Bangladesh needs $35b to meet 2040 clean energy target: CPD

Highlights:

• Sourcing 30% of electricity from clean energy by 2040 challenging
• Renewable energy now accounts for only 3.6% of national grid
• CPD recommends developing source-specific implementation plan
• Investing in decentralised energy systems like rooftop solar stressed

Bangladesh must invest at least $35 billion to have over 35 gigawatts (GW) of renewable power generation capacity if it is to meet its target of sourcing 30% of electricity from clean energy by 2040, according to a new study by the Centre for Policy Dialogue (CPD).

The report titled "Revisiting Targets Set for Renewable Energy-based Power Generation by 2040: Projection of 'SMART' Target and Required Investment" was unveiled at a press conference at the BRAC Centre in Dhaka today. 

The CPD estimates that between $35.2 billion and $42.6 billion will be required from 2025 to 2040 to integrate renewable power into the national grid alongside existing fossil fuel plants. With a renewable energy plant factor of 0.25, Bangladesh will need 35,713 megawatts (MW) of renewable power generation capacity to meet its 2040 target.

As of March 2025, renewable energy accounts for only 3.6% of the national grid, compared to 43.4% from gas-based fossil fuels.

The CPD also said the projected fossil fuel generation capacity exceeds actual electricity demand.

"By 2030, fossil fuel capacity is expected to reach 29,773MW, which is over 4,000MW higher than the projected demand of 22,702MW, and will remain above demand through 2040," states the report.

This imbalance may limit the use of renewable energy and reduce efficiency in power generation, it noted.

M Rezwan Khan, chairman of Power Grid Bangladesh PLC, emphasised that investors' confidence is very important to promote renewable energy in the country. "When it comes to payment, BPDB regularly defaults in paying to the power plant owners."

Imran Karim, former president of the Bangladesh Independent Power Producers Association, noted that renewables currently supply just 2% of electricity. "To reach 20% by 2030, we will require a $12–14 billion investment," he said, urging faster processing of government tenders for renewable projects.

Policy recommendations

The CPD's report laid out several key policy recommendations to help the country achieve its clean energy ambitions.

It said it is necessary to develop a source-specific implementation plan with targets for 2030 and 2035, including a clear fossil fuel phase-out schedule.

Modernising grid infrastructure and deploying storage systems is essential to handle variable renewable energy sources, said the CPD.

It recommended importing renewable electricity from neighbouring countries such as Nepal, Bhutan, and India.

The CPD suggested strategically engaging with multilateral development banks (ADB, AIIB, World Bank) and climate funds to secure concessional financing and attract private capital.

The recommendations also include urgently investing in grid infrastructure, storage technology, and decentralised energy systems like rooftop solar and mini-grids.

The CPD also emphasised that this future can start by slowing fossil fuel growth and expanding renewable energy quickly.

At the event, other panellists included Mirza Shawkat Ali, director of the Department of Environment, Shaikh Muhammad Mehedi Ahsan, assistant professor (adjunct) of Department of Environmental Science and Management at Independent University, Bangladesh (IUB), Tanzina Dilshad, program manager, Environment and Energy of European Union Delegation to Bangladesh and Zarifa Khatun, director of IPP Cell-3 of Bangladesh Power Development Board.

Khondaker Golam Moazzem, research director of CPD, moderated the programme. The report was presented by CPD programme associate Mehadi Hasan Shamim.