Renewable goals remain clouded by uncertainty

Despite the Awami League government's ambitious commitments to renewable energy prior to being ousted by a mass uprising in August last year, achieving those high targets remains a far-off aspiration for the country.

The interim government has been working to accelerate the shift towards renewable energy, but experts and industry leaders have raised concerns that the absence of implementation agreements in new tenders could hinder progress. An analysis by the Bangladesh Independent Power Producers' Association (BIPPA) reveals that Bangladesh generates the least electricity from renewables compared to four neighboring countries—India, Pakistan, Vietnam, and Sri Lanka. 

Bangladesh’s power generation remains heavily reliant on fossil fuels, with just 0.8% of energy coming from renewable sources. By comparison, Pakistan derives 3.7% of its total 42,131 megawatts (MW) installed capacity from renewables. These findings, shared with senior officials on Monday at Rail Bhaban, were based on data up to June 2024. 

Bangladesh currently has an installed capacity of 27,115MW, of which only 663MW comes from solar and wind power. Vietnam leads in renewable adoption, followed by India and Sri Lanka. Bangladesh began its renewable energy journey in 2017 with the launch of a 3MW solar power plant in Jamalpur’s Sharishabari. Later, the Awami League government pledged to produce 6,000-16,000MW from renewables by 2030 but failed to follow due procedures during the initial approvals.

Following the political shift in August, the interim government canceled 42 power plant projects, including 37 renewable plants with a combined capacity of 3,102MW. These projects were originally awarded without tenders under the Awami League’s controversial Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010. The interim government has since repealed this “indemnity act” and introduced a 15-year tax benefit for grid-tied renewable energy projects, alongside a 10-year exemption to incentivize bidders.

To date, the Power Development Board (PDB) has issued two tender notices for 22 solar plants, totaling 853MW, with deadlines set for February and March 2025. However, concerns persist. According to Shahriar Ahmed Chowdhury, director at the Centre for Energy Research at United International University, previous commitments to renewable energy lacked sincerity. He emphasized that renewables would reduce fuel costs in the long run but require more substantial government backing.

Imran Karim, former BIPPA president and vice-chairman of Confidence Group, cited land scarcity as a key barrier to solar projects in the densely populated country. Another major issue is the government’s decision not to sign implementation agreements, which guarantee repayment if the PDB defaults. Without these assurances, investors are reluctant to participate in tenders, as most lenders require such agreements before financing.

The PDB's financial struggles further complicate matters, with approximately Tk 21,000 crore owed to independent power producers in overdue payments. Additionally, the PDB sells electricity to consumers below cost, making it reliant on government subsidies to cover deficits.

Karim also noted that while the private sector is eager to support renewable initiatives, financing from multilateral banks and development partners has been difficult to secure under the current framework. Energy expert Shahriar Chowdhury stressed that the government’s reluctance to offer implementation agreements undermines its renewable energy goals. He pointed out that fossil fuel-based plants have long enjoyed such benefits and argued that similar support is essential for renewable investors until the sector becomes self-sustaining.

“Despite some progress, significant government support is still needed for the renewable sector to stand on its own,” Chowdhury added.