Financing Bangladesh’s clean energy future with IDCOL powering the transition

At Infrastructure Development Company Limited (IDCOL), we have long recognised that financing is the cornerstone of renewable energy growth. A significant challenge for many developers is meeting the high upfront capital requirements for clean energy projects. At IDCOL, we address this by designing financial products that make renewable energy projects more bankable and attractive to investors. To date, we have financed nearly 50% of Bangladesh's renewable energy capacity — over 650 MW — including 167 MWp of industrial rooftop solar, 206 MWp of grid-tied utility-scale projects, and 40 MWp of solar irrigation systems.

Our approach centres on providing long-term concessional financing to private sector developers, allowing solar projects in Bangladesh to become viable and profitable investments. The sharp decline in solar technology costs, combined with pragmatic government policies such as reduced import barriers for key equipment, has made solar one of the most cost-effective energy solutions today. Particularly, the industrial rooftop solar segment has grown significantly in recent years, demonstrating the transformative potential of clean energy.

To sustain this momentum, IDCOL actively conducts awareness and capacity-building programmes for all stakeholders — including financial institutions — to encourage greater participation from commercial banks and non-bank financial institutions (NBFIs) in renewable energy financing. Looking ahead, we have set an ambitious target: to finance 6 GWp of renewable energy projects over the next five years. This pipeline spans industrial and domestic rooftop solar, solar installations on government buildings, merchant power plants, grid-tied projects, and solar irrigation pumps. Waste-to-energy and wind power projects also remain key priorities. Importantly, we offer financing in local currency, making investments far more accessible for domestic developers.

We are also working with leading multilateral development partners to introduce payment guarantee schemes that ensure competitive financing for renewable projects. IDCOL is developing its own guarantee mechanisms to encourage broader participation from commercial lenders. As Bangladesh's Direct Access Entity (DAE) of the Green Climate Fund (GCF), we already channel concessional climate finance to the textile and garment industries to enable their green transformation. Beyond traditional loans, we are exploring innovative instruments such as green bonds to mobilise funds from a wider investor base.

At the grassroots level, access to affordable financing is equally critical. Rural communities adopting solar home systems or biogas plants often face significant cost barriers. IDCOL has addressed this by mobilising concessional finance, grants, and technical assistance — with strong government support — to ensure renewable solutions are within reach. So far, we have financed the installation of 71,000 biogas plants and over four million Improved Cooking Stoves across the country, contributing to a reduction of 35 million tonnes of carbon dioxide emissions.

Our success stems from a unique community-based model, partnering with local NGOs, microfinance institutions, and other trusted Participating Organisations (POs) with strong rural networks. These partners handle outreach, installation, maintenance, and loan recovery, enabling us to reach even the most remote households. By offering subsidies and soft loans tailored to rural income patterns, and ensuring quality control and robust after-sales services, we have created an inclusive, sustainable clean energy ecosystem that strengthens local economies, creates jobs, improves health, and reduces carbon footprints.

We also understand that green projects often require longer payback periods, which can discourage private investment. By focusing on project cash flow strength, credible developers, and secure power purchase agreements, we mitigate such risks. Through mechanisms like escrow accounts, structured off-taker arrangements, and credit enhancement instruments, we systematically reduce uncertainties for investors. Performance enforcement, evolving security arrangements, and disciplined fund disbursement are central to our strategy, ensuring both technical and repayment security.

International climate funds and development partners are vital to the clean energy transition. As a trusted national intermediary, IDCOL pools grants, concessional loans, and commercial funds to deliver scalable financing aligned with Bangladesh's climate and development goals. Rigorous monitoring and transparent reporting strengthen donor confidence, enabling us to translate international resources into impactful local projects.

At IDCOL, we act as a connector — bridging government agencies, private investors, and communities. We support policy development, align programmes with national renewable energy targets, train private sector players, and work closely with POs to ensure inclusive energy access. By fostering dialogue and knowledge-sharing among stakeholders, we create a collaborative environment that accelerates the scaling of green projects.

Looking forward, we are exploring innovative financing mechanisms to further drive clean energy adoption in Bangladesh. These include issuing green bonds, expanding rooftop solar and MSME financing, monetising carbon credits, and developing credit enhancement partnerships with international institutions. Our efforts aim to create a flexible and sustainable financing ecosystem, enabling Bangladesh to build a clean energy future that benefits industries, communities, and the environment alike.