Energy outlook turns ‘grim’

Bangladesh’s energy situation is “grim” as heavy dependence on imported fuel and LNG leaves the country exposed to global market shocks, Bangladesh Energy Regulatory Commission (BERC) Chairman Jalal Ahmed said on Friday.

He called for an urgent, coordinated strategy covering domestic gas exploration, LNG infrastructure and renewable energy, warning that there was no quick fix to the country’s growing energy challenges.

“We have short-term solutions, medium-term solutions and long-term solutions.

We have to look at all three simultaneously,” Jalal said while speaking at the Shadow Parliament Debate Competition 2026, organised by Debate for Democracy.

Bangladesh has failed for years to conduct adequate reserve studies and explore its domestic gas resources, while increasingly relying on imports, he said.

“We have installed two FSRUs, whereas we actually need four,” Jalal said, noting that even if a new FSRU project were approved immediately, it could take 24-30 months to become operational.

“So, the situation is actually grim. There is no scope to overcome this situation without good management,” he said.

Policy overhaul needed
Jalal said Bangladesh also urgently needs to update its energy policy, which was last formulated in 1996.

Disagreements over coal policy have partly delayed the formulation of a new policy, he said, stressing that a balanced energy mix was essential for long-term energy security.

“If we want long-term sustainability, we need a balanced energy policy,” he said.

He said recent global energy shocks had highlighted the risks of Bangladesh’s dependence on imported fuel and LNG.

Solar key to transition
Renewable energy can help reduce reliance on costly furnace oil and diesel, but Bangladesh must assess its renewable potential realistically, Jalal said.
He identified solar as the country’s most promising renewable source, while noting the limitations of wind and hydropower.

Bangladesh receives only 3.1-3.9 hours of effective sunshine a day, making battery storage crucial for large-scale solar integration. But storage remains expensive and would require substantial investment, he said.

The country therefore needs to combine renewables with baseload generation and storage rather than depend on a single energy source.

30,000MW capacity, 17,000MW demand
Jalal also questioned Bangladesh’s high installed power capacity, saying the country has around 30,000MW of capacity against demand of roughly 17,000MW, in addition to substantial captive generation in industries.

The mismatch has increased capacity payments and subsidies, he said. “Capacity charge itself is not undesirable.

It exists wherever power plants are built. But the problem is when unnecessary capacity is created through one-to-one negotiations under special laws, with rates that may not be transparent,” he said.

Bangladesh should gradually replace expensive oil-fired generation with renewable energy while maintaining adequate baseload and storage capacity, he added.

Green power tied to exports
Jalal said renewable energy was also becoming critical to Bangladesh’s export competitiveness, particularly for the garment industry.

The apparel sector will increasingly need renewable electricity to retain access to major markets, especially the European Union, which accounts for around 52-55 per cent of Bangladesh’s exports, he said.

Large industries are already installing rooftop solar, while smaller factories need access to cheaper financing. Where rooftop space is unavailable, merchant power arrangements could offer an alternative, he said.

Bangladesh Bank’s low-cost financing schemes could be strengthened to allow industries to borrow at around 5 per cent interest for solar investments, Jalal suggested.

He said Bangladesh could not solve its energy crisis overnight and must pursue immediate supply measures alongside medium- and long-term reforms.