Bangladesh Power Crisis Exposes Cost of Fossil Fuel Dependence, Solar Can Help

Bangladesh experienced load shedding of up to 4,395 megawatts during evening peak demand following a sharp rise in international fossil fuel prices in mid-2022, just months after declaring 100% electricity access — an outcome that IEEFA attributes to the country's heavy import dependence on fossil fuels and its failure to scale grid-connected renewable energy beyond 689 megawatts. A new IEEFA analysis argues that adding 2,000 megawatts of solar capacity could immediately provide significant relief and reduce the country's staggering fossil fuel import bill.

Bangladesh spent Bangladeshi Taka 35.64 billion (US$328 million) on power sector fuel costs in May 2023 alone, of which more than Tk30 billion (over US$276 million) was used to import oil, coal, liquefied natural gas, and electricity. Despite a total installed generation capacity of 24,911 megawatts, the highest peak power generation in May 2023 was only 12,887 megawatts — implying idle capacity of 48%. Renewable energy accounted for just 0.75% of total electricity generation, with grid-connected renewable capacity at 689 megawatts and rooftop solar under net metering at only 84 megawatts.

IEEFA identifies significant untapped solar potential in Bangladesh's garment and textile industries and in the special economic zones under development. The government has recently tendered for leasing 6.3 million square feet of rooftop space across 13 state-owned jute mills for solar installation of approximately 90 megawatts. Danish companies Copenhagen Infrastructure Partners and Copenhagen Offshore Partners have submitted an investment proposal for a 500-megawatt offshore wind project, which if implemented could attract further international renewable energy investment. Falling prices for solar accessories make future utility-scale projects more cost-competitive.

IEEFA urges Bangladesh Bank to direct commercial banks to prioritise letters of credit for solar equipment imports from creditworthy clients, noting that the foreign currency cost of 1,000 megawatts of solar capacity — approximately US$500 million — is a small fraction of the country's total import bill yet has faced inexplicable delays. The National Board of Revenue is called upon to classify solar accessories as essential goods, consistent with the Prime Minister's stated willingness to waive duties on solar energy if needed. IEEFA estimates the one-off import duty revenue foregone is far outweighed by the 25 to 30 years of economic and foreign currency benefits that rooftop solar would deliver.

Key figure — 4,395MW — highest evening peak load shedding recorded in Bangladesh following the fossil fuel price surge in mid-2022