BD’s Power Capacity-Projections, Challenges: Key opportunities for investors

Bangladesh, one of Asia’s fastest-growing economies (∼7% GDP growth), has achieved nearly universal electricity access with about 97% of people connected to the grid.

However, much of its power still comes from gas and coal – about 82% of generation – leaving the country vulnerable to fuel-price shocks and environmental impacts.

To ensure sustainable growth and meet soaring energy demand, Bangladesh is now ambitiously pursuing green energy.

This blog post explains the current power mix, growing demand and deficits, the status of solar, wind and other renewables, government incentives, local appetite for clean power, and key opportunities for foreign stakeholders.

We draw on official data and recent analysis to give a clear, human-centered view of Bangladesh’s renewable energy landscape and why it matters for investors.

Content Overview

• Current Electricity Production in Bangladesh
• National Demand and Energy Deficit
• Current Status of Renewable Energy in Bangladesh
• Government Policy and Incentives for Green Energy
• Local Demand for Clean Energy
• Investment Opportunities for Foreign Stakeholders

Bangladesh’s Electricity Capacity and Projections

Bangladesh is rapidly expanding its power infrastructure to meet soaring energy demand. According to the Bangladesh Power Development Board (BPDB), the country’s installed electricity generation capacity reached 27 GW by 2024 (BPDB Annual Report, 2023).

While official data for 2025 is not yet published, projections based on government plans and ongoing projects suggest capacity could grow to 30–32 GW by 2025. Here’s the breakdown:

Current Electricity Production in Bangladesh

Bangladesh’s power system has expanded rapidly, but remains heavily fuelled by fossils. In 2024 about 45% of electricity still came from natural gas and 26% from coal (with oil and imports filling much of the rest). Wind, hydro and solar remain small contributors. For example, a June 2024 report notes gas’s dominant role in generation.

This reliance has helped industrial growth but also driven environmental strain.

Modern plants (large gas turbines and new coal-fired stations) power the grid, yet they emit greenhouse gases and expose Bangladesh to price swings.

Despite this, Bangladesh’s generation capacity has surged (over 23 GW by 2020, and around 27 GW by 2024), meaning blackouts are far fewer than years ago.

Nearly all Bangladeshis now have electricity – a remarkable achievement – but generation still struggles to meet rapid demand.

National Demand and Energy Deficit

Rapid urbanization and industrialization have driven Bangladesh’s electricity demand upward, leading to notable deficits and peak shortfalls.

For instance, in April 2023 the grid hit a record peak of 15,648 MW around 9 pm, far above earlier records. Average daytime peaks were about 11,500 MW while evening peaks reached nearly 12,833 MW – illustrating how demand spikes in the evening.

These peaks have often exceeded available supply, forcing load-shedding (planned outages) especially in hot summers.

The grid operator’s data show that evening demand now significantly outstrips daytime usage. Even with almost 100% population coverage, Bangladesh still faces energy shortages during peak hours.

Electricity Demand vs. Supply: The Growing Gap

Despite increased production, peak demand hits 15,000 MW, leaving a 1,500 MW shortfall (World Bank).

Rural areas face 6-8 hours of daily load shedding, hurting businesses and households. Urban zones like Dhaka rely on costly diesel generators, worsening air pollution.

In sum, Bangladesh’s energy hunger remains high – power demand is rising with population and economic growth, and keeping the lights on is an urgent challenge.

Current Status of Renewable Energy in Bangladesh

Renewables are growing but still modest. As of 2024, Bangladesh had only about 1.2 GW of total renewable installed capacity (roughly 4% of its 27.7 GW capacity).

Solar dominates that mix – accounting for about 80% of renewable capacity – while the rest is small hydropower, wind and biomass. For example, the country’s largest solar park, Teesta Solar Ltd (200 MW), began operation in 2023.

In total, roughly 10 grid-connected solar plants were online by 2024, contributing about 459 MW.

Wind energy is nascent but promising: Bangladesh launched its first large wind farm (offshore Cox’s Bazar, 50 MW) in 2024, expected to generate ~145 million kWh annually.

Micro-hydro and biogas projects exist on a small scale.

Overall though, renewables generated only a few percent of Bangladesh’s electricity (about 628 MW by 2020) – far below demand. However, this is changing rapidly with new projects.

Compared to its 20th-ranked status a decade ago, Bangladesh is now building dozens of solar parks and wind projects.

Analysts have shown the country could add 1.7–3.4 GW of solar and 2.5–4.0 GW of wind power onto the grid within existing infrastructure.

Indeed, planning documents envision massive offshore wind expansion (6 GW by 2041, 15 GW by 2050).

In short, renewables are still a tiny slice of today’s mix, but they are the focus of intense development and investment. 

Government Policy and Incentives for Green Energy

The government has set ambitious targets and incentives to grow renewables.

In 2008, Bangladesh issued its first Renewable Energy Policy, with clear objectives like scaling up RE contributions to meet 5% of power demand by 2015 and 10% by 2020.

This spurred creation of the Sustainable & Renewable Energy Development Authority (SREDA) and financing programs.

In the early 2020s the government doubled-down: official goals were raised to 15% renewable share by 2030, 40% by 2041 and ultimately 100% by 2050. Policies include feed-in tariffs, tax exemptions and credit facilities for solar and wind.

For example, rooftop solar projects are supported through net-metering and favorable finance. The power ministry has also launched competitive bidding for large solar parks and wind farms.

On the demand side, initiatives like solar home systems and solar irrigation programs are explicitly backed (IDCOL financed 6 million off-grid systems by 2021).

Recent legislation further streamlines land allocation and grid access for renewables.

In essence, Bangladesh’s green energy policy framework is evolving quickly – moving from pilot schemes to a push for utility-scale projects – as officials seek foreign capital.

These incentives create a more attractive environment: investors can tap tax holidays, lower import duties on equipment, and guaranteed power purchase by state utilities.

Local Demand for Clean Energy

Awareness and grassroots demand for clean energy are growing among Bangladeshi businesses and citizens.

In rural areas, millions of households have embraced solar power.

The country’s flagship Solar Home System program (run by IDCOL) installed over 4.1 million home PV kits by 2019, bringing electricity to about 18 million people (12% of the population) who previously lacked it.

This off-grid success – the world’s largest such program – shows how villagers jump at affordable solar solutions in lieu of kerosene or diesel.

Even in urban centers, demand for rooftop solar is rising as commercial and industrial users seek to cut rising grid costs.

Notably, Bangladesh’s apparel industry (a major energy consumer) is pushing for renewable power: global brands have helped finance solar installations in factories, halving energy bills.

Consumers and local NGOs are also advocating green energy: solar-powered irrigation pumps and solar streetlights have proliferated across districts.

In short, Bangladeshis themselves want clean energy: from remote villages trading solar on mini-grids to city businesses installing PV on roofs, local demand is steadily increasing.

Investment Opportunities for Foreign Stakeholders

For global investors, Bangladesh’s green energy sector offers many opportunities.

The market is still in its early stages, so competition is moderate and potential upside is high.

Key areas include large-scale solar parks (several tenders are open for 100–500 MW projects), onshore wind (coastal and northern sites), emerging offshore wind (pilot zones planned by the late 2020s), biomass/biogas (abundant agricultural waste), and energy storage or grid integration technologies.

The government’s targets imply dozens of gigawatts of new capacity in the coming decades.

Foreign investors can participate through joint ventures (as in the China-Bangladesh JV to build 500 MW RE by 2023) or public-private partnerships.

Investment incentives (like multi-year tax holidays and repatriation of profits) further sweeten the deal.

Leading multinationals are already moving in for example, European renewable developers are exploring solar and wind contracts, and Chinese firms are keen on grid and hybrid projects.

Even the apparel giants are indirectly driving investment by funding factories’ solar plants.

The scale is enormous – Bangladesh projects total energy demand of 60 GW by 2041, many megawatts of which policymakers want green.

In summary, with a supportive policy environment and urgent demand, Bangladesh’s renewable energy sector is ripe for foreign capital.

Investors who enter early can benefit from fast growth and play a major role in powering the country’s sustainable future.

Conclusion

Bangladesh’s energy landscape is changing fast. Decades of reliance on gas and coal have given way to a new focus on solar, wind and green technologies.

The country now balances nearly universal electrification against rising peaks and deficits – a gap that only more power, especially from renewables, can fill.

Government targets and grassroots demand both point towards a rapidly expanding clean-energy share.

For global investors, this means a chance to help build a future-proof power system while capturing growth in one of the world’s most dynamic markets.

With clear policies, urgent demand and international support, Bangladesh offers a compelling opportunity deploying capital into a transition that is not only profitable but socially and environmentally meaningful.

Sources

• International Energy Agency – Bangladesh: Electricity and Heat
• The Daily Star – “200MW solar power plant opens” (Aug 2023)
• Reuters – “Chinese firm to build renewable power projects in Bangladesh” (Aug 2019)
• Government of Bangladesh – Renewable Energy Policy (Dec 2008)
• Reuters – “Apparel brands help fund Bangladesh’s first offshore wind” (May 2025)
• Bangladesh IDCOL – Solar Home System Program Overview (2019 data)
• IEEFA – “Meeting peak demand: renewables as game changer for Bangladesh” (Aug 2023)
• Bangladesh Power Development Board reports (via citations)
• USAID/NREL – Offshore Wind in Bangladesh (2023 IEPMP data)