Bangladesh’s national grid has long struggled with high generation costs, heavy subsidy bills and unreliable supply in rural areas, and a sweeping set of solar import duty cuts announced in the latest budget could mark a turning point for how the country generates and consumes electricity.
The budget removes import duties on solar panels, inverters, lithium batteries, cables and mounting structures, cutting the effective duty burden from around 20 per cent to zero. Battery storage duties fall even further, from 61.8 per cent to nothing, while commercial solar investors will enjoy a full income tax holiday until 2035. Consumers who install solar systems will also receive a 5 per cent rebate on their electricity bills, a direct incentive aimed at shifting demand away from the grid.
The numbers illustrate why these matters for the energy system as a whole. Grid electricity currently costs industrial users Tk11.56 per unit during off-peak hours, rising to Tk16 per unit during peak demand. With the new duty waivers in place, rooftop solar can deliver electricity at around Tk3 per unit over a 20-year panel lifespan, roughly a quarter of the grid price.
Installation costs have fallen sharply too. A one-megawatt rooftop solar system, which previously cost between Tk3.5 crore and Tk4 crore, will now cost between Tk2.75 crore and Tk3 crore, a drop of 25 to 30 per cent. Battery storage costs have followed the same trend, with a one-kilowatt-hour lithium battery falling from around $300 to roughly $160. The foreign currency component of a one-megawatt installation will also fall by approximately $40,000, equivalent to nearly Tk50 lakh, easing pressure on import bills tied to renewable energy equipment.
The shift could ease one of the most persistent burdens on Bangladesh’s power sector: subsidies. Four thousand megawatts of industrial rooftop solar, considered achievable within five years, would reduce grid dependency by an equivalent amount, saving approximately Tk5,000 crore annually in power subsidies that currently run at Tk4 to Tk6 per unit. Reduced grid dependency also has a foreign exchange dimension, with every 500 megawatts of rooftop solar installed saving roughly $20 million in import costs, a figure that doubles at 1,000 megawatts.
Two regional markets offer comparable examples of rapid solar expansion following energy supply pressures. In Pakistan, the Russia-Ukraine war in 2022 drove up fossil fuel prices to the point where imported energy became unaffordable for many users. The government responded by removing solar import duties, and the share of solar in the national energy mix rose from 2.9 per cent in 2020 to 32.3 per cent in 2025. Pakistan’s rooftop solar capacity has since grown to an estimated 34,000 megawatts, with around 25,000 megawatts connected directly to the grid in a decentralised format. An estimated one in four Pakistani households now uses solar in some form, and the shift has helped the country save billions of dollars on fuel imports.
Vietnam followed a comparable path, with its solar sector expanding from virtually nothing in 2018 to more than 19,000 megawatts of capacity by the end of 2025, driven largely by rising grid electricity costs and favourable tariffs for solar generation. It is now the largest solar producer in Southeast Asia.
Of the government’s target to add 10,000 megawatts of solar capacity over five years, 4,000 megawatts are expected to come from industrial rooftops, with the remaining 6,000 megawatts generated through ground-mounted and utility-scale solar projects.
One significant risk to this energy transition centres on equipment quality. With import duties removed, the market is now open to a much wider range of solar components, and not all of them meet acceptable technical standards. In other markets, substandard panels, counterfeit batteries and poorly rated inverters have led to systems that underperform or fail within a few years, undermining consumer confidence in solar power at a critical stage of adoption.
Effective enforcement of quality standards by the Sustainable and Renewable Energy Development Authority and the Bangladesh Standards and Testing Institution at the import stage will be essential, as weak oversight could allow substandard equipment to flood the market just as the policy begins to gain momentum.
The economic case for rooftop solar in Bangladesh now appears strong, and the timing aligns with ongoing pressures on energy supply and grid costs. Whether the country can convert this policy shift into a lasting change to its energy mix will depend less on the duty cuts themselves and more on whether regulators can guarantee that the equipment entering through Chattogram port meets the standards needed to deliver reliable power for decades to come.
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