Policy push, tax incentives boost solar power prospects

Government incentives, tax exemptions and policy support are creating fresh momentum for solar power expansion in Bangladesh, encouraging households, businesses and public institutions to invest in rooftop solar systems and supply surplus electricity to the national grid.

The government is pursuing measures to reduce installation costs, facilitate financing and expand renewable energy generation as part of its efforts to diversify the country’s energy mix and reduce dependence on fossil fuels.

The benefits are already visible in individual initiatives. Engineer Md Akhtaruzzaman, from Kechuadubi village in Magura Sadar Upazila, installed a rooftop solar system at his business, Saleha Oil Mill, to meet its electricity requirements.

The system, which began generating electricity in December 2023, comprises nine panels with a combined capacity of 5.23 kilowatts and cost him Tk184,000.

Through net metering, Akhtaruzzaman uses part of the electricity generated and supplies the surplus to the national grid. He said he is supplying an average of 550 units monthly to the national grid, earning Tk6,000-7,000.

He plans to expand the system but said limited access to financing, particularly for individual consumers, remains a major obstacle.

Similarly, Sabbir Hossain of Chakgopal village in Niamatpur, Naogaon, installed seven solar panels, each with a capacity of 585 watts, at a cost of around Tk173,000.

His 4.1-kilowatt-peak system powers household appliances and a water pump, reducing his monthly electricity bill from around Tk1,500 to Tk700-900. However, he has been unable to supply surplus electricity to the grid because he has not received net metering approval.

According to the Sustainable and Renewable Energy Development Authority (SREDA), grid-connected solar power capacity increased from 1,020 megawatts in January this year to 1,283 megawatts by early November.

To accelerate the expansion, the government has initially allocated Tk1,500 crore in financing and plans to mobilise additional resources. It aims to add 3,000-4,000 megawatts of solar power to the national grid before the next summer season.

Under a government initiative, surplus electricity supplied by consumers through net metering will be purchased at Tk10.50 per unit until 2030.

The Power Division issued a notification on 1 September outlining the arrangement. Consumers obtaining net metering connections by February next year will be eligible for the facility.

The National Board of Revenue (NBR) has also reduced the total tax burden on imports of eligible solar equipment and machinery to one percent from 17%, which previously included 15% VAT and two percent advance income tax.

In another major policy move, the government issued the Special Solar Power Installation Ordinance, 2026, on 19 October. It allows solar projects on rooftops, courtyards, unused land, tea gardens and water bodies with capacities of up to five megawatts under specified conditions.

The ordinance provides for financing under the OPEX model, net metering, competitive selection of service providers and project monitoring. It also establishes penalties for theft, vandalism, illegal connections and obstruction of solar installations.

The government has set a target of generating 20% of the country’s electricity from renewable sources by 2030. A draft plan envisages adding around 10,450 megawatts of renewable energy capacity between 2026 and 2030, including 5,500 megawatts from rooftop solar and 4,500 megawatts from ground-mounted projects.

All government institutions have been instructed to install solar panels on their rooftops. One-stop services have also been introduced through the Power Division and electricity distribution companies to simplify the installation process.

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At the Solar Expo held on 3-4 November, Prime Minister Tarique Rahman called for support from development partners to advance the country’s renewable energy sector. He highlighted financing and technological cooperation for small entrepreneurs and businesses, alongside investment opportunities for expatriate Bangladeshis.

Energy expert and Director of the Centre for Energy Research at United International University, Shahriar Ahmed Chowdhury, welcomed the government’s initiatives, particularly the reduction in import duties on solar equipment.

However, he noted that many household consumers purchase equipment from local markets and therefore may not directly benefit from import tax concessions.

He stressed the need for reducing local market taxes and VAT, introduce incentives for two to five years and ensure affordable financing. Long-term loans, flexible instalment facilities and simpler net metering approvals are also essential to encourage wider adoption, he said.

Experts say effective implementation of the government’s incentives and policies, alongside faster net metering approvals and easier access to finance, will be crucial to unlocking Bangladesh’s solar power potential and increasing renewable electricity supply to the national grid.