New year, same goal: Bangladesh needs to clear existing roadblocks to clean energy
At this stage of the transition, Bangladesh needs to focus on first addressing persisting roadblocks with enhanced coordination, capacity development and proper monitoring
Bangladesh's renewable energy capacity grew fastest ever in 2024, sparking optimism. Yet, a lack of investment-ready projects in 2025-26 could limit the sector's progress. The clean energy sector lacks coordination between government agencies and the private sector, with stakeholders battling capacity gaps.
Moreover, the electric vehicle sector, dominated by three-wheelers, continues to face safety concerns.
Renewable energy sector may face challenges in 2025-26
Bangladesh added grid-connected renewable energy capacity of around 331 megawatts (MW) between 1 January 2024 and 1 December 2024, registering a 42.7% growth. Utility-scale renewable energy contributed the most to this new capacity.
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The country's current on-grid renewable energy capacity is 1,105MW, which rises to 1,547MW if off-grid systems are included (763+230+5+549 = 1,547MW). Even a modest goal of tripling the total capacity (including off-grid systems) by 2030 would require adding 3,000MW of renewable energy. Here lies the challenge, as renewable energy projects of only around 500MW are at an advanced stage of construction.
Besides, the renewable energy pipeline is empty following the current government's decision to cancel projects that received letters of intent (LOIs) without any competition during the previous government's tenure.
While the government has recently floated a tender for solar projects of 353MW capacity to encourage competition, there is a lack of confidence among project developers. This is because the new tendering does not ensure that project developers who obtained LOIs during the previous government's tenure will be the lowest bidder under the current process. As such, foreign partners committed to investing may not wait for the whole tendering process.
Unless the government, the power division and the Bangladesh Power Development Board (BPDB) coordinate and manage the sector better, there will be a paucity of investment-ready renewable energy projects in 2025-26.
Electric vehicles take a hit
With a population of three to four million, three-wheelers dominate Bangladesh's electric vehicles sector. Yet, the biggest challenge they face is the risk of accidents. Furthermore, as many of them reportedly operate without the government's permission, the High Court of Bangladesh ordered curbs on their operation in Dhaka city in November 2024, sparking widespread protests. Ultimately, the government had to roll back its decision.
With Bangladesh aiming to reduce 3.39 million tonnes of carbon dioxide (CO2) from the transport sector and gradually transitioning to electric systems to utilise grid power and enhance efficiency, the Bangladesh Road Transport Authority (BRTA) should find ways to streamline electric three-wheelers and address safety concerns.
Additionally, the country does not have adequate charging infrastructure for electric cars.
2025 could be the year of energy transition
By ensuring proper coordination, capacity development and monitoring in 2025, Bangladesh can speed up the energy transition.
Coordination: The private sector will likely implement the majority of future renewable energy projects in which foreign investment is expected to play a key role. This requires confidence in the domestic market. Therefore, while transitioning from the unsolicited project award process to competitive bidding, the power division and the BPDB should ensure proper coordination to boost the confidence of the private sector and its foreign investment partners.
Moreover, stakeholders have raised concerns over the quality of solar accessories. The Sustainable and Renewable Energy Development Authority (SREDA) and Bangladesh Standards and Testing Institutions (BSTI) should coordinate the enforcement of standards to drive out poor-quality solar accessories from the market.
Likewise, SREDA and the distribution utilities should work closely to create an enabling environment for scaling up charging infrastructure for electric vehicles. Besides, BRTA should regularise the movement of electric three-wheelers in suitable areas by ensuring all safety features are in place.
Capacity Development: SREDA is entrusted with catalysing renewable energy growth in Bangladesh. It needs to coordinate with key stakeholders and develop its capacity to spearhead the energy transition. However, IEEFA's study and discussions with stakeholders show that SREDA lacks sufficient human resources to meet the sector's growing demand. Enhancing SREDA's capacity is the first step in accelerating the transition.
Similarly, financial institutions require experienced personnel to appraise and finance clean energy projects. However, existing capacity development initiatives for financial institutions organised by SREDA, Bangladesh Bank or other agencies are inadequate.
The renewable energy sector also lacks skilled human resources for installation and maintenance, which erodes the confidence of industries or building owners, particularly in small projects.
Moreover, if the Bangladesh Solar and Renewable Energy Association (BSREA) – which has a shortage of full-time staff – is better equipped, it can develop the capacity of financial institutions and trained technical personnel.
Progress monitoring: Bangladesh's first utility-scale solar energy project came online in 2018. Since then, it has added only 875MW renewable energy to the grid given that hydropower projects of 230MW were commissioned during 1962-88. However, many countries have ramped up renewable energy capacity in the last seven years, minimising reliance on imported fossil fuels.
As the sector's nodal agency, SREDA should periodically monitor the progress of renewable energy projects, identify areas of concern and address them. It should then apprise the power division if a course correction is needed.
At this stage of the transition, Bangladesh needs to focus on first addressing persisting roadblocks with enhanced coordination, capacity development and proper monitoring.
Shafiqul Alam is IEEFA's Lead Energy Analyst for Bangladesh
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.
