After almost 17 years, Bangladesh has unveiled a revised version of its Renewable Energy Policy that aims to ensure that at least 20 percent of the country’s total electricity supply comes from renewable energy by 2030 and at least 30 percent by 2040.
the policy promises many lucrative incentives, including ten years of corporate tax exemptions for both government and private renewable energy producers, followed by five years of half-exemption, and a waiver of import duty on solar equipment.
it also allows consumers from all segments (domestic, industrial, and commercial) to install renewable energy systems and sell surplus electricity to the government or individual players under the Net Metering Guidelines 2018.
at a broader level, its vision is to decarbonize the energy sector, reduce reliance on fossil fuels, and create an energy-efficient, low-carbon economy by scaling out technology solutions such as solar, wind, biomass, wasteto-energy, biofuels, geothermal, tidal, hydro, and green hydrogen.
the policy additionally encourages innovative solutions such as peer-to-peer energy trading, floating solar projects, solar irrigation, EV charging infrastructure, and Battery Energy Storage Systems for improving grid integration and stability to meet its 6,145 MW renewable capacity target by 2030 and 17,470 MW renewable capacity target by 2041. Despite this renewed ambition, certain issues and gaps exist within the policy design.
the biggest challenge in meeting the renewables target is the financing. According to the Institute for Energy Economics and Financial Analysis (IEEFA), this will cost Bangladesh USD 933-980 million/yr until 2030 and USD 1.37-1.46 billion/yr till 2040.
the energy sector had received only 3.6 percent of the funds it needed by 2023, while banks and non-banking financial institutions financed only BDT 742 crore in renewable projects, in contrast to an estimated requirement of BDT 20,500 crore, as per a study by the Bangladesh Institute of Bank Management (BIBM). Given the funding shortfall, we need substantial private and foreign investments. Some support exists, like 350 million Euro loans from the European Investment Bank and 45 million Euro from EU grants, but that is still far away from the annual requirement.
in the policy, a fund has been proposed named Sustainable Energy Development Fund (SEDF), but it neither specifies its governance structure nor the funding sources, which further decreases investors’ confidence. Provisions such as incentives that the government ‘may’ provide or duty exemptions it ‘might’ grant, whichare often unclear, create uncertainty for investors. Such phrasing completely casts doubt on the true motivation.
uncertainty about implementation and potential support might cause investors and industry players to sit on the sidelines.
investor confidence has also been rattled by the suspension of 31 utility-scale renewables projects for which Letters of Intent were issued through a non-competitive bidding process.
these challenges are compounded by institutional fragility beyond finances and investor confidence.
in the policy, the Sustainable and Renewable Energy Development Authority (SREDA) has been assigned the nodal role in developing the roadmap, establishing standards, and monitoring projects. However, as we realize that without deadlines, milestones, and accountability mechanisms, the commitment to achieving the renewable target risks becoming a mere piece of paper.
adding to this, land scarcity presents another barrier. While the policy suggests Khas land, fallow fields, water bodies, agrivoltaics, and floating solar, these are often stalled by bureaucracy, vested interests, and local resistance. For example, wind projects in Cox’s Bazar might face conflicts with the fisher communities. Such projects are even more at risk of conflict if they are not consulted and compensated adequately.
the policy encourages rooftop solar.
the interim government aims for a 3,000 MW rooftop solar target by December 2025, but it is ambitious in view of systemic constraints such as low standards, weak enforcement, high tariffs on imports, capacity limitations, and funding hurdles. The shortcomings become even clearer when compared regionally.
out of the 1,616 MW of renewable capacity in Bangladesh, only 245 MW comes from rooftop solar (0.8 percent). Sri Lanka, on the other hand, produces 1,347 MW of rooftop solar energy, comprising 23 percent of its renewable mix. With approximately 25 percent of its renewables coming from rooftop capacity, Pakistan performs even better, with 15,000 MW of rooftop solar. Moreover, import duties remain a persistent barrier. We know that inverter duty has now been reduced to 1.0 percent from June 2025, but taxes on Fiberglass Reinforced Polymer (FRP) walkways and Direct Current (DC) cables remain high. In terms of inclusion, this policy does not recognize the agency of women and youth. Women in rural Bangladesh, who manage most household energy and often lead microgrid or rooftop solar projects, are not mentioned anywhere in the policy and receive no recognition or role as stakeholders. Even youth, whose potential for sustainable innovation will be critical for a country with two-thirds of the population under the age of 35, are also ignored. Another major concern is that there is still no Just Transition framework in the policy.
this framework, which is also the backbone of global climate policy, ensures that the transition to renewables is fair and will not leave workers and communities behind. Without it, the transition may risk marginalising vulnerable groups and deepening existing social and economic inequalities. To overcome the challenges, a combination of strategic, institutional, and public interventions is required. Strengthening SREDA needs to be prioritized, which requires more resources, skilled officials, and, more importantly, accountability.
the policy also needs to have a clear, time-bound trajectory with milestones, performance indicators, and responsible agents to address the past gaps.
it is essential to set up a coordination framework across relevant ministries; otherwise, ministries may carry out their own plans without being on the same page. A financing and investment plan should be carefully designed to integrate public funds, private capital, foreign direct investment, and climate finance.
timely and transparent land acquisition, fair compensation, and a mechanism for conflict resolution are critical in reducing local resistance.
the policy should incorporate Just Transition principles, protect workers, and prioritize women and youth as change drivers. Finally, all vague language and obscurity need to be replaced with binding commitments, clear incentives, and strong governance mechanisms.