Solar shift could save Tk30bn in diesel imports for Bangladesh: IEEFA

Converting one-third of Bangladesh's diesel-powered irrigation to solar could cut the country's annual diesel import bill by about 244 million dollars (30 billion taka), according to a new briefing note by the Institute for Energy Economics and Financial Analysis (IEEFA).

The briefing note, released on Tuesday, says Bangladesh's irrigation sector, which remains heavily reliant on diesel, has substantial potential for the uptake of solar-powered irrigation systems.

The note draws on a comparative analysis of Bangladesh, Australia and India.

Titled Role of Distributed Resources in Energy Transition: A Multi-country Perspective, it finds that rooftop solar has emerged as the single biggest driver of growth in distributed energy resources (DERs) – small-scale power generation and storage technologies, such as rooftop solar, solar irrigation pumps, biogas and batteries, located close to where electricity is used.

The note says rapid DER expansion in Australia and India has reduced reliance on fossil fuel-based power, offering Bangladesh valuable lessons for charting its own DER pathway.

It projects the solar sector to grow further, with engineering, procurement and construction (EPC) companies holding a 500MW rooftop solar project pipeline and the government's strategy targeting 5,500MW of new rooftop solar capacity by 2030.

It says that despite the continued dominance of centralised electricity systems built around large power plants and transmission networks, distributed energy resources (DERs), such as rooftop solar, solar irrigation and vehicle-to-grid (V2G) technologies, are demonstrating their ability to deliver clean, affordable energy.

In Bangladesh, rooftop solar has grown faster than other DERs. Government data shows 418.1MW of rooftop solar capacity as of June 2026, while IEEFA estimates the figure has reached 667MW across 239 establishments, including groups of companies.

If the assessment were to include units below 0.15MW, Bangladesh's rooftop solar capacity could already be around 1,000MW.

This growth has slightly reduced daytime electricity demand, based on comparisons between 16 April and 11 June 2024 and the same period in 2026.

Despite the presence of net metering guidelines and low-cost financing, higher electricity tariffs have become one of the key drivers of rooftop solar adoption in Bangladesh, the IEEFA highlights.

"Compared to the grid-scale variable renewable energy capacity of 859MW as of June 2026, the country's growing rooftop solar capacity provides an encouraging signal for Bangladesh's power sector... However, Bangladesh needs to scale up efforts to tap into the potential of several thousand MW of rooftop solar capacity that the industry sector alone offers," said Shafiqul Alam, Lead Analyst, Bangladesh Energy, IEEFA–South Asia, and a co-author of the briefing note.

Acknowledging that high import duties raise project costs and remain an impediment, the government has revised the duty structure. However, the note says the revisions do not fully address long-standing concerns over import duties.

Although the government has reduced import duties on rooftop solar systems, stringent eligibility conditions mean smaller rural projects are unlikely to benefit from the concessions.

Additionally, the new structure increases the duty on rooftop solar projects in industries to 17% from 1% under the previous capital machinery provision, it says.

The briefing note also demonstrates how incentives in the form of capital subsidies helped accelerate the deployment of DERs at scale in both Australia and India.

"With the government stipulating a target to install a renewable energy capacity of 10,450MW between 2026 and 2030 in its strategy document, relying on rooftop solar for more than 50% of new capacity, a full duty waiver for all rooftop solar projects will likely help achieve the goal," said Shafiqul Alam.

The briefing note highlights that despite a stipulated approval timeline of 10–15 days for net metering applications, both rooftop solar and solar irrigation projects face delays in obtaining net metering connections, affecting the growth of DERs in Bangladesh.

The note therefore recommends that the Sustainable and Renewable Energy Development Authority (SREDA) and the Ministry of Power, Energy and Mineral Resources monitor the status of online net metering applications and take measures to avoid approval delays.

Drawing on lessons from Australia and India, Bangladesh could promote the deployment of battery storage alongside DERs, particularly rooftop solar.

"For predictability and better management on the part of utilities, Bangladesh should gradually adopt smart meters with DERs, like rooftop solar," added Alam.