Combining Private and Public Resources: Captive Power Plants and Electricity Sector Development in Bangladesh

Sakib Amin, Tooraj Jamasb, Manuel Llorca, Laura Marsiliani, Thomas I. Renström

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Developing economies need to efficiently utilize both public and private resources to develop their energy sectors. The opportunity cost of failing to do so is high. This article uses a Dynamic Stochastic General Equilibrium (DSGE) approach to assess the integration of the Captive Power Plants (CPPs) in the power sector of Bangladesh. We find that if Bangladesh shut down the CPPs, the long-run industrial output and GDP would fall by 1.5% and 1.2%, respectively. The Impulse Response Functions (IRFs) show that the Bangladesh economy would be more vulnerable to oil price shocks without CPPs. In order to minimize distortion in the energy markets, the government could instead consider alternative reforms such as promoting the use of efficient production technologies or the replacement of fossil fuels with renewable energy sources.
Original languageEnglish
JournalEmerging Markets Finance & Trade
Number of pages22
ISSN1540-496X
DOIs
Publication statusPublished - 18 Dec 2019

Bibliographical note

Epub ahead of print. Published online: 18. December 2019

Keywords

  • Captive power plants
  • Electricity generation
  • DSGE model
  • Natural gas
  • Bangladesh

Cite this

@article{7cab6e335b694be0a7de3e324dcfcd30,
title = "Combining Private and Public Resources: Captive Power Plants and Electricity Sector Development in Bangladesh",
abstract = "Developing economies need to efficiently utilize both public and private resources to develop their energy sectors. The opportunity cost of failing to do so is high. This article uses a Dynamic Stochastic General Equilibrium (DSGE) approach to assess the integration of the Captive Power Plants (CPPs) in the power sector of Bangladesh. We find that if Bangladesh shut down the CPPs, the long-run industrial output and GDP would fall by 1.5{\%} and 1.2{\%}, respectively. The Impulse Response Functions (IRFs) show that the Bangladesh economy would be more vulnerable to oil price shocks without CPPs. In order to minimize distortion in the energy markets, the government could instead consider alternative reforms such as promoting the use of efficient production technologies or the replacement of fossil fuels with renewable energy sources.",
keywords = "Captive power plants, Electricity generation, DSGE model, Natural gas, Bangladesh, Captive power plants, Electricity generation, DSGE model, Natural gas, Bangladesh",
author = "Sakib Amin and Tooraj Jamasb and Manuel Llorca and Laura Marsiliani and Renstr{\"o}m, {Thomas I.}",
note = "Epub ahead of print. Published online: 18. December 2019",
year = "2019",
month = "12",
day = "18",
doi = "10.1080/1540496X.2019.1703107",
language = "English",
journal = "Emerging Markets Finance & Trade",
issn = "1540-496X",
publisher = "Routledge",

}

Combining Private and Public Resources : Captive Power Plants and Electricity Sector Development in Bangladesh. / Amin, Sakib; Jamasb, Tooraj ; Llorca, Manuel ; Marsiliani, Laura; Renström, Thomas I.

In: Emerging Markets Finance & Trade, 18.12.2019.

Research output: Contribution to journalJournal articleResearchpeer-review

TY - JOUR

T1 - Combining Private and Public Resources

T2 - Captive Power Plants and Electricity Sector Development in Bangladesh

AU - Amin, Sakib

AU - Jamasb, Tooraj

AU - Llorca, Manuel

AU - Marsiliani, Laura

AU - Renström, Thomas I.

N1 - Epub ahead of print. Published online: 18. December 2019

PY - 2019/12/18

Y1 - 2019/12/18

N2 - Developing economies need to efficiently utilize both public and private resources to develop their energy sectors. The opportunity cost of failing to do so is high. This article uses a Dynamic Stochastic General Equilibrium (DSGE) approach to assess the integration of the Captive Power Plants (CPPs) in the power sector of Bangladesh. We find that if Bangladesh shut down the CPPs, the long-run industrial output and GDP would fall by 1.5% and 1.2%, respectively. The Impulse Response Functions (IRFs) show that the Bangladesh economy would be more vulnerable to oil price shocks without CPPs. In order to minimize distortion in the energy markets, the government could instead consider alternative reforms such as promoting the use of efficient production technologies or the replacement of fossil fuels with renewable energy sources.

AB - Developing economies need to efficiently utilize both public and private resources to develop their energy sectors. The opportunity cost of failing to do so is high. This article uses a Dynamic Stochastic General Equilibrium (DSGE) approach to assess the integration of the Captive Power Plants (CPPs) in the power sector of Bangladesh. We find that if Bangladesh shut down the CPPs, the long-run industrial output and GDP would fall by 1.5% and 1.2%, respectively. The Impulse Response Functions (IRFs) show that the Bangladesh economy would be more vulnerable to oil price shocks without CPPs. In order to minimize distortion in the energy markets, the government could instead consider alternative reforms such as promoting the use of efficient production technologies or the replacement of fossil fuels with renewable energy sources.

KW - Captive power plants

KW - Electricity generation

KW - DSGE model

KW - Natural gas

KW - Bangladesh

KW - Captive power plants

KW - Electricity generation

KW - DSGE model

KW - Natural gas

KW - Bangladesh

UR - https://sfx-45cbs.hosted.exlibrisgroup.com/45cbs?url_ver=Z39.88-2004&url_ctx_fmt=info:ofi/fmt:kev:mtx:ctx&ctx_enc=info:ofi/enc:UTF-8&ctx_ver=Z39.88-2004&rfr_id=info:sid/sfxit.com:azlist&sfx.ignore_date_threshold=1&rft.object_id=111035580863018&rft.object_portfolio_id=&svc.holdings=yes&svc.fulltext=yes

U2 - 10.1080/1540496X.2019.1703107

DO - 10.1080/1540496X.2019.1703107

M3 - Journal article

JO - Emerging Markets Finance & Trade

JF - Emerging Markets Finance & Trade

SN - 1540-496X

ER -