CPD calls for policy overhaul to boost rooftop solar growth

The Centre for Policy Dialogue (CPD) on Tuesday called for comprehensive policy reforms to accelerate rooftop solar adoption in Bangladesh, warning that the country risks repeating the “retention failures” of its off-grid Solar Home System (SHS) era unless structural barriers in financing, taxation and regulation are urgently addressed.

The think-tank made the observations at a programme held at a city hotel titled “Solar Revolution in Pakistan in the Eyes of Country’s Leading CSO: Lessons for Bangladesh from National Budget Perspective.”

Presenting the keynote paper, CPD Research Associate Atikuzzaman Shazeed traced Bangladesh’s solar energy development from the off-grid SHS programme launched in 2003, which brought electricity to over 20 million people, to the subsequent decline of that model as the national grid expanded into rural areas and rooftop solar emerged as the next phase of growth.

He noted that SHS installations peaked at 853,000 units in 2013 before falling sharply to just 3,455 by 2018 — a 99.6 per cent decline over five years — as grid electricity made the off-grid model less relevant.

According to CPD’s SHS Survey 2025, nearly 47 per cent of all installed solar home systems are now non-functional, mainly due to battery failure and the absence of a structured transition or retrofitting framework.

On-grid solar adoption, however, remains at an early stage. Bangladesh currently has 4,551 net-metering rooftop solar installations with a combined capacity of 213.3 MW, of which 1,531 systems were installed in 2025 alone.

However, 60.4 per cent of installations are concentrated in the Dhaka division.
CPD identified several key barriers hindering faster expansion of rooftop solar.
On the residential side, cumulative import duties of 27.5 to 33.6 per cent on solar panels and inverters significantly increase upfront costs.

At the same time, banks remain reluctant to provide small, long-term solar loans, while Bangladesh Bank’s green refinancing scheme is constrained by complex documentation requirements and slow disbursement.

Regulatory challenges, including system size limitations and inconsistent net-metering approvals, were also cited as major deterrents for small consumers.

In the industrial sector, CPD noted that banks’ requirement for 100 per cent asset-backed collateral effectively restricts the lower-cost OPEX model, as solar assets and power purchase agreements are not recognised as bankable security. As a result, access remains largely limited to large firms with existing capital and technical capacity.

On solar irrigation, CPD highlighted that more than 90 per cent of Bangladesh’s 3,100-plus solar irrigation pumps remain off-grid. It noted that only the Bangladesh Rural Electrification Board (BREB) model provides both ownership and grid connectivity for farmers, although BREB accounts for just 8.6 per cent of total installations.

The report also flagged heavy reliance on subsidies, ranging from 50 to 100 per cent in many cases, while actual payback periods of 15 to 20 years significantly exceed the official estimate of eight years.

To address these challenges, CPD recommended simplifying net-metering eligibility and introducing a unified digital application platform across utilities, rationalising import duties on photovoltaic components, and establishing a Renewable Energy Service Company (RESCO) collateral framework that recognises power purchase agreements as bankable security.

It also called for expanding net metering to solar irrigation systems to utilise off-season surplus capacity, and for the creation of a national distributed renewable energy coordination body under the Sustainable and Renewable Energy Development Authority (SREDA) to monitor not only installations but also system retention.

CPD further urged that institutional incentives be redesigned so that partner organisations are rewarded for long-term system use rather than installation targets alone.