Since 2010, Bangladesh has made remarkable strides in the power and energy sector. Some mention-worthy points are 100% electrification, increased power generation capacity from 5,800 MW to 22,800 MW and a rise in per capita electricity usage from 220 kWh to 560 kWh per year.

In 2017, Bangladesh introduced large-scale solar projects tied to the national grid. The first large-scale windmill will start delivering power by 2024. Bangladesh will enter the nuclear power era in 2025. Interestingly, Bangladesh is in a complex situation. On the one hand, the unchecked use of fossil fuels is causing climate catastrophes. On the other hand, the energy crisis is under a very real threat. Energy crisis threatens economic security.

In Bangladesh, the threat is twofold. The country’s domestic fossil fuel reserves may be depleting. Meanwhile, it is one of the most climate-vulnerable countries. An energy shortage could cripple Bangladesh’s growth momentum. Meanwhile, climate disasters threaten to reverse its hard-earned economic gains. With this reality, it is high time for Bangladesh to expand the application of renewable energy across sectors.

Around 34% of Bangladesh’s electricity generation capacity is from imported liquid fuels. The cost of power from this fuel is about BDT 18 per kWh, which is about USD 0.18. This power is being sold at a highly subsidised rate of BDT 6.7 per unit, which is about USD 0.7. Many of these plants are running as regular ‘base load’ plants, even though they were meant to be used during peak times. In 2022, Bangladesh’s power sector alone received USD 3 billion worth of subsidies; the overall energy sector got USD 7 billion worth of subsidies. Energy subsidies were about 6% of Bangladesh’s gross domestic product. All sources of electricity in Bangladesh enjoy government subsidies.[1]

Competitive renewables

Bangladesh has a tariff of USD 0.10 per kWh of electricity from new solar projects. The tariff for the first onshore windmill will be USD 0.12. Global prices of these renewables are gradually declining, as technologies improve, and the industry goes through a learning curve. These renewable energy technologies are costlier than Bangladesh’s local hydro and gas-based power. But they are more affordable than the other fuels from the country’s energy mix.

For Bangladesh, imported gas is projected to be costlier than domestic gas. An advantage of renewable-based electricity is that the bulk of the costs is incurred in the installation phase. There is, of course, no fuel cost. This makes the cost of renewable energy predictable throughout the project’s lifetime, which is around 20 years. On the other hand, the cost of fossil fuel-based electricity is highly volatile.

The money spent on fossil fuel plants could be more profitably invested in renewables in Bangladesh. Liquid fuels are the costliest in the mix. Many liquid fuel-based power plants are running at baseload.[2] These can be the first to be replaced with solar and wind power. Bangladesh will soon phase out diesel power plants. Only heavy fuel oil (HFO) will remain. HFO is rather costly. If it is to be substituted with solar PV in the daytime, a big chunk of fuel will be saved. Therefore, even though the HFO plants will remain, they will be used only in the night time (or at low solar radiation hours).

Consequently, the fuel costs of HFO will be replaced by the tariff rate of solar power. Meanwhile, a big amount of fuel will be saved. There can be more efficient use of solar PV and wind by adopting cost-effective energy storage systems, like hydrogen as an energy carrier. Other fossil fuels, like coal and gas, could also be partly replaced. Solar PV and wind can also take night load with battery storage. This will be possible as soon as battery storage becomes cheaper than fossil fuel plants. At present, a strategy of replacing liquid fuels during the day can save Bangladesh approximately USD 322 million annually. 

Low-hanging fruit

The energy infrastructure in Bangladesh will see many changes in the future. This will bring opportunities for renewable electricity. For example, there will be a great increase in the number of electric vehicles, and the transport sector will undergo electrification. There is already a steady increase in electric vehicle adoption.  Bangladesh is already formulating guidelines for EV charging stations. The batteries in EVs will act as a stock of storage for renewables. These EV batteries can collectively form a vehicle to grid (V2G) system.

The UN’s Sustainable Development Goal agenda, which Bangladesh is signed on to, stipulates that everyone should have access to clean cooking fuels by 2030. According to World Bank data for 2023, clean cooking has so far reached only a quarter of Bangladeshis. In the coming decade, clean cooking, such as electric cooking, will proliferate in the country. Already in Bangladesh, electric cooking technologies including electric stoves, induction cookers and rice cookers are becoming common, in urban as well as rural areas. This will increase the demand for electricity in the daytime.

The rising demand for electricity can be met through renewable sources like solar and wind. There is potential for community-based rooftop solar systems by utilising roofs of factories, silos, cyclone shelters, public schools, airports and government infrastructure. This is low-hanging fruit. In Bangladesh, there are 498 railway stations and over 3,600 km of rail lines. Solar PV can be installed on rooftops of stations and on the edges of the rail lines. All this ‘rooftop electricity’ can be connected to the grid through Bangladesh’s iconic Net Metering Policy.[3] This will reduce demand for grid electricity from the prosumers, and thus reduce demand for fossil fuels in the power sector.

Solar-based irrigation systems are another crucial source of renewables for Bangladesh. At present, Bangladesh has 1.3 million diesel-based irrigation pumps. These can be replaced by solar PV pumps, thus reducing the import of diesel. Bangladesh is a riverine country, and there are many water bodies (like wetlands and canals), where there can be floating solar PV plants. A countrywide feasibility study should be conducted to determine the potential for floating solar systems.

Bangladesh should conduct a countrywide feasibility study to determine the potential for floating solar systems.

Finance policies

The price point for renewable electricity is getting ever-more competitive. Given this trend, renewable technologies may not need subsidies. But it will surely need instant policy support, like a waiver on all duties/taxes on the import of renewable energy equipment. At present, Bangladesh imposes 26%, 38% and 58% import duties on solar panels, inverters and solar DC cables respectively. If these are waived, the solar rooftop and solar irrigation sectors will flourish.

Since renewable electric power plants do not have fuel costs, any headache of forex reserves owing to fossil fuel imports will be gone for at least the next 20 years. Meanwhile, Bangladesh should use smart financial instruments to create a level playing field for renewables.

The country’s central bank provides a revolving ‘green fund,’ which commercial banks are meant to channel in order to finance green projects like renewable electricity. However, the banks are reluctant to deploy this fund because it has a lower rate than the banks’ own offered rates. As such, the central bank needs to regularly monitor the situation to ensure these funds are channelled to renewable energy projects.

Shaking technologies

The world is advancing towards renewable energy. Since 2013, more renewable-based power plants compared to fossil fuel or nuclear-based power plants have been set up. In 2021, globally, renewable-based power plants made up 84% of all newly constructed power plants. The future trend is also in favour of renewables.

In 2022, Bangladesh drafted its holistic energy strategy, the Integrated Energy and Power Master Plan. Before full adoption, this should ensure a focus beyond fossil fuel-based energy. Shifts in geopolitics and technology mean disruptions like artificial intelligence will change business-as-usual. With the adoption of smart systems, energy use patterns will change drastically in the next decade. Bangladesh should factor this scenario into its new energy policies.

Changes will be very fast-moving. Hence, Bangladesh should focus on the short- and medium-term future while market forecasting because long-term predictions are increasingly unrealistic. Policies should highlight the needs of the near future, and outline a strategy to fulfil the energy needs of Bangladesh. They should not make lofty commitments to industries. Policymakers need to understand technologies, which evolve unpredictably.

Bangladesh should avoid using energy technologies that may become stranded assets in the long run and burden the country economically, particularly in terms of subsidies. Stranded assets can also lead to loss of production owing to disruptions in fuel supply. There should also be plans for alternative/back-up options, in case of any energy security threat to the country. Excessive dependence on fossil fuels only serves to exacerbate import dependence, impeding energy security.

Words for sceptics

Bangladesh’s neighbour, India, set a target in 2010 of 20 GW of solar power by 2022. In 2015, it ambitiously revised it to 100 GW. And then it set a goal of achieving 500 GW from non-fossil fuel sources by 2030, which will be 50% of its energy needs. Vietnam has installed more than 8,000 MW of rooftop solar in just a year by giving incentives such as feed-in-tariffs. Bangladesh also has a climate-focused energy agenda, and has declared that 40% of its energy will come from renewables by 2041.

Amid all this, there are the renewable energy sceptics, who make their case based on the past experience of renewables vs fossil fuels. They do not consider the strides that renewable technologies and markets have made. When Bangladesh formulated its past energy policies, the target for renewables was set at a modest level of 10%. The target failed because renewables did not reach ‘grid parity’ and were supposedly not competitive with fossil fuels.

The scene has changed since then. The cost of renewables has decreased, there is market demand, local innovations are being fostered and the cost of fossil fuels has increased. Now, continued investment in fossil fuel-based power plants will result in stranded assets. Bangladesh needs a ‘solar and wind energy roadmap,’ as these two sources are suitable for the country. This will be in conjunction with Bangladesh’s all-encapsulating climate policy, the Mujib Climate Prosperity Plan. For Bangladesh, the time for renewable energy is now!


[1] Only the power plants running on local gas and hydroelectricity do not receive subsidies.

[2] Baseload is the minimum level of demand on an electrical grid.

[3] Bangladesh formulated its Net Metering Policy in 2018. The policy facilitates the self-consumption of electricity by industrial or commercial buildings, while any surplus can be sold to the grid.


Photo ©️ Mahmud Hossain Opu

Waseqa Ayesha Khan is a member of parliament in Bangladesh and Chair of the Parliamentary Committee on the Ministry of Power, Energy and Mineral Resources. She is a politician and a banker. She is Co-Chair of Climate Parliament Bangladesh. She was Regional Representative of the Asia-Pacific Group in the Bureau of Women Parliamentarians of the Inter-Parliamentary Union, Manager at Standard Chartered Bank and Operations Manager at American Express. She pursued her graduate studies in accounting at the University of Chittagong, Bangladesh.
Shahriar Ahmed Chowdhury is Founder of the Centre for Energy Research at United International University. He is an academic. He is also Chair of the Centre for Renewable Energy Services. He is an author of the Bangladesh Delta Plan: 2100; the Net Metering Guidelines of Bangladesh and the Guidelines for Grid Integration of Solar Irrigation Pumps; the Solar Energy Roadmap: 2021-2041; and the Mujib Climate Prosperity Plan: 2030. He pursued his graduate studies in Renewable Energy at Carl von Ossietzky University, Oldenburg, Germany.