Can Bangladesh Meet Its Renewable Goals?

After almost 17 years, Bangladesh has unveiled a revised version of its Renewable Energy Policy that aims to ensure that at least 20 percent of the country's total electricity supply comes from renewable energy by 2030 and at least 30 percent by 2040.

- S M Saify Iqbal

The policy promises many lucrative incentives, including ten years of corporate tax exemptions for both government and private renewable energy producers, followed by five years of half-exemption, and a waiver of import duty on solar equipment. It also allows consumers from all segments (domestic, industrial, and commercial) to install renewable energy systems and sell surplus electricity to the government or individual players under the Net Metering Guidelines 2018.

At a broader level, its vision is to decarbonize the energy sector, reduce reliance on fossil fuels, and create an energy-efficient, low-carbon economy by scaling out technology solutions such as solar, wind, biomass, waste-to-energy, biofuels, geothermal, tidal, hydro, and green hydrogen. The policy additionally encourages innovative solutions such as peer-to-peer energy trading, floating solar projects, solar irrigation, EV charging infrastructure, and Battery Energy Storage Systems for improving grid integration and stability to meet its 6,145 MW renewable capacity target by 2030 and 17,470 MW renewable capacity target by 2041. Despite this renewed ambition, certain issues and gaps exist within the policy design.

The biggest challenge in meeting the renewables target is the financing. According to the Institute for Energy Economics and Financial Analysis (IEEFA), this will cost Bangladesh USD 933-980 million/yr until 2030 and USD 1.37-1.46 billion/yr till 2040. The energy sector had received only 3.6 percent of the funds it needed by 2023, while banks and non-banking financial institutions financed only BDT 742 crore in renewable projects, in contrast to an estimated requirement of BDT 20,500 crore, as per a study by the Bangladesh Institute of Bank Management (BIBM).