Bright Future of Renewable Energy in Bangladesh

As the world pivots toward cleaner, sustainable power sources, Bangladesh is also embarking on its own energy transformation journey. Once heavily dependent on natural gas and imported fossil fuels, the country is now investing in renewables to diversify its power mix, ensure energy security, and combat climate change. While challenges remain, opportunities abound in solar, wind, and green financing.

Bangladesh’s Renewable Energy Rise: Opportunities and Optimism for a Greener Future

Bangladesh’s renewable energy sector is rapidly advancing, offering solutions to the nation’s energy crisis and paving the way for a sustainable future. Led by solar power, supported by government incentives and international investments, this transformation fosters economic growth and environmental sustainability, igniting hope for a greener tomorrow.

This blog post explores why the future of Bangladesh’s energy sector lies in renewables and what that means for citizens, investors, and the planet.

Key Highlights

• Total installed capacity (2023): 26,018 MW
• Renewable energy share: Only 4.59%
• CVF target: 40% electricity from renewables by 2041
• Solar makes up 70% of current renewable energy
• Major constraints: Limited hydro and wind potential, policy gaps
• Opportunities: Off-grid solar, floating solar, cross-border energy trade

Solar Energy: The Cornerstone of Bangladesh’s Green Future

Solar energy has emerged as the most promising renewable source for Bangladesh. Its abundance, modularity, and cost-effectiveness make it ideal for rural electrification and urban rooftops. As of 2023, solar accounts for nearly 70% of the country’s renewable capacity.

The government’s success with Solar Home Systems (SHS) is globally recognized. Over 6 million units have been installed, lighting up rural homes and empowering families. These systems provide basic electricity for lighting, phone charging, and small appliances.

Next Steps for Scaling Solar

• Promote rooftop solar in cities through net metering
• Encourage solar irrigation pumps for agriculture
• Develop solar mini-grids for remote communities
• Explore floating solar plants on water bodies

Wind and Hydro: Still in Nascent Stages

Wind energy potential in Bangladesh is relatively low due to the country’s geography, but specific coastal areas like Kutubdia and Cox’s Bazar offer moderate promise. The government is conducting feasibility studies and pilot projects to test commercial viability.

Hydropower remains limited due to a lack of strong rivers and elevation gradients. The existing Kaptai hydropower plant is the only major facility in operation. However, regional cooperation with Bhutan and Nepal could open avenues for importing green hydroelectricity.

Green Finance: Catalyzing Clean Investments

To support clean energy investments, Bangladesh Bank has introduced a refinancing scheme worth BDT 4 billion for green projects. Under this scheme, banks and financial institutions offer loans at 5.5%, and refinance at 3%. Institutions are also required to allocate at least 5% of their total loan disbursements to green financing.

This initiative has been a game-changer, particularly for small solar companies and clean tech startups. The Infrastructure Development Company Limited (IDCOL) continues to lead the way in funding solar home systems and renewable energy entrepreneurs.

Regional Trends and Benchmarking

Country	Renewable Mix (2024)	2030 Targets
Bangladesh	4.59% (~1.4 GW)	20% (~6,145 MW)
India	~50% (220+ GW)	500 GW
Pakistan	~32% (incl. hydro)	60% by 2030
Nepal	~96% (mostly hydro)	12,000 MW hydro, 2,100 MW solar

Policy Momentum and International Partnerships

Bangladesh has made significant strides in policy formulation. The Renewable Energy Policy (2008) and the Power System Master Plan (2016) provide roadmaps for green energy development. SREDA, formed in 2012, plays a key regulatory and promotional role.

International collaborations are also on the rise. Bangladesh has signed MOUs with China, India, and Japan to expand renewable energy investments, including solar IPPs (Independent Power Producers). The country is also exploring regional electricity markets through SAARC and BIMSTEC for green power imports.

Community Impact and Human Stories

Renewables are transforming lives beyond just power generation. Solar-powered irrigation has reduced diesel use in farming. Women entrepreneurs are running solar-powered businesses from sewing to mobile charging.

Sabina, a mother of two from a rural village in Khulna, says, “Before solar, we had only kerosene. Now my kids can study at night. We even bought a fan for summer!”

Investment Opportunities

With only 4.59% of power coming from renewables and a 2041 target of 40%, there is vast room for investment. Promising sectors include:

• Utility-scale solar farms
• Distributed rooftop solar
• Battery storage solutions
• Smart grids and metering systems
• Green hydrogen (long-term)

Challenges to Overcome

• Land scarcity for solar farms
• Grid capacity limitations
• Delays in power purchase agreements (PPAs)
• Regulatory red tape

The Road Ahead: Why Optimism is Justified

Bangladesh’s renewable energy journey is still in its early stages, but the direction is right. With policy support, international collaboration, and increasing investor interest, the country is poised to leap forward. A cleaner, greener energy future is not just possible—it is within reach.

Sources: SREDA, IDCOL, Ember’s Global Electricity Review 2023, Bangladesh Economic Review 2022, Bangladesh Bank Green Financing Report