Energy transition sets early test for Bangladesh’s new government
Following the 2026 election, Bangladesh’s new government faces urgent tasks: restoring investor confidence, clearing policy bottlenecks, and accelerating renewable energy projects to put the country’s stalled energy transition back on track
Following Bangladesh's general election on 12 February 2026, the onus is on the incoming government to build much-needed momentum for the country's renewable energy transition.
Prior to the election, Bangladesh's interim government had implemented a series of reforms to streamline the power and energy sectors and raise the share of renewable energy. It introduced a competitive renewable energy procurement process and approved a new Renewable Energy Policy with enhanced targets. On 3 July 2025, it also announced an ambitious rooftop solar programme to install a combined capacity of up to 3,000 megawatts (MW).
Despite these measures, progress on Bangladesh's energy transition remains slow. The country's utility-scale renewable energy project pipeline is almost empty. While the interim government ultimately approved 12 utility-scale solar projects with a combined capacity of 918 megawatts (MW), financing challenges will likely delay project execution, hindering the country's transition.
In addition, the interim government intended to revise the Integrated Energy and Power Master Plan (IEPMP) 2023 and drafted an Energy and Power System Master Plan (EPSMP). However, devising a suitable master plan for the country's energy transition will take time, requiring significant input from experts and stakeholders.
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As the new government takes office, it must provide a clear, long-term signal in support of Bangladesh's transition to renewable energy by addressing the prevailing barriers.
A lack of readiness for energy transition
The absence of a clear roadmap to achieve renewable energy targets points to Bangladesh's lack of readiness for the energy transition. The country needs to develop guidelines on land resource mapping, renewable purchase obligations (RPOs) and renewable energy certificates (RECs) to drive the transition.
The interim government approved the Merchant Power Policy 2025, laying the foundation for renewable energy project implementation under corporate power purchase agreements (CPPAs). The new government should finalise the format for service level agreements (SLAs) between the Bangladesh Power Development Board, Power Grid Bangladesh PLC, relevant distribution utilities, and individual project companies.
As the open access cost of renewable energy will influence investors, developers, industries or corporations' decisions to pursue projects under CPPAs, the new government should keep the costs (e.g. wheeling charges) at a level that ensures the resulting tariffs are competitive.
Moreover, there are feasibility concerns over Bangladesh's new rooftop solar programme. Projects in areas prone to load-shedding may fail to attract engineering, procurement and construction companies under the operational expenditure (OPEX) model. While a battery energy storage system can store solar energy during load-shedding, this will raise project costs, further diminishing viability under the OPEX model.
A barren period for utility-scale renewable energy projects
Bangladesh is currently experiencing stagnation in renewable energy development, with no utility-scale projects added to the pipeline between August 2024 and December 2025.
The new government should prioritise efforts to design an energy master plan, drawing on input from key experts and stakeholders, that can foster an effective energy transition in the country. The plan should seek to rebuild confidence among renewable energy investors and avoid abrupt changes that shake the sector.
The country floated four tenders for renewable energy projects with a combined capacity of 5,238MW between December 2024 and March 2025, but they initially generated limited interest among investors. Multiple deadline extensions for document submission ultimately drew bidders, reducing the proposed tariff by 16% (from $0.0993/kWh under the unsolicited offer to the average tariff of $0.0827/kWh). The interim government then finalised 12 solar projects of 918MW capacity for implementation.
However, some of these projects may encounter difficulty in arranging debt, as financiers have suggested, due to the absence of implementation agreements. The sluggish progress of Bangladesh's renewable energy sector – in contrast to the boom in other parts of the world – could also limit foreign investors' interest in the short term. This means Bangladesh's utility-scale renewable energy pipeline may remain empty for another year or so as the interim administration hands over responsibility to the new government.
Building momentum for the energy transition
On taking office, the new government will be under pressure to rebuild investor confidence and renew momentum for renewable energy, laying a solid foundation for the energy transition. It should revisit the IEPMP and compare it with the EPSMP to craft a holistic energy master plan. It should then devise a renewable energy action plan, draft relevant guidelines, assess the feasibility of the national rooftop solar programme, and enhance competition through reverse auctions.
Energy master plan, policy consistency and investors' confidence: The new government should prioritise efforts to design an energy master plan, drawing on input from key experts and stakeholders, that can foster an effective energy transition in the country. The plan should seek to rebuild confidence among renewable energy investors and avoid abrupt changes that shake the sector.
Renewable energy action plan: The new government can frontload measures through the Sustainable and Renewable Energy Development Authority (SREDA) to convert the country's 2030 and 2040 renewable energy goals – of 20% and 30%, respectively – into realistic and achievable annual targets. The SREDA can further devise a monitoring mechanism to track renewable energy developments.
Guidelines: Clear guidelines on land resource mapping, RPOs and RECs, and the format for SLAs in CPPA projects will also determine Bangladesh's success in achieving its renewable energy goals. While drafting these guidelines will take time, the new government can commence the process early to avoid delays in project implementation.
Expedite utility-scale project implementation: The new government should quickly assess the likelihood of the implementation of the 12 solar projects the interim government had finalised. It should address any bottlenecks to expedite them. It should also document any lessons from those projects to support further deployment of utility-scale renewable energy in Bangladesh.
Detailed assessment of the rooftop solar programme: Although the new rooftop solar programme is a positive development for Bangladesh's renewable energy sector, it faces many obstacles, raising serious feasibility concerns. The government should conduct a thorough assessment and develop an implementable programme backed by a readiness plan. In addition, the government should revisit the fundamental reasons for the continued delays to financially viable rooftop solar projects in the industry sector.
Reverse auctions: Bangladesh could benefit from competition in renewable energy procurement by deploying properly designed reverse auctions. To that end, the government can prepare and publish the benchmark cost of renewable energy technologies each quarter or biannually.
It can then allocate public land, cover the cost of transmission, and opt for reverse auctions in selected projects to bring down the cost. Special economic zones are suitable for renewable energy projects under reverse auctions. The government may also consider solar projects under CPPAs in special economic zones.
Bangladesh needs to pursue fundamental changes in its energy system, capitalising on renewable energy to reduce its import dependence. This requires an ambitious plan, policy consistency, timely preparation and execution, and proper monitoring.
On top of these, the new government should enhance investor confidence by delivering policy certainty and clearing obstacles, because the private sector will play a key role in Bangladesh's energy transition.
Shafiqul Alam is the Bangladesh Lead Energy Analyst at the Institute for Energy Economics and Financial Analysis (IEEFA)
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
