Renewables take centre stage in energy strategy

Bangladesh is placing renewable energy at the centre of its long-term power strategy, targeting 20 per cent of electricity generation from renewable sources by 2030 and 30-50 per cent by 2050, as the government moves to reduce dependence on imported fossil fuels and strengthen the country’s energy security.

The strategy, outlined in the national budget, is backed by a series of reforms, including stricter energy audits for major industries, incentives for local manufacturing of renewable energy equipment and modernisation of the power grid to improve efficiency and financial sustainability.

The government says strengthening industrial energy audits will help curb energy waste and encourage designated consumers to adopt energy-efficient
technologies at a time when rising fuel prices and growing electricity demand continue to put pressure on the country’s power sector.

The initiative comes as Bangladesh faces increasing electricity generation costs due to declining domestic gas reserves and growing reliance on imported liquefied natural gas (LNG).

More than 40 per cent of the country’s electricity generation capacity is gas-based, making the sector highly exposed to volatility in international fuel markets.

To support the transition to cleaner energy, the budget proposes incentives for investors to manufacture renewable energy equipment locally, including solar panels, wind turbine components and battery storage systems.

The government also plans to expand rooftop solar programmes, conduct wind resource assessments in coastal areas, implement utility-scale solar projects and pilot waste-to-energy initiatives.

In addition, authorities intend to prepare a National Energy Storage Roadmap and improve grid flexibility to accommodate a greater share of renewable electricity.

Alongside the renewable energy push, the government aims to raise the country’s electricity generation capacity to 35,000MW by 2030 while expanding the transmission network to 25,000 circuit kilometres.

Construction of the 2,400MW Rooppur Nuclear Power Plant is also progressing. The budget document says around 300MW from the plant is expected to be connected to the national grid by August 2026, with the first unit projected to generate its full 1,200MW by January 2027.

The government’s long-term objective is to establish a modern, affordable, reliable and environmentally sustainable electricity system.

The budget document attributes rising electricity generation costs to years of unplanned power and energy policies, corruption, rent-seeking, mismanagement and other irregularities.

It alleges that capacity payment mechanisms enabled significant financial misappropriation and capital flight, while several large-scale power projects undertaken by the previous administration created substantial long-term financial liabilities through costly power purchase agreements and fuel imports.

Heavy dependence on fossil fuels has further driven up production costs, the document says.

As a result, government subsidies for the power sector are expected to exceed Tk 40,000 crore in the current fiscal year as the gap between generation costs and retail tariffs continues to widen.

Although Bangladesh’s installed electricity generation capacity has reached 28,919MW, including imported electricity and grid-connected renewable power, ensuring uninterrupted and quality electricity supply remains a challenge.

To address these issues, the government has prioritised reforms across electricity generation, transmission and distribution.

The reform agenda includes strengthening transparency and accountability, retiring inefficient power plants, modernising existing facilities and adopting a least-cost generation strategy.

The budget also proposes reviewing capacity payments and power purchase agreements, introducing smart grid technologies to reduce system losses, expanding electricity access in remote and island areas, and developing future power plants through competitive bidding to help keep electricity tariffs affordable.

A draft Power Sector Strategy Paper (2026-2050) has also been prepared, proposing a balanced energy mix and the adoption of advanced technologies such as SCADA, Geographic Information Systems (GIS) and Advanced Metering Infrastructure (AMI).

The government has further automated electricity connection and bill payment services to improve customer service, with industrial energy audits, renewable energy expansion and governance reforms forming the cornerstone of its strategy to build a more efficient, resilient and financially sustainable power sector.