Rooftop solar: Turning incentives into sustainable energy

Bangladesh has taken a timely step towards expanding renewable energy.

Consumers who install rooftop solar systems by 28 February 2027, and sell the excess power to the national grid after self-consumption, will get Tk10.50 per unit till 28 February 2030.

The government has determined the purchase price by taking into consideration the highest generation cost of Tk8 per unit, profit of 20% and premium of 11.25%.

The incentive can make rooftop solar more economically competitive, make investing in rooftop solar less risky, and make the rooftop a valuable energy asset instead of an unused space for households, businesses or institutions.

More significantly, the project is timely when Bangladesh is desperately in need of diversification of power generation sources.

Solar energy will not solve the risks in one day, and it will not be able to replace conventional generation.

However, it can decrease reliance on foreign fuels and diversify the country's energy portfolio. After being installed, a solar system can produce electricity for decades, albeit at a diminished rate and with varying component lifetimes.

So the decision to make batteries a part of the incentive scheme is quite significant.

Solar power is produced during the day when people are not using much electricity, and in many homes electricity demand is higher in the evenings. Batteries enable electricity to be stored for use at a later time. As rooftop solar continues to grow, storage can help to smooth out solar electricity generation and take the strain off the electricity network.

How much surplus electricity will be there?

The government has stated that it will pay consumers Tk10.50 per unit for surplus electricity, after consumers' demand is met. The question is how much extra electricity the average home will be able to produce?

Household electricity consumption and available storage, roof orientation, roof size, sunlight and shading affect the amount a household can generate. The primary advantage of rooftop solar for many families will be to decrease their role as electricity consumers — not as electricity exporters.

A recent study by the Distributed Renewable Energy Platform suggested that if 10% of the households in Bangladesh installed rooftop solar power systems ranging from 1–5kWp, the country could potentially have around 8,600MWp of solar PV power systems installed and generate sufficient electricity for about 15% of the country's current electricity demand.

It is a significant measure of the national potential of distributed solar. It, however, should not be read as one in every participating household being able to produce 15% of its own electricity.

Policymakers have to be aware of which types of consumers are likely to be able to produce substantial surpluses, if the financial benefit is in the significant sale of surplus electricity to the grid.

The electricity-use characteristics of factories, commercial buildings, educational institutions and other large consumers can vary significantly from those of households. The government should check whether the scheme is really touching the masses of consumers or only consumers who can bear the investment.

While a guaranteed purchase price is important to incentivise consumers, financing, a simple administrative process, reliable installers and effective participation of electricity distribution companies are also important. It is not to be expected that just by announcing a tariff, Bangladesh will have widespread adoption of rooftop solar.

Lessons from India, Sri Lanka and Vietnam

As of August 2026, over 5 million households in India have benefited from the rooftop solar programme. 

The programme includes capital subsidies, digital processing and direct benefit transfers and includes electricity distribution companies. Over 1.2 million households benefited from selling excess electricity in 2024–25, the Indian government has reported.

While a guaranteed purchase price is important to incentivise consumers, financing, a simple administrative process, reliable installers and effective participation of electricity distribution companies are also important. 

Sri Lanka has been able to support its rooftop solar programme via long-term preferential financing. Meanwhile, Sri Lanka Sustainable Energy Authority has a solar service provider registration system. The authority also prescribes technical and warranty standards and allows consumers to file complaints against issues like underproduction or poor after-sales service.

A similar integrated approach is required in Bangladesh.

More than an attractive tariff, consumers should have access to cheap credit, reliable suppliers, good equipment, skilled installers, warranties and a good dispute settlement system.

Vietnam originally used attractive feed-in tariffs to speed up the development of solar power. The country implemented a feed-in tariff of 9.35 US cents per kWh in 2017 for grid-connected solar power in qualified projects and, in 2020, it established a rooftop-solar tariff of 8.38 US cents per kWh. Such incentives helped to drive swift growth in solar capacity.

However, Vietnam faced strain on some parts of its electricity distribution network due to the fast growth rate, and the necessity of coordinating renewable-energy development with the capacity and management of the electricity system. Then it shifted from a feed-in tariff (FIT)-based strategy to a higher proportion of self-production and self-consumption.

Vietnam's experience  presents two lessons that are in contrast to one another in Bangladesh. Firstly, an attractive feed-in tariff can attract investment and speed up the deployment of rooftop solar power. 

Second, if expansion is done without proper attention to the distribution infrastructure and the patterns of electricity use, policymakers may later need to re-engineer the system.

So, in addition to the Tk10.50 incentive, it is important for Bangladesh to consider the number of rooftop solar installations that can be made in a specific area, the amount of electricity that individual feeders can safely absorb and the timing of the electricity coming from rooftop solar into the grid.

Technical capacity could become the bigger challenge

When thousands of consumers in the same area start to feed electricity into the grid at the same time, it may lead to voltage fluctuations, congestion and balancing issues in the grid.

Distribution companies require feeder-level information on where systems are being installed, their capacity, the electricity they are expected to generate, and patterns of electricity export.

Companies should also have a digital register of participating consumers and their installed systems. Smart meters or appropriately calibrated bidirectional meters should be able to meter electricity into and out of the grid.

The government has already made solar panels, batteries, inverters and meters meet the standards of the Bangladesh Standards and Testing Institution (BSTI) and SREDA (Solar Renewable Energy Development Authority). While necessary, enforcement will count more than the wording of the standards.

Thus, quality control should be applied to the entire solar system, encompassing PV modules, inverters, batteries, charge controllers (if applicable), mounting structures, cables, connectors, protection equipment and bidirectional meters. Testing and certification should be strengthened, and imported products should be traceable to the manufacturer and supplier.

Battery waste cannot be an afterthought

Batteries help make rooftop solar more useful, especially in the evening when everyone is using the most electricity and when the grid is down.

There should be minimum requirements for battery chemistry, safety testing, thermal management, warranties, and installation and performance set by the government. Installers should also be trained in safe handling and maintenance.

Most of all, Bangladesh needs to focus on minimising battery waste even before the batteries start to come into the country in bigger numbers.

But batteries can present environmental concerns if they are not handled properly. Therefore, their collection, reuse, recycling and final disposal should be integrated into the rooftop-solar policy right from the beginning.

This also applies to solar panels.

The typical lifetime of PVs is estimated to be approximately 30 years by IRENA and the IEA Photovoltaic Power Systems Programme. 

There will be a significant amount of PV waste at the end of the life of today's installations. Recycling and reuse can be an effective way of recovering valuable materials, but the institutional framework for end-of-life management must be put in place in advance.

A new approach for financing

For an average home, the initial cost of a rooftop solar power installation can be substantial.

The benefits of the programme are likely to be concentrated among wealthier households and larger businesses if the programme is entirely reliant on consumers' capacity to pay from their own resources.

Therefore, the government should cooperate with banks and financial institutions to provide long-term financing, loan guarantees and installment payments.

Bangladesh should also see the Tk10.50 incentive as a stepping stone and not as a permanent solution. 

The tariff should be periodically checked in relation to the costs of the equipment, the cost of batteries, actual electricity generation, electricity tariffs and their financial consequences for the electricity distribution companies.

One more important lesson from international experience is that policy success is dependent on the architecture of implementation.

Consumer protection can be incorporated into rooftop-solar policy through Sri Lanka's registered service-provider system, technical requirements and warranties, and complaint mechanisms.

As seen in India, the quick deployment in households shows that financial support is not enough; administrative and digital systems are also needed. The problem that can arise when distributed generation grows faster than the grid is illustrated by the Chinese experience.

Another lesson from Vietnam is that policy incentives need to be flexible and change with grid conditions and actual grid performance. Bangladesh should learn from all of these experiences.

The government should measure the success of the programme not by its announcement, but by its results: the amount of electricity generated, the surplus power fed into the grid, the distribution of benefits among consumers, the programme's overall cost, the number of systems that remain operational after five or 10 years, and the effectiveness of battery and solar-equipment waste collection and recycling.

Dr Muhammad Badrul Hasan is an Associate Professor in the Department of Political Science at the University of Dhaka. He can be reached at badrulhasan@du.ac.bd.