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BANGLADESH’S renewable energy ambitions remain largely unrealised, despite more than a decade of policy commitments. Today, renewable energy contributes less than five per cent of total electricity generation, according to Sustainable and Renewable Energy Development Authority data. This failure stems not from technological constraints but from regulatory bottlenecks, investment risks and a lack of serious policy commitment. While the country continues to expand its power capacity, it remains heavily reliant on fossil fuels, leaving renewable projects struggling to compete.

Bangladesh’s eighth five-year plan and its Nationally Determined Contributions under the Paris Climate Agreement have rescheduled renewable energy goals to 2025, but there is little indication that these targets will be met. Investment remains the principal hurdle. A recent study conducted by researchers from the United International University and the Bangladesh Power Management Institute highlights the risks that deter potential investors. The study, which surveyed 46 key stakeholders — including developers, regulators and financiers — found that permit delays and power market risks remain the biggest barriers to renewable energy expansion. Developers face prolonged bureaucratic processing, cost overruns and, in some cases, harassment and bribery, making projects financially unviable. These issues not only slow down project implementation but also discourage new players from entering the market, leaving renewable energy development in the hands of a few entities with limited capacity.

Securing land for solar or wind power projects poses another serious challenge. Bangladesh’s dense population and agricultural dependence make large-scale land acquisition difficult. At the same time, the country’s power grid is not equipped to integrate intermittent renewable energy effectively. Limited grid codes and infrastructure gaps further complicate efforts to scale up renewable projects. Investors also cite political risks and counterparty risks — concerns over whether state-run entities will honour contracts — as major deterrents. Foreign developers, in particular, seek risk-sharing mechanisms such as insurance and currency hedging to offset macroeconomic uncertainties. Local developers prioritise community engagement and technical capacity building, but without strong institutional support, these efforts remain limited. The absence of a well-defined framework for renewable energy projects has led to a situation where investors must navigate a complex web of unclear regulations, increasing uncertainty and reducing confidence in the sector’s growth prospects.

A fundamental problem is the gap in risk perception among stakeholders. Regulators downplay issues such as permit delays and financial inefficiencies, while investors see these as critical barriers to entry. Public sector developers are more optimistic than their private counterparts, reflecting a disparity in how risks are assessed by those with institutional backing versus those dependent on market conditions. This divergence in perspective means that policy responses are often misaligned with the actual challenges faced by investors and project developers. Unless policymakers acknowledge these concerns and address them through targeted reforms, private investment in renewable energy will remain stagnant.

Several policy interventions can create a more favourable investment climate. A one-stop licensing process would eliminate bureaucratic delays. Simplifying approval mechanisms and ensuring that power purchase agreements offer bankable guarantees would improve investor confidence. Financial product development — such as long-term loans, currency hedging and green bonds — can mitigate financial risks. Training local developers to access international climate funds, including the Green Climate Fund, would provide additional financial avenues. Allocating government-owned land for renewable projects and streamlining land procurement could remove a significant bottleneck. Competitive bidding, rather than unsolicited contracts, would ensure transparency and attract credible investors. Strengthening the regulatory framework by setting clear guidelines on tariffs, grid integration and compliance measures would further instil confidence among investors and reduce uncertainties surrounding project implementation.

Bangladesh cannot afford to treat renewable energy as an afterthought. Its long-term energy security and climate commitments depend on breaking its dependence on fossil fuels. With the right policy interventions, the country can unlock investment, accelerate project implementation and position itself as a leader in sustainable energy. The current trajectory, however, suggests that without immediate action, Bangladesh will once again fall short of its targets. The government must recognise that attracting investment in renewable energy is not just an option but an urgent necessity. A proactive and transparent policy approach, coupled with sustained commitment to reform, is essential if Bangladesh is to achieve its renewable energy goals and meet its obligations under international climate agreements.

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Mohammad Alauddin is a rector at Bangladesh Power Management Institute.