Govt’s big solar push faces cold responses from local, international cos

Infographics: TBS

As the world accelerates towards net-zero targets with trillions of dollars earmarked for renewable energy, Bangladesh finds itself in a concerning predicament. The nation, which floated tenders for over 5,000 megawatts (MW) of solar energy late last year, is now struggling to even sell bid documents, let alone secure vital investment deals.

The signals are not just weak; they are alarming. As a country heavily reliant on imported fuels for power generation, Bangladesh critically needs to reduce this dependence to bolster energy security – a factor that directly impacts everything from industries and shops to individual households.

A cold shoulder to a hot market

The latest push by the Bangladesh Power Development Board (PDB) to secure investors for 55 grid-tied solar power plants, totaling 5,238MW, has been met with deafening silence. Four rounds of international tenders, issued between December 2024 and March 2025, have seen one deferral after another. The first package, comprising 12 plants with a 353 MW capacity, required six extensions before the BPDB finally managed to open bids on June 2nd. Only 20 bids were submitted against 98 tender documents sold. More tellingly, not a single foreign investor participated.

This is not an isolated incident. The other three packages have fared no better. The second package, aiming for 500 MW at 10 sites, saw only 42 documents sold despite five deadline extensions. The third, with 1,780MW on offer, sold just 45 documents. In the fourth and largest package – 2,605MW across 14 locations – the PDB has sold a mere eight documents. Furthermore, nine proposed power plants, totaling 1,615MW, haven't attracted a single expression of interest. This begs the question: why the drought in one of the world's fastest-growing energy consumers?

A catalogue of policy failures

The issues begin with what many in the sector now identify as the single most damaging move: the abrupt cancellation of 31 solar projects in November 2024. These projects had already received Letters of Intent (LOIs) from the BPDB under the Quick Enhancement of Electricity and Energy Supply Act, only to be unilaterally scrapped. Investors – some of whom had already procured land, established local offices, and even commenced equipment procurement – were left blindsided. The significant fallout: 15 of those companies, representing projected foreign investments of $6 billion, have initiated legal action against the PDB.

Shafiqul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), summarizes the sentiment: "This sent a shockwave through the investor community. The message was clear – no deal is safe in Bangladesh."

The problems extend beyond project cancellations. The tenders themselves are riddled with issues, such as the absence of implementation agreements, which are standard practice in international energy procurement. Their exclusion exposes investors to significant sovereign risk.

Land acquisition presents another major hurdle. In a country like Bangladesh, where land scarcity is chronic, asking investors to arrange land – often in scattered and remote areas – is almost a nonstarter. A third critical point is currency risk; contracts specify that 70% of the payment will be in US dollars and 30% in Bangladeshi Taka, but with no inflation adjustment on the local component.

As Sakir Ahmed, former CEO of Xindex Energy, bluntly puts it: "Foreign investors will not walk into a market where the rules are made to change mid-game."

The cost of U-turns

The government's rationale, according to BPDB and power division officials, is that they are learning on the go. Md Mahbubur Rahman, joint secretary (renewable energy), admits: "We are new in this field and are incorporating feedback from bidders." However, as the sector sees it, the cost of that inexperience is now running into billions in lost investment.

Each bid round is plagued with repeated extensions, signaling to investors a distinct lack of clarity and coordination. Chinese firms, which dominate the global solar market, are conspicuously absent. Even domestic players are showing wariness.

CPD flags budget misalignment

If the policy framework wasn't discouraging enough, the fiscal allocation speaks volumes. The Centre for Policy Dialogue (CPD) highlighted a concerning fact in its recent post-budget analysis: only one renewable energy project and one power evacuation project received minimal budgetary support in the fiscal 2025-26. Projects totaling 463MW remain stuck in the approval pipeline, with no allocation in sight.

How can a nation realistically aim for a 20% renewable energy share by 2030 and 30% by 2041 – as per its stated targets – when it currently hovers at a mere 5%, with virtually no capital commitment? As CPD noted, such a deprioritisation of renewable energy in the national budget does not align with the broader vision of achieving zero carbon emissions.