Rooftop solar could be answer to Bangladesh's power crisis

Despite repeated electricity tariff hikes, Bangladesh still spends around about USD 3.3 billion (Tk 40,000 crore) annually on power subsidies. Yet consumers continue to face shortages during peak demand despite paying higher prices. Energy experts say one of the simplest and most cost-effective solutions lies above people's heads: unused rooftops.

According to sector insiders, electricity generated from rooftop solar systems costs less per unit than power supplied through the national grid. Several large industrial companies are already meeting a significant portion of their electricity demand through rooftop solar installations, and many more are following suit.

Although Bangladesh has long pledged to expand renewable energy, progress has been slow. The country aimed to generate 10 per cent of its electricity from renewable sources by 2021 but failed to meet the target. A revised goal was set for 2025, yet renewables still account for less than 5 per cent of total power generation, only slightly higher than the 2.58 per cent installed capacity recorded in 2012-13.

A World Bank-funded study conducted by Dutch consultancy Neo BV identified enormous rooftop potential in Dhaka and surrounding areas. The survey mapped more than 639,000 residential, commercial, industrial and government buildings across greater Dhaka and estimated they could collectively generate 10,590 megawatts (MW) of electricity.

Even if only half of that potential is utilised, rooftop systems could produce more than 5,000 MW, enough to significantly ease pressure on the national grid.

On June 26, 2025, at an event titled "National Rooftop Solar Programme," the then Chief Adviser of the interim government directed that rooftop solar systems be installed on all government buildings, schools, colleges and madrasahs.

Subsequently, in October last year, the Power Division under the Ministry of Power, Energy and Mineral Resources signed separate memorandums of understanding (MoUs) with six departments under three ministries.

The six departments are the Secondary and Higher Education Division, the Technical and Madrasa Education Division, the Primary and Mass Education Division, the Health Services Division, and the Health Education and Family Welfare Division.

Although tenders were invited to generate 1,454.61 megawatts of electricity at 46,854 institutions, the response was not encouraging.

Officials say a ceiling has been set requiring bids to be lower than the wholesale electricity price. However, the country's six power distribution companies purchase electricity at different wholesale rates. The two distribution companies serving Dhaka buy electricity at higher prices.

As a result, while there has been interest in tenders in Dhaka, there has been little interest in rural areas. Yet the Rural Electrification Board (REB) is supposed to implement projects exceeding 1,000 megawatts. Officials say interest would increase if this price ceiling were removed.

According to Power Division sources, work is underway to install 12.5 megawatts of rooftop solar capacity on 165 rooftops in Dhaka city. However, the tender process has been suspended for the time being.

The government is preparing a strategy paper on the issue, after which fresh tenders will be invited. It has already decided to remove the price ceiling from the bidding process. The new tenders will no longer have any price cap. All policy-related obstacles have been removed. The withdrawal of import duties in the budget will further reduce costs.

As a result, investment is expected to increase and greater competition will bring prices down. Rather than investing directly, the government wants to implement projects under the OPEX (operating expenditure) model, under which contractors will finance, build and operate the solar power plants and sell electricity.

State Minister for Power, Energy and Mineral Resources Anindya Islam Amit told Prothom Alo that the government had taken all its measures with private-sector investment in mind to achieve its renewable energy generation targets. The policy made that clear.

He also said the decision to waive import duties on renewable energy equipment had been taken after consultations with all stakeholders. Later, some stakeholders sought additional incentives. However, the demands of 90 per cent of stakeholders had been met. Now everyone should begin work. If further measures prove necessary, the government will consider them based on practical realities.

Bangladesh's largest industrial groups are already demonstrating the commercial viability of rooftop solar.

PRAN-RFL plans to generate more than 100 MW from the rooftops of its factories. It already produces 35 MW across 20 facilities, with another 30 MW expected this year. Two factories are already supplying surplus electricity to the national grid, while approval has been sought for another 15 facilities. The group's average generation cost is below Tk 6 per unit.

Akij Bashir Group is also expanding rapidly. Its Janata Jute Mills now meets its entire electricity demand through a 21 MW rooftop solar system. The company has also installed a 13 MW system at its glass factory in Habiganj, including an 8 MW battery storage system that provides electricity after sunset. Altogether, the group currently generates 75 MW from rooftop solar, with another 28 MW under construction.

Akij Bashir Group's Manager (P&D, TSD and Solar) Hossein Muhammad Alamin told Prothom Alo that rooftop solar power is highly cost-effective. That is why the group plans to generate electricity from the rooftops of all its factories. Their generation cost is Tk 4 to Tk 5 per unit. The cost per unit is slightly higher for smaller projects. Where battery storage has been installed to provide electricity at night, the cost rises to a maximum of Tk 8 per unit.

State-owned financial institution Infrastructure Development Company Limited (IDCOL) has financed the solar power projects of both PRAN-RFL and Akij Bashir Group. IDCOL has created a Tk 15 billion fund with USD 35 million from the World Bank, USD 60 million from Germany, and Tk3 billion from its own resources. Since 2020, IDCOL has been providing loans from this fund at interest rates ranging from 5 per cent to 5.5 per cent. So far, it has financed projects worth Tk 10.3 billion. Discussions are underway with the World Bank to expand the fund further. IDCOL is also investing an additional Tk3 billion from its own resources in the sector.

IDCOL officials say they have received rooftop data for more than 4,500 factories from business associations representing various sectors. These rooftops alone could generate 4,000 megawatts of electricity. Producing electricity from rooftops is cheaper than using land.

Building a 1-megawatt rooftop solar plant costs between Tk40 million and Tk45 million, whereas a land-based plant costs roughly twice as much. The recent withdrawal of import duties could reduce costs by 25 per cent to 30 per cent in both cases.

According to IDCOL sources, only one or two projects used to be implemented each year, but interest has been rising steadily over the past three years. As fossil fuel costs continue to increase, businesses are increasingly turning to rooftop solar.

In 2025, projects to install 100 megawatts of rooftop solar capacity were approved. So far, 120 factories have received approval to generate a combined 352 megawatts of electricity. Of this, 308 megawatts is already in operation. By the end of the year, operational capacity could reach around 350 megawatts, while another 80 to 100 megawatts may receive approval. Over the next five years, IDCOL plans to finance projects generating 5,000 megawatts of solar power. A solar power plant typically guarantees electricity generation for 25 to 30 years, making investment recovery relatively secure.

According to factories that have adopted rooftop solar and IDCOL sources, small industries currently pay Tk 12.73 per unit for electricity. For large factories, the average tariff is Tk 12.85 per unit for medium-voltage connections and Tk 12.75 per unit for high-voltage connections. During peak nighttime demand, however, the cost can approach Tk 16 per unit. By contrast, businesses that finance rooftop solar through loans are generating electricity at a cost of Tk 4 to Tk 8 per unit.

Installing battery storage to save electricity generated during the day increases the cost to around Tk7 to Tk 8 per unit. Running the system for more than four hours at night may increase costs further. Without batteries, however, rooftop solar electricity can be generated for just Tk 4 to Tk 5 per unit.

Among Bangladesh's universities, Jashore University of Science and Technology was the first to launch a rooftop solar project. A private company, financed by IDCOL, installed a 1 MW system on campus. Under the agreement, the university purchases electricity at a price 26.6 per cent lower than the national grid tariff, significantly reducing its electricity bills.

Any surplus electricity is supplied to the Rural Electrification Board (REB). The university exports 24,000 to 38,000 units of electricity to the grid each month, which is adjusted against its power bills. It also earns Tk 2 per square foot per month in rooftop rental fees. University officials say the project has proven highly profitable.

The Bangladesh University of Engineering and Technology (BUET) has since installed a 2.4 MW rooftop solar system, while BRAC University has added 1 MW of rooftop solar capacity. Both institutions have reduced their electricity costs and are no longer fully dependent on the national grid.

Meanwhile, United International University has installed a 72-kilowatt rooftop solar system with support from a private company. The project saves an average of 250 to 350 kilowatt-hours of electricity per day.

Bangladesh has 58 public universities, of which 40 have permanent campuses, and 116 private universities, with at least 50 operating large campuses. Experts believe rooftop solar could enable most universities to meet a substantial share of their own electricity demand.

An IDCOL survey found that Rajshahi University could install up to 5 MW of rooftop solar capacity. At Chittagong University, rooftops alone could generate 5.5 MW against a total electricity demand of 6.5 MW. If unused land on campus were also utilised, another 5 MW could be added, potentially allowing the university not only to meet its own demand but also to supply surplus electricity to the national grid.

Energy experts say all universities should move quickly to adopt rooftop solar.

Shafiqul Alam, Bangladesh lead energy analyst for South Asia at the Institute for Energy Economics and Financial Analysis (IEEFA), told Prothom Alo that rooftop solar has enormous potential—not only for industries and universities but also across Bangladesh's 87,000 villages. However, he noted that rural residents currently do not benefit from the import duty exemptions introduced in the national budget and argued that these incentives should be extended to everyone.

Neighbouring India brought renewable energy under a dedicated institutional framework by establishing the Ministry of New and Renewable Energy in 2006. The country significantly accelerated its renewable energy push in 2014, when its solar power capacity stood at just 2.82 gigawatts (GW). Capacity nearly doubled every year thereafter, reaching 55 GW in 2022 and 66 GW in 2023. (One gigawatt equals 1,000 megawatts.)

To promote rooftop solar, the Indian government launched a new programme on 13 February, 2024, offering subsidies ranging from 30,000 to 78,000 rupees for installing solar panels capable of generating one to three kilowatts or more.

Another programme helped install more than 100,000 solar-powered irrigation pumps. The government also facilitated easy bank loans covering up to 70 per cent of the cost of solar projects with capacities of up to two megawatts.

As a result, solar expansion gathered pace. By March this year, India's total solar power capacity had reached 150.26 GW, with 44 GW added to the national grid in 2025 alone.

Vietnam's solar power capacity was only 86 MW in 2018 but surpassed 19,000 MW by the end of 2025, with more than 9,000 MW generated from rooftop systems.

Pakistan has also emerged as a recent solar success story. As electricity prices soared, households and businesses increasingly turned to rooftop solar. The government supported the shift by offering tax exemptions on imported solar equipment and allowing consumers to sell surplus electricity back to the grid. Grid-connected rooftop solar capacity has now exceeded 6,000 MW.

However, various sources suggest Pakistan's actual rooftop solar capacity is several times higher, as much of it is used privately and remains disconnected from the national grid. The resulting decline in grid demand has forced authorities to continue paying capacity charges to idle power plants. Analysts say the country's lack of planning has contributed to disorder in the power sector.

The government launched a programme in 2003 to bring electricity to off-grid communities through solar home systems installed by development organisations. Implemented through Infrastructure Development Company Limited (IDCOL), the initiative led to the installation of nearly six million solar home systems across the country.

Although usage declined after Bangladesh achieved nationwide electrification, IDCOL says a substantial number of those systems remain operational. The agency is now considering fresh investment to expand residential solar power generation.

Muhammad Alamin, a resident of Mirpur, installed a 2-kilowatt rooftop solar system with 5-kilowatt battery storage for his apartment and plans to expand generation capacity by another 3 KW. Once completed, he expects to eliminate his reliance on the national grid.

The system cost him Tk 270,000. He said his monthly electricity bill, previously Tk 4,000–4,500, has fallen by about Tk 2,500 after installing the solar panels.

Rising electricity tariffs and frequent summer load shedding are encouraging more households to consider rooftop solar. According to ACI Motors' solar division, installing a 5-kW rooftop system currently costs around Tk 300,000, though prices could fall further if import duty exemptions are fully implemented.

The government has prioritised renewable energy and aims to generate 10,000 MW from renewable sources within the next five years. Solar equipment currently faces import duties ranging from 30 per cent to 70 per cent.

In this year's budget, however, the government removed import duties, regulatory duties, supplementary duties and advance taxes on key solar equipment, a move expected to reduce project costs by 25 per cent to 30 per cent. Industry stakeholders warn that attached conditions could still hinder the widespread adoption of rooftop solar.

The Bangladesh Sustainable and Renewable Energy Association (BSREA) has alleged that the latest tax exemptions favour only a limited group of businesses. At a press conference on 14  June, BSREA President Mostafa Mahmud said that unless the National Board of Revenue (NBR) revises its notification, Bangladesh will struggle to expand its solar sector and achieve its 2030 renewable energy targets.

He argued that while the current incentive structure benefits industrial consumers, it does little for residential, agricultural and rural users, adding that incentives should be equally accessible to all. Speaking to Prothom Alo yesterday, he noted that imported solar equipment still faces a combined 17 per cent tax burden, including 15 per cent VAT, and said removing the VAT would significantly boost the sector.

BSREA says Bangladesh's renewable energy market has largely been built by importers, distributors, dealers, retailers and EPC (Engineering, Procurement and Construction) companies, yet these businesses receive little benefit under the current policy. Since 63 per cent of the country's electricity consumers are residential, agricultural or small commercial users, the association argues they will not benefit either.

According to BSREA, if the NBR notification remains unchanged, Bangladesh will fail to meet its 2030 renewable energy target. However, if zero customs duty and tax benefits are extended to all importers, EPC firms, distributors and other industry participants, rooftop solar installed on just 25 per cent of buildings in Dhaka and other divisional cities could generate between 6,000 MW and 8,000 MW of electricity.

Industry experts say tax barriers must be removed to make rooftop solar more attractive. Homeowners typically buy solar equipment from the domestic market rather than importing it themselves, so lower market prices are essential.

They also note that although approval for feeding excess rooftop electricity into the grid is officially supposed to take 15 days, the process often takes three to four months. They recommend streamlining approvals and extending tax incentives to all consumers.

M. Shamsul Alam, energy adviser to the Consumers Association of Bangladesh (CAB), told Prothom Alo that the government is preparing a strategy to generate 20 per cent of Bangladesh's electricity from renewable sources by 2030.

He said universal incentives announced in the budget could reduce the cost of solar electricity generation to Tk 4.29 per unit, making rooftop solar commonplace across the country. However, he described the NBR notification as "a farce" that had undermined those ambitions.

State Minister for Power, Energy and Mineral Resources Anindya Islam Amit told Prothom Alo that the government has taken all necessary measures with private-sector investment in mind to achieve its renewable energy generation targets. He said this is clearly reflected in the policy.

He also said that the government granted import duty exemptions on renewable energy equipment after consulting all stakeholders. Some stakeholders later sought additional incentives. However, he said, 90 per cent of the sector's demands have already been met. Now everyone should begin work. If further measures become necessary later, the government will consider them based on practical realities.