Bangladesh is preparing a major policy push to accelerate renewable energy investment, with the government considering tax holidays, lower import duties and expanded public-private partnerships to strengthen the country’s solar power sector and reduce pressure on the national electricity system.
Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood said on Thursday that the government was considering a five-year tax holiday alongside significant reductions in import duties on solar equipment to encourage private sector investment in renewable energy.
“An investment-friendly policy framework for the solar energy sector is expected to be finalised and announced by June,” he said while speaking at the opening session of a market sounding workshop held at the Bangladesh Investment Development Authority headquarters in Dhaka.
The workshop focused on a proposed 130-140 MW AC grid-tied solar power project with battery energy storage at the National Special Economic Zone in Mirsarai, Chattogram. The Bangladesh Economic Zones Authority organised the event under a Public-Private Partnership framework.
The minister said the government was reviewing reductions in import duties and taxes on key solar equipment, including photovoltaic cells, solar frames and batteries, to reduce project costs and improve investor confidence.
“As a businessman, I understand which facilities are required to attract investors,” he said, adding that the government was prioritising expansion of the investment base over short-term revenue collection.
He said the proposed incentives were designed to help build a mature renewable energy industry capable of generating long-term tax revenue while reducing dependence on expensive imported fuels such as LNG, coal and oil, which continue to increase electricity generation costs and subsidy burdens.
Drawing comparisons with the rapid rise of Bangladesh’s garment industry after the introduction of bonded warehouse and back-to-back letter of credit facilities in 1979, he said the government now intended to introduce similar high-impact policy support for the solar energy sector.
The minister also highlighted the untapped potential of rooftop solar generation in Dhaka, saying nearly 1,000 megawatts of electricity could be produced from rooftops in the Dhanmondi and Mohammadpur areas alone.
Under the proposed model, private investors would be allowed to install solar systems on rooftops through net metering arrangements, enabling property owners to earn revenue by supplying excess electricity to the national grid.
He said the electricity saved through rooftop generation could then be redirected to industrial factories to support manufacturing and economic growth.
State Minister for Power, Energy and Mineral Resources Aninda Islam Amit said Bangladesh’s renewable energy transition would depend heavily on private sector capital, technology, implementation capacity and operational expertise.
He said the Renewable Energy Policy 2025 and the newly developed Renewable Energy PPP Guidelines 2026 had created a practical framework for accelerating clean energy projects.
The guidelines were especially important because they addressed one of the biggest challenges facing solar development in Bangladesh — access to suitable land, he added.
“By using appropriate government-owned land under a PPP framework, we can reduce development risk, improve project preparation, and attract more serious private sector participation,” he said.
He described the Sonagazi project as an important test case for future renewable energy development.
According to the state minister, the project structure combines several major institutions, including the Bangladesh Economic Zones Authority as land owner and project sponsor, Bangladesh Power Development Board as electricity offtaker, Power Grid Company of Bangladesh for grid evacuation, the Power Division for policy support, the Sustainable and Renewable Energy Development Authority for renewable energy coordination, and the Public-Private Partnership Authority for project structuring and procurement support.
He said the project was also strategically important because of the proposed inclusion of battery energy storage systems.
“As Bangladesh increases the share of solar and other variable renewable energy, storage will gradually become more important for grid stability, peak management, and better utilisation of renewable power,” he said.
He added that early discussions on battery energy storage systems, commonly known as BESS, were necessary to understand market expectations regarding technical integration and commercial viability.
The state minister said the government was seeking direct feedback from investors, lenders and industry stakeholders before finalising project structures and tender documents.
“The feedback received today can help improve the project’s bankability and make the bidding process more competitive,” he said.
He stressed that private companies would play a critical role in Bangladesh’s clean energy transition.
“We need your capital, technology, execution capacity, and operational experience. At the same time, the government must create the right enabling environment through clear policies, bankable documents, predictable processes, and proper coordination among agencies,” he said.
He thanked the Bangladesh Economic Zones Authority and the Public-Private Partnership Authority for leading the pilot initiative and acknowledged the Asian Development Bank for providing transaction advisory support.
Executive Chairman of the Bangladesh Economic Zones Authority Chowdhury Ashik Mahmud Bin Harun said the Sonagazi project carried strategic importance for several reasons.
He said the project would use government-owned land, helping address land scarcity, one of the largest barriers to private solar investment in Bangladesh.
He also noted that the initiative would include the country’s first Battery Energy Storage System, which would help supply electricity during peak demand periods and improve grid synchronisation.
According to him, the project was intended to serve as a model for future renewable energy investments on unused government land.
Ashik Chowdhury said Bangladesh’s power sector now required a structural shift in policy direction, where the government would gradually move away from being a direct investor and instead act as a facilitator for private investment.
Bangladesh has intensified efforts to expand renewable energy as rising global fuel prices, LNG import costs and growing subsidy requirements continue to strain the country’s electricity sector and public finances. Officials believe larger solar generation capacity, battery storage integration and private sector participation will be essential to improving long-term energy security and stabilising electricity supply.
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