Bangladesh stands at a decisive moment in its energy transition. In April 2026, the government announced an ambitious target of installing 10,000 megawatts (MW) of solar power by 2030 to address mounting energy pressures.
This is a significant opportunity to strengthen energy security, reduce dependence on imported fuels and improve long-term electricity affordability. Bangladesh must now move beyond policy announcements and focus on implementation, investment and institutional reform.
The country's renewable energy journey has been marked by missed opportunities.
The Renewable Energy Policy 2008 targeted renewable electricity shares of 5% by 2015 and 10% by 2020, but neither target was achieved. Solar photovoltaic (PV) now accounts for the majority of Bangladesh's renewable energy capacity. Falling global solar costs offer a fresh opportunity, but translating this potential into installed capacity requires consistent policies and decisive execution.
Policy certainty and longer-term incentives
Policy certainty is the first requirement. The government's reported reduction of import duties and taxes on renewable energy equipment to 1% signals a welcome commitment to accelerating deployment.
However, the reported six-month duration of these incentives is too short to deliver a significant market transformation. Solar projects require time for planning, financing, procurement and installation. Bangladesh should consider extending targeted fiscal incentives for three to four years to give investors and consumers the confidence to commit capital.
The benefits should also reach domestic suppliers and small consumers. Import-duty reductions alone may not lower retail prices sufficiently if locally sold equipment remains subject to taxes and VAT. Appropriate exemptions for eligible renewable energy equipment sold by local businesses could reduce costs and encourage small commercial, industrial and household rooftop installations.
In densely populated Bangladesh, acquiring large, contiguous areas for solar parks is exceptionally difficult. Agricultural livelihoods, competing land uses, fragmented ownership and the high opportunity cost of land constrain conventional utility-scale development. The government must therefore move beyond a project-by-project approach and develop dedicated renewable energy hubs, modelled on the country's economic zones. These hubs should provide suitable land, planned transmission connections, power evacuation facilities and streamlined approvals.
Lessons from Vietnam's solar expansion
Vietnam offers a compelling example of how sustained policy incentives can transform a solar market. In 2017, the country introduced a feed-in tariff (FiT) programme to encourage solar investment. By June 2018, installed solar capacity was less than 100 MW.
However, as investors responded to the first FiT deadline, capacity surged to approximately 4,460 MW. Under the second FiT deadline, Vietnam recorded another remarkable expansion, reaching around 16,500 MW of solar capacity by the end of 2020.
This dramatic growth demonstrates how clear incentives, credible deadlines and sustained policy support can unlock investment at an extraordinary pace. Bangladesh need not replicate Vietnam's tariff structure, but it should learn from its experience: incentives and support mechanisms must remain available long enough for projects to be developed, financed and commissioned.
Restoring investor confidence
Recent solar tenders have reportedly struggled to attract competitive participation amid concerns about payment security and the removal of payment guarantees. This is a question of policy credibility and risk allocation.
Standardised, bankable power purchase agreements (PPAs), transparent procurement and reliable payment mechanisms are essential to attracting domestic and international investment. Without predictable contractual arrangements, even technically attractive projects will struggle to secure financing.
Time-of-use provisions and energy-settlement rules must reflect the technical and financial realities of solar generation. Poorly designed charges could undermine project viability, while energy balancing that ignores the timing of generation and consumption could create operational challenges for utilities. A technically sound and financially sustainable framework is essential to the policy's success.
In densely populated Bangladesh, acquiring large, contiguous areas for solar parks is exceptionally difficult. Agricultural livelihoods, competing land uses, fragmented ownership and the high opportunity cost of land constrain conventional utility-scale development. The government must therefore move beyond a project-by-project approach and develop dedicated renewable energy hubs, modelled on the country's economic zones. These hubs should provide suitable land, planned transmission connections, power evacuation facilities and streamlined approvals.
By developing shared infrastructure in advance, the government could reduce project development costs, improve investor confidence and attract multiple private developers to designated locations. Suitable public and non-agricultural land, including appropriate char areas and reclaimed zones, should be assessed carefully. Solar installations alongside highways, railways and industrial facilities could further expand opportunities without placing additional pressure on productive farmland.
If Bangladesh can successfully establish even a few well-planned solar hubs, they could be game changers for the renewable energy sector. However, land preparation, infrastructure development and transmission expansion will take time. Solar hubs must therefore be recognised as a medium-term strategic solution, not an immediate remedy for the country's energy challenges. In the short term, rooftop solar, industrial installations and other distributed systems offer a faster route to additional capacity.
Exploring floating solar
Suitable reservoirs and water bodies, including parts of Kaptai Lake where technically and environmentally appropriate, warrant feasibility studies. Environmental assessments must protect aquatic ecosystems, water uses and local livelihoods. With proper safeguards, floating solar could complement land-based development.
Upgrading the grid
Adding solar capacity without strengthening transmission and distribution networks risks creating stranded assets and wasting investment. Bangladesh needs upgraded transmission infrastructure, improved forecasting and dispatch, modern grid-management technologies and carefully planned energy storage.
Appropriate ramp-rate requirements and storage obligations for larger projects can help manage variability, provided they are technically justified and do not impose unnecessary costs. Grid investment should be planned alongside generation, particularly in southern and coastal regions where renewable potential remains constrained by inadequate transmission infrastructure.
Mobilising finance
Delivering 10,000 MW could require an estimated $5–6 billion, depending on project costs and system requirements. Dedicated green financing windows through Bangladesh Bank, blended finance, access to international climate funds and affordable long-term lending could improve project viability. Transparent procurement and robust public-private partnerships will be essential to mobilising investment at the necessary scale.
Building skills
Universities should update engineering curricula to include solar PV design, battery storage and grid integration. Technical and vocational institutes should introduce industry-aligned certification programmes for installers, engineering, procurement and construction technicians, and operations and maintenance personnel.
Partnerships with experienced international firms should incorporate practical training and structured knowledge transfer. Without these capabilities, shortages of qualified professionals could slow project development even when finance and equipment are available.
Unlocking rooftop solar
Commercial and industrial rooftops can generate electricity without competing for scarce land, while household systems can broaden participation in the energy transition. Yet cumbersome approvals and delays in net-metering arrangements continue to discourage adoption.
The government should simplify procedures, establish clear approval timelines and ensure that electricity settlement rules provide fair and predictable returns. A coordinated national rooftop programme could unlock substantial capacity while larger infrastructure projects are being developed.
A phased strategy for delivery
Bangladesh's 10,000 MW solar ambition requires a phased but decisive strategy. Immediate priorities should include predictable fiscal incentives, bankable PPAs, streamlined rooftop approvals and improvements to existing grid infrastructure. Medium-term priorities should include renewable energy hubs, dedicated power evacuation facilities, storage deployment and workforce development.
A three-to-four-year window of targeted support—including appropriate duty exemptions for renewable energy equipment and battery storage, alongside carefully designed tax incentives—could accelerate deployment. These measures should be transparent, time-bound and linked to measurable outcomes.
Shahriar Ahmed Chowdhury is director of the Centre for Energy Research at United International University. Email: [email protected]
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of The Business Standard.