Bangladesh’s renewable targets keep slipping as fossil fuels dominate power plans. Conflicting policies, weak procurement and investor doubts slow solar growth, despite import costs, climate risks and an election spotlight.
Despite repeated policy pledges and revised targets over more than a decade, Bangladesh continues to lag behind in expanding electricity generation from renewable energy, remaining heavily dependent on fossil fuels at a time of rising fuel import costs, pressure on foreign exchange reserves and escalating climate risks.
A government target to generate 10 percent of electricity from renewable sources by 2021 was missed. A revised goal for 2025 has also fallen short, with renewables currently accounting for only 4.62 percent of total power generation capacity, according to official figures.
More than 95 percent of the country’s energy demand is still met by fossil fuels such as natural gas, coal and oil. Energy experts warn that Bangladesh’s power sector master plans remain structurally dependent on fossil fuels, making it difficult to build a sustainable, affordable and climate-resilient energy system.
While an immediate shift away from fossil fuels is unrealistic, analysts say Bangladesh lacks a clear and credible roadmap for a phased energy transition, where renewable energy steadily replaces carbon-intensive sources instead of remaining marginal.
With a national election scheduled for February, analysts and civil society groups say the power sector has become a critical policy issue. They argue that political parties should clearly outline renewable energy targets, timelines and financing plans in their election manifestos, giving voters a transparent choice on how Bangladesh will manage its energy transition amid economic and climate pressures.
According to the Power Division, Bangladesh’s total installed power generation capacity stands at 28,616 megawatts. Of this, renewable energy contributes 1,314 megawatts, not all of which is connected to the national grid. Around 93 megawatts remains off-grid.
Most renewable capacity comes from solar power, followed by hydropower, while wind power remains limited.
Despite rapid growth in overall power capacity, renewable energy expansion has been slow. Bangladesh Power Development Board data shows renewables accounted for 2.58 percent of total capacity in 2012-13. That share declined in subsequent years, reaching around 2 percent in 2021-22, before rising modestly to about 4 percent in the 2024-25 fiscal year.
Over the last 12 years, the renewable share has increased by just 2.16 percentage points, even though nearly 300 billion US dollars has been invested in the power sector since 2010. Only about 3.3 percent of that investment went to renewable energy.
As Bangladesh faces rising fuel import costs and mounting climate risks, analysts warn that delaying a decisive shift to renewable energy could deepen economic and environmental vulnerabilities in the years ahead. They say immediate policy priorities should include tariff and tax reform, transparent procurement, faster rooftop solar deployment and a clear long-term transition roadmap to prevent renewable energy from remaining marginal in Bangladesh’s power sector despite its vast solar potential and urgent climate needs.
Under the previous Awami League government, electricity generation capacity expanded more than fivefold, driven largely by fossil fuel-based power plants supported by capacity payments. The 2016 Power System Master Plan envisioned 10 percent renewable energy by 2021, but that goal was not achieved.
A revised master plan in 2023 set targets of 10 percent renewable energy by 2030 and 40 percent by 2050. Other official documents present different goals. The Eighth Five-Year Plan aimed for 10 percent by 2025, while the Bangladesh Climate Prosperity Plan proposed 30 percent by 2030 and 100 percent by 2050. Experts say these conflicting targets reflect policy inconsistency and weak institutional coordination.
The interim government has cancelled approvals for 37 power plants, most of them fossil fuel-based and introduced a new renewable energy policy targeting 20 percent renewable electricity by 2030 and 30 percent by 2041. However, investor confidence has weakened after the cancellation of 31 previously approved private power projects, many involving foreign investment.
A study by the Centre for Policy Dialogue found weak competition in solar power tenders. Of 55 solar projects offered in phases, many received only a single bid and several attracted no bids at all, indicating low investor confidence and regulatory uncertainty.
Transparency International Bangladesh recently reported widespread irregularities in past solar projects, citing excessive costs, land-related corruption, lack of international pricing benchmarks and delays averaging 908 days per project.
Experts argue that renewable energy in Bangladesh has long been planned within a fossil-fuel-dominated framework, prioritising short-term cost considerations over long-term sustainability. While renewable energy costs have fallen globally, Bangladesh’s excess power generation capacity, estimated at around 40 percent above demand, has reduced urgency for a rapid transition.
CPD Research Director Khondaker Golam Moazzem said that setting targets alone is not enough. “Without consistent policy support, tax reforms and dedicated institutional focus, renewable energy will continue to lag,” he said, adding that the opportunity to scale up renewables existed much earlier.
Rooftop solar remains one of Bangladesh’s most underused opportunities. According to the Institute for Energy Economics and Financial Analysis, rooftop solar capacity rose from 56 megawatts between 2012 and 2020 to about 160 megawatts today. Analysts say large-scale rooftop deployment could significantly reduce reliance on oil-fired power plants and save the government billions of taka each year.
The government has announced plans to generate between 2,000 and 3,000 megawatts from rooftops of public buildings, including schools and hospitals. Tenders have been floated for more than 1,450 megawatts, but implementation has been slow due to procurement rule changes and administrative delays.
Bangladesh also lags behind regional peers. Sri Lanka generates about 75 percent of its electricity from renewable sources, while India generates around 40 percent. In contrast, renewable energy costs in Bangladesh remain significantly higher than in neighbouring countries.
Although the government has announced ten-year tax exemptions and VAT relief for renewable projects starting commercial operation between 2025 and 2030, industry leaders say high import duties, policy uncertainty and slow approvals continue to discourage investment. The Bangladesh Sustainable and Renewable Energy Association estimates that meeting national targets would require around three billion US dollars in annual investment, largely from foreign sources.
Climate and youth advocates argue that Bangladesh must now prioritise a just energy transition that reduces fossil fuel dependence while protecting workers, communities and vulnerable groups.
Sohanur Rahman, Executive Coordinator of YouthNet Global, said the transition must be people-centred rather than profit-driven. “Bangladesh does not need a rushed energy transition, but it urgently needs a just one. A just transition is not only about technology, it is about fairness, accountability and climate justice,” he said. “Renewable energy must be expanded in a way that protects workers, ensures energy access for the poor and avoids repeating the mistakes of fossil fuel dependency.”
