Budget sends strongest solar signal yet, but fossil fuel bias remains: Sanem
Sanem highlighted a gap between Bangladesh's renewable energy targets and budget allocations
The FY2026-27 national budget offers Bangladesh's strongest fiscal support for solar energy and electric vehicles (EVs) to date, but continued backing for fossil fuel expansion could undermine the country's long-term energy transition goals, according to an analysis by the South Asian Network on Economic Modeling (Sanem).
In a press release issued today (25 June), Sanem noted that although the government has identified energy security as one of its ten strategic priorities, the Ministry of Power, Energy and Mineral Resources received Tk17,345 crore, accounting for 1.85% of the total budget, down from 2.15% in the revised FY2025-26 budget.
The think tank welcomed the introduction of a zero per cent tax rate for the solar sector until 2035, tax rebates for solar electricity consumers, and the removal of duties on key solar components until 2031. It also praised substantial tax cuts on electric vehicles and the elimination of all duties on EV charging equipment, describing the measures as a significant shift toward cleaner transportation.
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However, Sanem highlighted a gap between Bangladesh's renewable energy targets and budget allocations. While the country aims to generate 20% of its electricity from renewable sources by 2030, only 2.53% of the Power Division's expenditure has been earmarked for renewable energy projects. The Sustainable and Renewable Energy Development Authority (Sreda) received just 0.1% of the division's development budget.
The organisation also expressed concern that recent tax incentives largely benefit VAT-compliant self-consumption solar producers and projects operating under the RESCO model, leaving many importers, EPC firms and self-financed users outside the incentive framework.
Sanem further criticised the budget's continued support for fossil fuels through new coal projects, expanded coal extraction targets and investment in the Second Eastern Refinery.
To strengthen energy security and resilience, the think tank recommended accelerating domestic gas exploration, increasing renewable energy allocations, redirecting a portion of fossil fuel subsidies toward clean energy, extending battery manufacturing incentives beyond 2028, and introducing dedicated fiscal support for wind power development.
