IEEFA says Bangladesh can expand distributed energy resources through duty relief, faster net metering approvals and battery storage, with rooftop solar central to its 2030 renewable target.
Bangladesh’s distributed energy resource sector is beginning to take shape, driven largely by industrial rooftop solar, with engineering, procurement and construction companies holding a rooftop solar project pipeline of more than 500 megawatts, according to a new briefing note released on Tuesday.
The Institute for Energy Economics and Financial Analysis said in the note that rooftop solar has grown faster than other distributed energy resources in Bangladesh, where government data reports 418.1 megawatts of rooftop solar capacity till June 2026.
IEEFA estimates that the capacity has already reached 667 megawatts across 239 establishments including groups of companies. If units below 0.15 megawatts are included, Bangladesh’s rooftop solar capacity might already be around 1,000 megawatts, it said.
The briefing note, titled “Role of distributed resources in energy transition: A multi-country perspective”, examines how distributed energy resources are increasingly demonstrating their ability to deliver affordable and clean energy.
Distributed energy resources are small-scale power generation and storage technologies, such as rooftop solar, solar irrigation pumps, biogas and batteries, located close to where electricity is used.
Drawing on a comparative analysis of Bangladesh, Australia and India, the note finds that rooftop solar has emerged as the single biggest driver of DER growth. It says the rapid expansion of DERs in Australia and India has reduced demand for fossil fuel-based power, offering Bangladesh lessons for charting its own DER pathway.
Despite the continued dominance of centralised electricity systems built around large power plants and transmission networks, DERs such as rooftop solar, solar irrigation and vehicle-to-grid technologies are demonstrating their ability to deliver clean, affordable energy, the note said.
In Bangladesh, the growth of rooftop solar appears to have contributed to a slight decline in daytime power demand, based on comparisons between 16 April to 11 June 2024 and the same period in 2026.
“Compared to the grid-scale variable renewable energy capacity of 859MW as of June 2026, the country’s growing rooftop solar capacity provides an encouraging signal for Bangladesh’s power sector. The rooftop solar sector is expected to grow further, with engineering, procurement, and construction (EPC) companies holding a project pipeline of more than 500MW. However, Bangladesh needs to scale up efforts to tap into the potential of several thousand MW of rooftop solar capacity that the industry sector alone offers,” said Shafiqul Alam, lead analyst for Bangladesh energy at IEEFA South Asia and a co-author of the briefing note.
The note also says Bangladesh’s diesel-dominated irrigation sector offers substantial scope for solar-powered generation. Converting one-third of diesel-powered irrigation to solar could lower the country’s annual diesel import bill by around $244 million, or 30 billion taka.
IEEFA said rising power tariffs have emerged as one of the key factors driving rooftop solar adoption in Bangladesh, despite the presence of net metering guidelines and low-cost financing. The high cost of diesel is also motivating agricultural entrepreneurs to invest in solar irrigation systems.
However, the note said high import duties raise project costs and discourage large-scale adoption of rooftop solar and solar irrigation in Bangladesh.
Although the government has reduced import duties for rooftop solar systems, small projects in rural areas are unlikely to receive the duty benefits because of stringent conditions, according to the note. It also said the new structure increases the duty on rooftop solar projects in industries to 17 percent from 1 percent under the previous capital machinery provision.
IEEFA said incentives in the form of capital subsidies helped accelerate DER deployment at scale in both Australia and India. Bangladesh could take a similar first step by offering duty exemptions to make DERs more affordable, it said.
“With the government stipulating a target to install a renewable energy capacity of 10,450MW between 2026 and 2030 in its strategy document, relying on rooftop solar for more than 50% new capacity, a full duty waiver to all rooftop solar projects will likely help achieve the goal,” Alam said.
The government’s strategy stipulates 5,500 megawatts of new capacity from rooftop solar by 2030, according to the release.
The note also highlights delays in obtaining net metering connections for rooftop solar and solar irrigation projects, despite a fixed timeline of 10 to 15 days for approving applications.
It recommends that the Sustainable and Renewable Energy Development Authority, Bangladesh’s renewable energy regulator, and the Ministry of Power, Energy and Mineral Resources monitor the status of online applications for net metering connections and take measures to avoid approval delays.
Drawing on the experiences of Australia and India, Bangladesh could also promote the deployment of battery storage alongside DERs, particularly rooftop solar, the note said.
“For predictability and better management on the part of utilities, Bangladesh should gradually adopt smart meters with DERs, like rooftop solar,” Alam said.
