If you ask anyone in Bangladesh's apparel industry what the sector needs most to survive and thrive in the years ahead, you will hear the same answer, almost without exception: energy security.
The urgency is not hypothetical. A recent survey of 134 knitwear factories found that 55% had seen buyers cancel or cut orders because of gas and power shortages since late August. Across the sector, energy shortfalls are cutting output by as much as 25–30%, and the diesel needed to keep backup generators running now comes at a heavy premium.
Let me be fair to those in charge. The government has been doing its best through careful rationing and prioritisation of available energy to keep the apparel industry, and industry at large, running without interruption. Entrepreneurs, for their part, are managing somehow. But managing somehow is not the same as operating smoothly. Flawless operations, the kind global buyers expect when they place their orders, require a steady supply of energy that is simply not available at the moment.
So, what is the solution? The permanent answer is, of course, a long-term one. According to media reports, there has been little meaningful effort to explore domestic gas reserves over the past 17 years. Even if exploration began today, it would take a minimum of 10 to 20 years for that gas to reach our factories. We cannot ask the country's largest formal employer to wait two decades.
Nor are we alone. The energy crisis is a global one, driven by turmoil in the Middle East, and the world's more forward-thinking economies are not waiting either. One quick solution they are turning to is the battery energy storage system, or BESS.
What remains missing is access to finance. Few manufacturers, battered by falling orders and rising costs, can commit nearly a million dollars upfront. If the government were to extend financing directly to manufacturers — interest-free or at a low rate — installation could be completed within two to three months. No other measure on the table offers relief this quickly.
The case for BESS has never been stronger. An all-inclusive turnkey system now costs around $135–165 per kWh globally, down from more than $380 per kWh as recently as 2022. A typical 5 MWh industrial system, suitable for a large apparel factory in Bangladesh, costs roughly $900,000, all-inclusive.
The technology has matured, too. Lithium iron phosphate (LFP) chemistry now dominates industrial storage, valued for its safety and long cycle life. A system typically lasts 10–15 years, or 6,000 to more than 9,000 cycles. With periodic augmentation, it can continue delivering power for 15–20 years.
I do not speak merely as an observer. At 4A Yarn Dyeing, we have never relied on a single energy source, and our rooftop solar and backup systems have helped us absorb rising costs. Even so, more expensive diesel has increased 4A's production costs by 2–3%. If a factory with multiple backup systems feels the squeeze, one can only imagine the strain on those without them.
Here, the government deserves credit for a far-sighted move. The FY2026-27 budget has removed import duties, VAT and other taxes on BESS and solar equipment until 2031 and set the corporate tax rate at 0% for solar power generation until 2035. With diesel costly and outages frequent, these incentives have made the payback period shorter and the post-tax returns on BESS more attractive than they were even a year ago.
What remains missing is access to finance. Few manufacturers, battered by falling orders and rising costs, can commit nearly a million dollars upfront. If the government were to offer financing directly to manufacturers, interest-free or at a low rate, installation could be completed within two to three months. No other measure on the table offers relief this quickly.
We are well aware that the economy is currently facing a cash crunch. Nevertheless, since assuming office, the government has shown a clear willingness to support industry, and rightly so, because the only way to strengthen the economy is to help its industries grow.
For example, Bangladesh Bank has rolled out a Tk60,000 crore stimulus package specifically aimed at reviving closed, sick and underutilised industrial and service-sector enterprises. It is a well-intentioned initiative. If even a portion of that fund were made available for BESS installation at existing, operational factories, the impact would be immediate.
Reviving closed factories carries considerable risk, and the benefits will take time to materialise. By contrast, existing factories struggling to survive today could not only stay afloat by overcoming the energy crisis but also double or even triple their capacity in the years ahead.
This is not an argument against long-term energy planning. Domestic exploration must begin in earnest, and renewable energy capacity must continue to grow. But the long term will mean little if our factories cannot survive the short term.
Bangladesh's apparel industry has weathered far greater storms over four decades, and each time, it has come back stronger. With the right financial support at the right moment, it can do so again and, in doing so, give the wider economy the strength it needs to grow.
Abdullah Hil Nakib is the Deputy Managing Director of Team Group.
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.