity consumption and
rate of industrial development in Bangladesh. In this regard
we will venture into history and follow some significant
data collected from various studies to verify the fact.

It should be kept in mind that the existence of a strong


relationship between electricity consumption and industrial
development does not always necessarily imply a causal
relationship. The relationship may very well run from
electricity consumption to industrial development, and/or
from industrial development to electricity consumption.
These causality issues, therefore, have been widely
investigated in the report. However number of empirical
studies indicates that overall, increased electricity
consumption often correctly indicates faster rate of
industrial development although the causal relationship is
not consistent for other countries, but is indeed quite true in
general for the perspective of Bangladesh. In order to
thoroughly understand the role of electricity in
industrialization, the general electricity production,
distribution and transmission system in the country, the
advantages of using electricity over other traditional means
of energy and the historical significances of using
electricity must also be taken into account. All these have
been rightfully done in this report.


3 
 



 
3 c
  



 
 

3


Electric power is properly considered as a key element
of the "Second Industrial Revolution" of the last quarter or
so of the 19th century and the beginning of the 20th. This
revolution, together with the transformation of the chemical
industry and the internal combustion engine, redefined the
whole set of technological opportunities available to
industrializing societies. The electrical and chemical
industries shared the important feature that their
development was heavily dependent upon scientific
progress in the 19th century. It is fair to say that 20th
century industrialization has been, in large measure, a
protracted working out of the trajectories of economic
opportunities that were established by these two major
scientific breakthroughs, together with the uniquely-
important internal combustion engine.
What is distinctive about the electricity industry,
however, is that it was, in all respects, a new industry, a
product of 19th century scientific progress. Consequently, it
should be dated, with apologies to Volta and Galvani, from
Faraday's discovery, in 1831, of electromagnetic induction.
Electricity is, of course, not a primary source of
energy. It is, rather, a form into which primary energy
sources can be converted. Many of the distinctive
advantages of electricity derive specifically from the form
that it can take rather than from any narrow efficiency
calculation as measured in terms of BTUs. Indeed, one of
electricity's greatest, but largely unsung virtues, is that it
can make use of many energy sources - fossil fuels (coal,
oil, and gas), hydro, nuclear, solar. It therefore makes

Œ


possible the substitution of one primary energy source for
another, a feature that may sometimes be of considerable
strategic as well as economic value, although it is easy to
underestimate the cost of shifting from one primary energy
source to another.




3 3
  



 


 


 In 1947 when the British colonial rulers left this


country, power generation and distribution were in the
hands of private companies. The power supply to then 17
provincial districts was limited. The generation voltage was
400 volts. Power used to be supplied to most of the districts
during night time only. The exception was Dhaka City
where power used to be supplied by two 1,500 kW
generators. Generation voltage was 6,600 volts and this was
the highest supply voltage. In aggregate the generation
capacity of the country was 21MW. The generation
capacity of the power utility companies together was only 7
MW and there were no transmission systems available.
In 1948 the Electricity Directorate was created in order
to plan and improve power supply situation. Subsequently,
in 1959 the Water and Power Development Authority

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(WAPDA) was created. In 1960, Electricity Directorate
was merged with WAPDA. At that time relatively higher
capacity plants were built at Siddhirganj, Chittagong and
Khulna.
Construction of Kaptai dam and the commissioning of
Dhaka-Chittagong 132 KV transmission line in 1962 was a
milestone of power development of the country. In 1972,
the Bangladesh Power Development Board (BPDB)
emerged as the organization to boost the power sector.
The Power Division was established in 1998 under the
Ministry of Power, Energy and Mineral Resources, cabinet
division notification no. CD-4/1/94-Rules/23(100), dated
25 March 1998. It is entrusted with the responsibility of
overall management of the power sector in Bangladesh.

Π  



 


In Bangladesh electricity is the major source of power


for country's most of the economic activities. Bangladesh's
installed electric generation capacity was 4.7 GW in 2009;
three-fourth of which is considered to be available. 40% of
the population has access to electricity with a per capita
availability of 136 kWh per annum. The Ministry of Power
and Energy has been mobilizing Tk 40,000 crore ($5.88
*


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energy; and Growth of the power sector was forced to be
linked with the programmes of development of a particular
fuel type.

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!


The responsible authorities for generation of electricity


are! Bangladesh Power Development Board, Rural Power
Company and Independent Power Producers (IPPs). The
total installed capacity of the power plants was about 4680
MW including 1260 MW of the IPPs.

Bangladesh Power Development Board (BPDB),


Dhaka Electric Supply Authority (DESA), Rural
Electrification Board (REB), Power Grid Company of
Bangladesh (PGCB) are responsible for transmission and
distribution. The total length of 230 kV and 132 kV
transmission lines were 682.5 route km (1365 circuit km)
and 2635 route km (4611 circuit km), respectively. The
total length of distribution lines comprising 33 kV, 11 kV
and 11/.4 kV lines stood at 43059 km at the end of 2002-
2003 which was 1404 km higher than the previous year.

The following chart shows the general scenario of


electricity transmission and distribution in Bangladesh.

‰




The transmission and distribution system in the


country can be understood more clearly from the following
picture!


A map of the Primary Electricity Grid system in


Bangladesh as of June 2006 obtained from the directorate
of system planning, BPDB is provided in the next page.

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end-user categories were as follows! DESA (50.95%), REB
(19.43%), domestic (12.21%), industrial and commercial
(15.77%), agriculture (0.46%) and others (1.18%).

The following table obtained from BPDB illustrates


net peak demand and generation capacity of electricity in
Bangladesh over the last 5 years.

" 
#
  $%3 
&  
' "  *
 *

() #

$+ $+ +
3  4308 4458 21964

3  4693 4683 23945

3  5112 5425 26106

3  5569 6002 28461

3  6066 7313 31028

3 c  6608 7986 33828


From the table it is evident that net demand,
generation and consumption have increased substantially
over the years.


An overview of the daily load curve shown in the


above Figure is proof that in the evening time the demand
for electricity is maximum. The main reason for this sharp
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increase is - millions of electric lights are switched on by
all types of consumers during that period. According to a
preliminary study - the light load contributes about 80% of
the peak demand. At present, the maximum peak demand
served by BDPB is 3084 MW. This composition of
electrical demand by different sectors is shown in the
following Table.


#  # 


 # 

# 


)    38.76 % Lighting = 341 MW (40%)


(853 MW) Fans & A/Cs =230 MW (27%)
Refrigeration =188 MW (22%)
Others = 94 (11%)

),
 7.55 % Pumps =66 MW (40%)
(166 MW) Rice Husking = 83 MW (50%)
Lighting = 17 MW (10%)

)   41.23 % Motors =635 MW (70%)


(907 MW) Lighting =73 MW (8%)
Others =200 MW (22%)

-)#.. 9.44% Lighting =135 MW (65%)


(208 MW) Others = 73 MW (35%)
-
)!
 3.02% Lighting = 26 MW (40%)
  (66 MW) Water Pump =20 MW (30%)
Others =20 MW (30%)


From the table it is clear that the major amount of
electricity is consumed in the industrial sector which is
about 41.23% of the total electricity produced.

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A more detailed overview of electricity consumption
in industries is described in section 7.




Î &  




Modern industrial societies are commonly described as


energy-intensive, which is, so far as it goes, perfectly
accurate. A central feature of industrial development over
the past two decades is that it has been characterized by a
growth in the amount of energy utilization per worker, or
per person. It may also be said, however, that these
societies are, more specifically, electricity-intensive. If one
considers the experience of Bangladesh, one observes a rise
in the ratio of total energy consumption to GNP between
1980 and 2000. It may be said therefore that, in the
aggregate, Bangladesh economy since the 1980s has
become, simultaneously, less energy-intensive and more
electricity-intensive. This is correctly identified by the
graph showing increasing electricity consumption over the
last 30 years.

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At first glance this seems surprising, because there is
many times more energy contained in the primary fuels that
is employed in the generation electricity than in the output
of electricity actually produced from that energy - which is
to say that there are huge thermal losses in the generation of
electricity.
In spite of the vast improvements in the course of the
twentieth century in convening various fuels into
electricity, it remains true that it still requires several BTUs
of fuel to produce one BTU of electricity. But
thermodynamic efficiency, which may make a great deal of
sense in designing an engine, may make no sense at all
when applied to a business firm, or to a sector of the
economy, or to the economy as a whole. Indeed, the rise in
electricity's share of total Bangladesh energy consumption,
now around 40 percent, has persisted in spite of the fact that
efficiency improvements in generating electricity have
stagnated for the last twenty years or so. The key point
appears to be that the various advantages of electricity,
when the primary energy sources have been convened into
the form of electricity, far more than offset the thermal
losses that conversion inevitably involves. Thus there has
been a significant evolution in the generation of electricity.

c*


Although electric power generation has fallen off its
earlier trajectory of cost reduction, there has been no
apparent slowdown in the growing reliance upon
electricity-intensive technologies. The persistence and the
pervasiveness of the growth of electricity consumption
remain most impressive.
Another critical feature of electricity, closely
connected with its distinctive form, is that it has brought
with it a progressive liberation from the locational
constraints that had characterized earlier forms of energy.
Electric power generation was far more permissive in terms
of the location of manufacturing facilities. To be sure,
hydro power was highly location specific, and the huge
economies of scale associated with centralized electricity
generating plants also meant that electricity was most
efficiently produced in a small number of places - again,
places where the fuel source could be delivered at low cost.
Nor was electric power generation entirely free of
dependence on water. Large central power stations required
huge quantities of cooling water for their condensers. But a
key feature of electricity, after the complex challenges of
transmission over long distances had been met, was that it
could deliver this form of electricity to a wide range of
places where steam engines were, for various reasons,
impractical. In this sense, then, although electric power
generation became increasingly centralized, it also made

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possible a high degree of decentralization in the location of
industrial activity as further reductions in transmission
costs were achieved.


  
 
 



Before liberation Bangladesh, known as East Pakistan,
was basically an agricultural area of the Indo-Pak sub-
continental. It was the backdrop and an important market
for the remaining industrially developed parts like-Bombay,
Calcutta, and Pakistan. After liberation, extensive plans for
industrialization were undertaken by the Bangladesh
government. As a result industries in the textile,
engineering and food, and allied sectors have rapidly been
established.
In the Chemical sector also a large number of
industries like tanneries & dying and printing, soap etc.
have been set up.

The Government has undertaken programs for the


implementation of 79 industrial estates and 4 export
processing zones (EPZ). Of these, 60 Industrial Estates and

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2 (two) EPZs have already been implemented. Private
initiatives have supported a number of industrial estate
endeavors as well. The major exporting sectors of the
country are now textiles, garments, jute and jute products,
leather and leather products, tea, etc. The contribution of
the industrial sector to the GDP is about 13.03%.

The major industries in Bangladesh are cotton textiles,


jute, garments, tea processing, paper newsprint, cement,
chemical fertilizer, light engineering, sugar, etc. Different
types of industries of Bangladesh are described in detail in
appendix 2.







  

  
/


It is the widespread use of electrically-powered


machinery in Bangladesh which, among other things,

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played a major role in the growing recourse to mass
production technology. In fact, the use of electric motors
expanded from slightly less than 5 percent of mechanical
horsepower in Bangladesh manufacturing in 1985 to more
than 25 percent of the total just two years later. By 1989 the
figure was 55 percent, by 1995 it was over 82 percent, and
by 2001 it was very nearly 90 percent (see Table).
Table! Electric Motor Use in Relation to Total
Mechanical Horsepower in Bangladesh Manufacturing,
Selected Years 1985-2001

' ( )  


 ( )
c 9,811 475
c 13,033 1,517
c 18,062 4,582
cc 21,565 8,392
cΠ28,397 15,612
c 34,359 25,092
c 41,122 33,844
c 49,893 44,827
3 c 108,362 92,821

But even these figures, by themselves, tell only a part


of the story. Throughout industry, electricity also made
possible an immense assortment of automatic precision
instruments for the monitoring, control and inspection of
industrial operations, including the increasingly
complicated operations of electric power generating plants
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themselves. Even more generally, it was electrical
automatic controls that made possible the epochal transition
from small scale batch production to continuous processing
in the refining of petroleum products and the paper
industry, technological accomplishments that were to
achieve an importance comparable to the mass production
industries elsewhere in the economy. Eventually, then, the
continuous processing technologies to which electricity had
given birth were to become standard technologies in a large
number of industries committed to bulk materials
manufacturing.
However, beginning in the late 1960s to the 1990s, the
attachment of electronic digital computers to machine tools
made it possible to employ automated, reprogrammable
manufacturing technologies in the production of small
batches of nonstandardized products -i.e., products of
various design features. These features increased the
consumption electricity in industries by huge amounts,
compared to residential and commercial use.


Electricity's rapid rise to dominance as a source of


industrial power, then, was based on a number of
compelling advantages. Electricity could be "packaged" in
almost any size. Thus, "fractionalized" electric power
sources of precisely the right capacity for each industrial
application meant large energy and capital savings.
Recourse to large steam engines that generated large
amounts of power in situations that required only small or

3 


intermittent doses could now be avoided. Electricity offered
opportunities for "fine tuning" the supply of power to
specific needs. Furthermore, the electric motor reduced the
requirements for floor space and offered much greater
freedom in the organization and layout of the workplace.
Electric motors meant that the flow of work in factories did
not have to accommodate a clumsy system of overhead
belting and shafting in order to transmit power, very
wastefully, from a central power source to a large number
of machines.
The effects of these industrial applications of electric
power on measured productivity growth for the Bangladesh
garments manufacturing sector in the aggregate are
observed from the late 1990s. The restructuring of a
factory, including the flow of work on the factory floor and
the larger issues of social reorganization, altered work
arrangements, and new patterns of specialization on the part
of both workers and management, resulted in greater
amount of production and revenues in the garments sector.
The lengthy period of time required for the
development of complementary technologies and for the
other adjustments that were necessary to realize the full
potential of electric power has characterized most major
technological innovations in this century. This tendency can
be observed not only in electricity-using products but also
in the electricity-producing sector itself. Improvements in
the production of electric power, like the industrial
applications, have relied on a large number of incremental

3c


improvements whose development and adoption required
decades. The cumulative effect of these numerous small
improvements, nevertheless, was so great that the long-term
rate of growth of total factor productivity in this sector was
higher than in any other sector of the Bangladesh economy.

  

 # 

 
 
 
 -




As stated before the major amount of electricity is
consumed in the industry sector which is about 41.23% of
the total electricity produced. If the development scenario
in the industry sector is observed thoroughly it could be
perceived that during the past several years there has been a
significant growth in electricity consumption with
increasing development in this sector. According to the
CIA Fact Book this could be illustrated in the following
two tables!

 

 % 0"   
'  
 # 

2003 14,260,000,000 72 2001
2004 14,270,000,000 71 0.07 % 2001
2005 15,300,000,000 69 7.37 % 2002

33


2006 16,200,000,000 67 5.88 % 2003
2007 16,820,000,000 69 3.83 % 2004
2008 21,370,000,000 65 27.05 % 2006
2009 21,370,000,000 65 0.00 % 2006
2010 21,380,000,000 66 0.05 % 2007

This entry consists of total electricity generated


annually plus imports and minus exports, expressed in
kilowatt-hours. The discrepancy between the amount of
electricity generated and/or imported and the amount
consumed and/or exported is accounted for as loss in
transmission and distribution.


'  
 0"   
 
 # 


2003 1.80 % 110 2002
2004 1.90 % 111 5.56 % 2003
2005 6.50 % 55 242.11 % 2004
2006 6.70 % 55 3.08 % 2005
2007 7.20 % 46 7.46 % 2006
2008 8.40 % 35 16.67 % 2007
2009 9.70 % 31 17.86 % 2008
2010 10.90 % 17 14.49 % 2009

3Œ


This entry gives the annual percentage increase in
industrial production (includes manufacturing, mining, and
construction).

 ! 
 

  




It has been observed that with increased industrial
development there is a major increase in consumption of
electricity, but as Bangladesh's energy infrastructure is still
quite small, insufficient and poorly managed there is a
shortage of adequate electricity supply in the industrial
sector. The per capita energy consumption in Bangladesh is
one of the lowest (136 kWH) in the world. Noncommercial
energy sources, such as wood, animal wastes, and crop
residues, are estimated to account for over half of the
country's energy consumption. Bangladesh has small
reserves of oil and coal, but very large natural gas
resources. Commercial energy consumption is mostly
natural gas (around 66%), followed by oil, hydropower and
coal.

In generating and distributing electricity, the failure to


adequately manage the load leads to extensive load
shedding which results in severe disruption in the industrial

3Î


production and other economic activities. A recent survey
reveals that power outages result in a loss of industrial
output worth $1 billion a year which reduces the GDP
growth by about half a percentage point in Bangladesh. A
major hurdle in efficiently delivering power is caused by
the inefficient distribution system. It is estimated that the
total transmission and distribution losses in Bangladesh
amount to one-third of the total generation, the value of
which is equal to US $247 million per year.


 # 
 


A country¶s infrastructure for electricity supply and


consumption has an important bearing on its ability to
develop and thus to achieve economic affluence in the
contemporary economic context. It has been proved beyond
doubt that in the context of Bangladesh with increased
industrial development there will be increased electricity
consumption. In this regard efforts must be made to
encourage government and industry to increase investment
in electricity supply and to overcome the constraints on
electricity consumption for proactively coping with the
increased demand and consumption of electricity that
accompanies Industrial Development.

c 0 
 

3*


In order to sustain a healthy economic growth and
steady industrial development growth rate, the government
must ensure the supply of uninterrupted electricity to the
industrial sector. In this regard Reform is required not only
for performance improvement but also to match with the
outside changes in both national and global development.

To address the issues in electricity generation,


distribution and transmission in the industrial sector the
following recommendations can be made!

0 
c
Energy efficiency is one of the key elements for
sustainable energy development. Energy conservation
measures are technically feasible, financially viable and
economically profitable. Institutional capabilities of Energy
Audit Cell (EAC) should be activated and strengthened to
enhance energy conservation activities.

0 
3
Alternate sources of renewable energy for electricity
generation should be initiated, such as solar energy, wind
energy, etc. Details in this regard are described in
Appendix 3.

0 
Œ

3A


Utilities like BPDB are facing enormous challenge to
meet up the electricity demand of the peak hours. Mass
introduction of energy efficient devices will decrease this
burden to a great extent.

0 
Î
End-user participation in the electricity supply
industry should be strengthened and an environment for a
regular dialogue between the end-users and utilities should
be established.

0 

Unplanned interruptions of electricity supply in the
industrial sector should be converted to planned outages
where possible.

0 

An Interruptible Electricity Tariff to industries should
be introduced that can absorb planned interruptions without
serious disturbance to their production processes.

0 

A well-planned load management scheme, particularly
to reduce the system peak demand should be introduced.

0 


3


Improvement of power system performance should be
made by making appropriate generation and transmission
capacity additions, and distribution system improvements.

0 

Detailed technical studies in specific areas identified
for performance improvement in the generation,
transmission distribution, and supply of electricity should
be commissioned. These studies can include activities, such
as!

c Examining ways to improve reliability of


transmission and distribution network.

3 Analyzing the present electricity tariff structure and


designing an interruptible electricity tariff for industrial and
commercial consumers; and

ΠDeveloping institutional and legislative frameworks
required for aggressive implementation of energy efficiency
programs in the electricity sector.

,* #

,Π0!   
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.1&0&0*#


Ahmad, Q.K., Ahmed N., and Rasheed, K.B.S., 1994,
Ñ  
  
    
Academic Publishers, Dhaka, Bangladesh

Bangladesh Ministry of Energy and Mineral Resources,


1996, 
          
Dhaka.

Bergey, M.L.S.,            


Bergey Wind power, for Wind Energy Applications and
Training Symposium, Boulder CO, March 20,1995.

ESCAP, 1996,     Economic and Social


Commission for Asia Pacific, Population Division.

Flavin, C. and Lens- N., 1994,        


  Ñ
  Worldwatch Environmental !  
Series, WW Norton and Co, "#$

Foley, Gerald, 1996,  
  !    Ñ
!   
 %World Bank TechNet Paper
Number &'(Energy Series. World Bank, Washington DC.

Ibrm personal communication Nov 20, 1996.


Jargstorf, B e n j w 1996, %  )  *   + 
%   - ,   +-presented at Wind
Energy Workshop at SPARRSO, 28 October 1996, Dhaka
Bangladesh.

Khan, S.D., 1996, comments made at the First Seminar on


Wind Energy Study, ./October, SPARRSO Auditorium
Dhaka, Bangladesh.
Bangladesh Power Development Board.

Œc


.10, '

PDB, 1995, ! Ñ  011&2011(Bangladesh Power
Development Board, Government of Bangladesh.

Rahman, Md. Fazler, 1996, ³Prospects of Wind Energy in


Bangladesh´, Bangladesh Atomic Energy Commission.

REB, 1994, ! Ñ  011&2011(Rural Electrification


Board, Bangladesh.

   # 3  1994, Bangladesh


Bureau of Statistics, 15th edition.

Task Forces, 1991,   


    
+ 011'$Vol 14. University Press LTD, Dhaka.

US Agency for International Development, 1988, Ñ  


 2!      Washington DC.

World Bank, 1992, %


 Ñ  011.

    
 Oxford University Press,
"#"#

Yakub Nerun, 1995, Prospects for Renewable Energy
Sources,   4 
April 7, 1995, magazine
Section.

Œ3


.1,0'
 
 -/The processof industrialization of a
country, and the developments in this sector. 
#
 / The instantaneous power output at any given time
normally measured in kilowatts (KW) or megawatts (MW), of a
power plant.


!
 ! Electrical lines, cables, transformers and
switches used to distribute electricity over short distances from
substations to the customers generally at voltages lower than 69
KV.
 / The amount of electricity produced or used over a period
a time usually measures in KWh, MWh or GWh.
./ The amount of electricity required by a customer or group
of customers.
. 
! Occurs when power authorities manage excess
demand by eliminating powers to regions or neighborhoods on a
rotating basis.

/ The instantaneous rate at which electrical energy is


produced, transmitted or consumed, typically measured in watts
(W), kilowatts (KW), megawatts (MW).
  / Technical system loss refers to the energy that is lost
as heat in electrical equipment and along transmission lines due to
resistance as electricity is transferred from one location to another.
 


! Electrical facilities used to transmit electricity
over long distances, usually at voltages greater than 69 KV
2/ Electromotive force or potential difference expressed in
volts (V).

ŒŒ


* 3


u 

Acknowledgement · 7 Features · 29
agrarian economy · 11 fuels · 30

 [

Bangladesh Power Development garments manufacturing sector · 39


Board · 21 GDP · 45
BPDB · 21 generation · 21
GNP · 29
- Grid · 23

capacity · 21 ^
consumption · 6
History · 14
î History of Electrification in
Bangladesh · 16
DESA · 21 History of Electrification in
Development · 12 Industries · 14
distribution · 21
Ê
9
industrial development · 13
economic growth · 12 industrial societies · 29
Electric power · 14 Industries in Bangladesh · 33
Electricity · 11 inefficient distribution system · 45
Electricity and Industrial Power ·
36 V
electricity consumption · 13, 28
Electricity Demand and Supply · load · 45
19 load curve · 27
energy-intensive · 29 load shedding · 45

ŒÎ


  Rural Power Company · 21

Micro hydro project · 52 º

M socio- economic development · 12


Solar Energy · 51
outages · 47 Sugar Co-generation · 52
sustainable energy development ·
ü 46
System loss · 55
per capita energy consumption · 44
power generation · 16
Power Grid Company of ©
Bangladesh (PGCB) · 21 transmission · 21
Preface · 6 Transmission line · 55
Primary Electricity Grid system ·
23 D
Problems in Electricity Production
· 44 voltage · 16

Ñ 

renewable energy · 46 WAPDA · 17


Rural Electrification Board · 21 Wind Energy · 51

Œ*



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