Renewable energy sector gets less than 5% budget allocation despite ambitious targets: CPD
The think tank noted that only 4.6% of the current fiscal year’s power sector allocation has been earmarked for renewable energy, while just three out of 42 development projects belong to the sector.
Despite ambitious targets over the past decade, Bangladesh's renewable energy sector has consistently received inadequate budgetary support, with less than 5% of power sector allocations going to renewable projects, according to the Centre for Policy Dialogue (CPD).
In many cases, allocations are further reduced in the revised budget, delaying project implementation and undermining the country's renewable energy targets, CPD said at a dialogue titled "Renewable Energy in the Upcoming Budget: Balancing Expectations and Achievements" held today (17 May).
The event was jointly organised by CPD and online news platform Dhaka Stream at a hotel in the capital.
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Presenting a keynote paper, CPD said Bangladesh currently has 1,745MW of renewable energy generation capacity, accounting for only around 5.5% of the country's total installed power capacity, despite a target to achieve 10% renewable energy generation by 2021.
The think tank noted that only 4.6% of the current fiscal year's power sector allocation has been earmarked for renewable energy, while just three out of 42 development projects belong to the sector.
"The government is now talking about expanding renewable energy generation, but that ambition must be reflected in the upcoming national budget," the paper said.
Prime Minister's Adviser on Finance and Planning Rashed Al Mahmud Titumir said the power and energy sector is facing several challenges, including excessive capacity payments and global energy market instability triggered by conflicts in the Middle East.
"Any significant adjustment in energy prices could further fuel inflation," he said.
He added that the government wants to prioritise renewable energy expansion as part of its broader economic strategy to achieve a trillion-dollar economy by 2034.
"Our policy will focus on reducing import dependency, encouraging local production, increasing domestic resource exploration and ensuring energy security," he said.
Prime Minister's Adviser on Posts, Telecommunications, ICT, and Science and Technology Rehan Asif Asad said electric vehicles represent the future, but Bangladesh must first strengthen power infrastructure and charging facilities.
He said the government has already reduced import duties on electric buses and is considering renewable energy, lithium batteries and electric vehicles as part of an integrated policy framework that will be reflected in the upcoming budget.
CPD Research Director Khondaker Golam Moazzem urged the government to ensure its renewable energy commitments are reflected in fiscal measures.
"The renewable energy sector has long remained neglected in the budget. This time, it should not be squeezed again," he said.
He also welcomed the government's focus on increasing domestic gas production but cautioned against expanding coal-based energy projects.
At the dialogue, speakers also highlighted the high import duties on renewable energy equipment. CPD said solar equipment still faces import duties ranging from 28% to 34%, while battery energy storage systems are subject to duties of up to 62%.
The keynote paper recommended reducing these duties for several years, accelerating grid modernisation and expanding rooftop solar and wind power initiatives.
Shahriar Ahmed Chowdhury, director of the Center for Energy Research at United International University, said the annual subsidy provided to the power sector could be enough to generate 10,000MW of renewable electricity.
Other speakers included Alamgir Morshed, executive director of Infrastructure Development Company Limited (Idcol), Moshahida Sultana, associate professor at University of Dhaka, and Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association.
