Bangladesh (2012)

Source: REEEP Policy Database (contributed by SERN for REEEP)

This policy & regulatory overview is not updated anymore since 2015. We decided to keep it online due to high demand but would like to make you aware of the fact that it might be outdated.

Energy sources

Total Installed Electricity Capacity (2010): 5823 MW
Gas: 4822 MW (82.81%)
Diesel: 186 MW (3.19%)
Hydro: 230 MW (3.95%)
Coal: 250 MW  (4.29%)
Furnace oil: 335MW (5.75%)

Total Primary Energy Supply (2008): 27,944 ktoe
Natural Gas; 50.4%
Comb. Renew. And Waste: 31.1%
Oil and Products: 15.8%
Coal/Peat: 2.2%
Hydro-electric: ~0.5%

Renewable energy in the form of traditional biomass is one of the main sources of primary energy. Four-fifths of Bangladeshis live in rural areas, and their energy needs are primarily met by straw, jute stick, animal dung and firewood. Major proportions of the nation's firewood consumption are met by forest resources.

Presently, known commercial energy resources include natural gas, oil, coal and hydroelectricity. Of the commercial fuels, natural gas is the most important, making up 70% of use, while imported oil, coal and hydropower comprises the balance. Among biomass fuels, agricultural residues contribute almost half, with cow dung, biogas and fuel wood making up the rest.  In the past, peat was considered as a fuel source, but study has shown that exploitation of high quality coal negates the possibility to use it as commercial energy resource. Until now, nuclear energy has not been given any serious thought. 

The country has experienced a severe power crisis for nearly a decade. Known reserves such as natural gas and coal of commercial primary energy sources in Bangladesh are limited compared to the development requirements of the nation. By acknowledging the potential of RES and working towards using them, Bangladesh could possibly meet its unprecedented energy demands .

Electricity is in deficit as per demand. The total installed capacity of electric power increased from 2350 MW in 1990 to 5823 MW in 2010, with an annual growth rate of 5.17%. The biggest share of electricity comes from gas generation system. However, the power plants are not operated for maximum output due to the shortage of fuel. The rate of gas production capacity is declining day by day. The country economic situation could not permit the import of more petroleum for power generation. The big hydropower plant could not run at full capacity due to declination of water head at the lake. However the demand for electricity is increasing day by day due to the growth of industry and population. To keep this in mind RES sources are coming forward. The off-grid solar PV systems have increased remarkably during the last few years. Now the capacity of solar PV electric systems in the country is 25 MW .

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Local oil and coal reserves are very small compared to the demand – according to 2009 statistics; more than 94% and 45% of the respective needs were met through imports.

Net energy imports in 2009 were 4.67 MtoE.

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Extend network

Population Access to Electricity (2009): 41%
Rural: 28%
Urban: 76%

Lack of access to electricity is one of the major issues affecting the socioeconomic conditions of the people. According to International Energy Agency statistics, nearly 96 million people, making up 38% of the total, do not have access to electricity. While some other estimates suggest that only 32% of the total population is connected to national electric grid. After India, Bangladesh has the largest population base in the world without access to electricity. In terms of per capita electricity consumption, the country has a ranking of 177 in the world with an annual value of 148 kWh.

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Capacity concerns

The present effective peak generation of about 4,000 MW of electricity against a peak demand of 5,500 MW means large-scale load shedding which seriously impacts industrial, commercial and social life.

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Renewable energy

Solar Energy
There is a strong potential for solar energy, with an average daily insolation of 4-6.5 kWh/m2.

The abundant sunshine available in Bangladesh makes it a good place to promote solar energy. A solar powered electricity generating system called solar home system (SHS) has been very popular since the solar power development project was initiated in rural Bangladesh in 2003 by IDCOL (Infrastructure Development Company Limited), an organisation created by the Bangladesh government. IDCOL implements its SHS installation programme in villages through several non-governmental organisations (NGOs) working as partners. By September 2005, a total of 50,000 SHS were installed in rural households. This number increased to about 400,000 by December 2008 and to about 801,358 by January 2011, generating about 36.5 MW of electricity in total  . The very rapid growth of SHS in rural households in Bangladesh puts it on the map of one of the faster growing solar energy programmes. IDCOL now plans to increase the total number of households with SHS in the country to one million by 2012. There is no doubt that solar powered electricity through SHS is benefiting millions in the rural households in Bangladesh, but in the context of total national output it will be quite some time before solar energy becomes a significant constituent of the energy mix of the country .  

The Bangladesh Power Development Board (BPDB) has also implemented an excellent Solar PV electrification project in the Chittagong hill tracts region. Solar PV electrification has emerged as the most appropriate technological option for electrifying these areas . 

Wind Energy
Wind energy has also made some inroads, but its potential is mainly limited to coastal areas, and offshore islands with strong wind regimes. These coastal settings afford good opportunities for wind-powered pumping and electricity generation. Presently there are 2 MW of installed wind turbine capacity at Feni and Kutubdia.

Biomass has been used traditionally as a domestic fuel in rural Bangladesh for ages, keeping the rural energy technology base inefficient and primitive. There has been increasing interest in improving the energy efficiency of biomass (cow dung, agricultural waste, etc.) by converting it to biogas, thus upgrading the rural energy consumption patterns. Biogas (methane), similar in nature and property to natural gas, is used in rural households for cooking, lighting and other purposes. About 10,000 biogas plants were installed in rural households up to December 2009. The ongoing programme of promoting biogas technology in rural Bangladesh has the people’s support and is destined to grow further. Biomass is not generally considered as commercial energy and therefore the drive to increase the energy efficiency of biomass is not always a priority with government agencies. But considering that the vast majority of people in rural Bangladesh depend on biomass, the biomass to biogas conversion technology deserves to be furthered in order to raise the standard of living of rural people.

Biogas mainly from animal and municipal wastes may be one of the promising renewable energy resources for Bangladesh. Presently there are tens of thousands of household- and village-level biogas plants throughout the country. There is the potential to harness basic biogas technology for cooking and rural and peri-urban electrification, to provide electricity during periods of power shortfalls.

Micro-hydro and mini-hydro have limited potential in Bangladesh, with the exception of the Chittagong and the Chittagong Hill tracts. Hydropower assessments have identified some possible sites from 10 kW to 5 MW, but no appreciable capacity has yet been installed. There is currently one operating hydropower plant at Kaptai, established in the 1960s, with an installed capacity of 230 MW.

Other renewable energy sources include biofuels, gasohol, geothermal, river current, wave and tidal energy. Potentialities of these sources are yet to be explored.

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Energy efficiency

Due to peak load deficits of over 2000 MW, load shedding during peak hours is a regular occurrence in Bangladesh. At the same time, the demand for electricity continues to grow at the rate of over 500 MW/year due to population growth, increased industrialization, additional grid connections, and the rise in modern, electrical appliances .

A major portion of the population located in off-grid areas may not be able to get electricity in the immediate future due to several constraints such as low consumer density and inaccessibility. Hence RE, EE and co-generation can play a significant role in the far-flung remote locations of Bangladesh.

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The Bangladesh Power Development Board (BPDB, was created in 1972, a public sector organisation. The Rural Electrification Board (REB) was established in 1977, as the semi-autonomous government agency .

As Dhaka grew in population and became a metropolitan city, the need for its own electricity grid, led to the creation of the Dhaka Electric Supply Authority (DESA) in 1991. It was implemented to operate and develop the distribution system and bring improvements in customer service, revenue collection and lessen the administrative burden of BPDB. Tthe Dhaka Power Distribution Company Ltd. (DPDCL, took over DESA activities in 2008 as part of an overall power sector reform, to unite the energy system, and produce a more competitive, reliable and efficient system.  The Power Grid Company of Bangladesh (PGCB, was created in 1996  to own, operate and expand the national power grid. In 2003, PGCB completed the takeover and began the operation all the transmission assets of BPDB and DESA. The PGCB is a public limited company, and is 76.25 % owned by BPDB, the remaining 23.75% is owned by the general public.

The creation of the Dhaka Electric Supply Company (DESCO, was also part of the reforms. It is a public sector company, and a subsidiary of DESA. However, in the future, its shares will be offered to other power sector entities and the general public.

The REB has 70 operating rural electric cooperatives called Palli Bidyuit Samity (PBS). These cover more than 90% of the area for rural electrification. These cooperatives bring service to approximately 7,200,000 new connections, and are constructing more than 14,000 km of new transmission and distribution lines each year.

The oil and natural gas market is primarily operated by the Bangladesh Oil, Gas and Mineral Corporation (, which holds the shares of all state-owned companies involved in  oil and gas production and exploration, and the Bangladesh Petroleum Corporation (BPC,, responsible for the refining,  distribution and import of crude oil and petroleum products.

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The electricity sector of Bangladesh has undergone reform since the mid-1990s, including unbundling of the state-owned energy supplier, the BPDB, into separate companies responsible for power generation, transmission and distribution. At present BPDB is functioning as a single buyer, except for some direct power purchase from small IPPs. Multi buyer/competitive pools may be adopted when the market becomes mature and stable.

Although generation, transmission and distribution have been opened to foreign and private sector involvement, these sectors remain dominated by state-owned entities. BPDB accounts for over 70% of the electricity generated in Bangladesh. This share also includes the first BPDB-founded subsidiaries, such as the Ashuganj Power Company (APS), which originated with the transformation in 2002 of the state-owned Ashuganj Power Station into a joint stock company. IPPs have been allowed to enter the market since 1996. Between 1998 and 2005, seven power plants belonging to IPPs started operation, providing an installed capacity of more than 1,290 MW, mainly fired by natural gas.  These plants represent a 26% share in the country’s total electrical generating capacity. Actual planning envisages the construction of further power plants by non-state-run producers, or joint state and private providers, for a total output exceeding 1.590 MW. Self-generators account for 1.1 GW of installed capacity in Bangladesh.

Since 1996, responsibility for the operation and expansion of the entire electricity transmission grid has lain with the PGCB, a subsidiary of the BPDP. Since the start of the power reform process in 1996, the DPDCL (formally the DESA) has shared electricity distribution operations in the capital with the DESCO, a state-run joint-stock company. In addition, a further power distribution company, the West Zone Power Distribution Company (WZPDC), was established in 2003 as a BPDB subsidiary, and is responsible for the country’s south-west.

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Energy framework

Development of the energy sector has been prioritised via the Five-Year Development Plans of Bangladesh. Development of the energy sector appears to be a major constraint for continued development of the nation.  The objectives and targets set out for the energy sector for the Sixth Five Year Plan (SFYP) 2011-2015, in line with the Vision 2021 a national development plan, are as follows:

  1. Accelerated exploration, appraisal and development of existing and new gas fields, the upgrade of possible gas resources into proven reserves, and balanced expansion of the transmission and distribution network;
  2. Integrated reservoir management in both public and private gas companies, and where possible, the provision of standby wells for supply security and reservoir data collection;
  3. Institute administrative, financial and legal reform in Petrobangla and companies;
  4. Reduce system losses and improve energy use efficiency;
  5. Improve the supply security of petroleum products;
  6. Encourage public-private partnerships for LNG import and marketing;
  7. Encourage public-private partnerships in the exploration and distribution of indigenous oil and gas;
  8. Expand LPG use for domestic consumption to discourage piped gas.

National Energy Policy (NEP)
To set out the overall framework for the improved performance of this sector, the National Energy Policy (NEP) was prepared and adopted by the government in 1996. To introduce competition, attract foreign direct investment and, more importantly, to increase power supply to alleviate the acute shortage, in line with the NEP, the government has adopted the following policy measures:

  • the Private Sector Power Generation Policy of Bangladesh, adopted in 1996,
  • Policy Guidelines for Small Power Plants (SPP) in the Private Sector” in 1998,
  • Guidelines for Remote Area Power Supply Systems (RAPSS) in July 2007,
  • Policy Guidelines for Enhancement of Private Participation in the Power Sector in 2008,
  • the Renewable Energy Policy of Bangladesh, adopted in January 2009. This policy has the following objectives:
  1. to harness the potential of renewable energy resources and the dissemination of RETs in rural and urban areas;
  2. to enable, encourage and facilitate public and private sector investment in RE projects;
  3. to develop sustainable energy supplies to substitute indigenous non-renewable energy supplies;
  4. to scale up the contribution of RE to electricity production;
  5. to facilitate the use of renewable energy at every level of energy usage;
  6. to promote development of local technology in the field of RE;
  7. to promote clean energy for the clean development mechanism (CDM).

The Ministry of Environment and Forests Government of the People's Republic of Bangladesh in 2008 released the Bangladesh Climate Change Strategy and Action Plan, which will be the main basis of the Bangladesh government’s efforts to combat climate change over the next ten years.

Government of Bangladesh unveiled a Power and Energy mega-plan in the recent budget of FY2011–2012 to generate additional 11,698MW of electricity by 2015. In this plan, a 5-year power generation and investment roadmap is designed to stimulate both public and private investments for power generation to accelerate the GDP growth in the country .

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Energy debates

The cabinet has approved a proposal for forming a sustainable and renewable energy development authority and amending the Renewable Energy Policy 2008 to institute an effective policy and regulatory framework for expanding the use of renewable energy in the country.

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Energy studies

Bangladesh is part of the South Asian Regional Initiative for Energy under USAID (SARI/E), a program that promotes energy security in South Asia through three focus areas :

(1) cross border energy trade,
(2) energy market formation, and
(3) regional clean energy development.

Through these activities, SARI/E facilitates more efficient regional energy resource utilisation, works toward transparent and profitable energy practices, mitigates the environmental impacts of energy production, and increases regional access to energy. SARI/E countries also include Afghanistan, the Maldives, Bhutan, India, Nepal, Pakistan, and Sri Lanka .

REIN (Renewable Energy Information Network) is the first website developed in Bangladesh to promote RE .

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Role of government

Ministry of Power, Energy, and Mineral Resources (MPEMR,
In Bangladesh, the electricity sector is the responsibility of the MPEMR. Its executing arm comprises the Power Division, which has overall authority for the electricity sector; and the Power Cell, which regulates development of the electricity sector, including the implementation of reforms. The Power Cell’s scope of responsibility includes renewable energy – it coordinates and supports the implementation of RE projects by NGOs and private actors.

Bangladeshi Rural Electrification Board (REB,
Since its founding in 1977, the REB has pursued the Bangladesh Rural Electrification Programme. The core of this programme focuses on building up the rural electricity cooperatives (PBSs). The REB is supported by a large number of international donors such as the Asian Development Bank and the World Bank. To date, only a certain proportion of the PBSs are financially self-supporting. To ensure that all PBSs become financially stable and self-reliant over the long term, the REB makes agreements each year with them; compliance or non-compliance entails financial benefits or penalties. To close supply gaps or shortages among existing PBSs, the REB is increasingly concentrating on integrating RE systems to create village-based stand-alone solutions alongside the distribution of electric power via the national grid to end-customers.

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Government agencies

Infrastructure Development Company Limited (IDCOL)
The IDCOL is a state-owned non-banking financial institution that administers financing for rural energy and renewable energy development projects (mainly solar home systems (SHS) and biogas) with 15 participating national NGOs. The main responsibility of the IDCOL is to promote economic development by encouraging private sector investment in energy projects. It engages local partner organisations, such as NGOs, community groups, and end users in projects. It plays an important role in bridging the financial gap for developing medium and large-scale infrastructure and renewable energy projects.

Grameen Shakti
Grameen Shakti is a sister organisation of the Grameen Bank (literally: rural bank). Grameen Shakti was established in 1996 to develop and popularise RES.  The Grameen Shakti energy program provides micro-generation RE systems to the rural population of Bangladesh which lacks access to the conventional electricity and gas networks. The program has grown at a remarkable rate over the last 14 years. Having installed over 520,000 solar home systems, over 14,300 biogas systems and 172,000 improved cooking stoves, Grameen Shakti has reached to around three 3.5 million people. The credit of its accomplishments goes to its innovative business model. The key drivers of its success include micro-credit based financial model, vast operational network, cost-effective production, Grameen Technology Centers (GTCs) and micro-utility systems. In order to make RETs affordable for its customers, Grameen Shakti offers them micro-credit assistance rather providing any direct grants or subsidies. In the wake of the growing trends of distributed generation across the world, Grameen Shakti can be a role model not only for the developing countries but also for developed countries.

Local Government Engineering Department (LGED) 
The LGED is one of the largest engineering departments in Bangladesh, providing technical support to local government institutions, including the application of renewable energy technologies in off-grid areas.  It has a project entitled “Sustainable Rural Energy
(SRE)”, with financial support from UNDP.

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Energy procedure

  • Government developed short-term (up to 2007), medium-term (up to 2012) and long-term (up to 2020) development plans.
  • In 2008, two new World Bank projects in Bangladesh were approved for 1.3 million solar home systems to be installed by Grameen Shakti and IDCOL. (These projects are among the first to incorporate off-grid PV carbon finance). The ongoing World Bank solar home project in Sri Lanka in 2008 now has a cumulative installation of 125,000 households .
  • Rural Electrification And Renewable Energy Development Project (REREDP) by Infrastructure Development Company Limited (IDCOL) is a Solar Energy Programme supported by IDA and Global Environmental Facility (GEF). 
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Energy regulator

The Bangladesh Energy Regulatory Commission Act was enacted in March 2003, and the Bangladesh Energy Regulatory Commission (BERC, was established in April 2004. The Commission has a mandate to regulate the electricity, gas and petroleum sectors, and has been fully functional since the year 2008. It was established “To make provisions for the establishment of an independent and impartial regulatory commission for the energy sector” .

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Degree of independence

In the government’s view, BERC is an independent body, whose autonomy is secured under the Act that created it. While the Commission was established with the vision to create an independent sector regulator,, the BERC has limited its activities to energy tariff regulations. Furthermore, there have been delays in appointing the commission’s five members: the commission’s chairman was appointed more than two years after the BERC’s formal establishment. The Bangladesh Energy Regulatory Commission Fund is the financing mechanism for the Commission, and is provided, primarily, through government stipends and operational revenues.

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Regulatory framework

The current legal and policy frameworks in Bangladesh that encompass reference to the development of renewable energy include the National Policy Statement on Power Sector Reform 2000; the Private Sector Power Generation Policy 1996 to encourage private sector participation in the electricity generation sector; Remote Area Power Supply Systems; Policy Guidelines for Small Power Plants in Private Sector 2001 to encourage small-scale (<10 MW) electricity generation; the Energy Regulatory Commission Act 2003  and the Renewable Energy Policy 2009.

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Regulatory roles

The major functions of BERC are as follows:

  1. To issue, cancel, amend and determine the conditions of licensees,
  2. To determine tariff safety enhancements,
  3. The framing of codes and standards, and to oversee the enforcement of them, ensuring quality of service,
  4. Resolving disputes between licensees, and between licensees and consumer, and referring those to arbitration if necessary,
  5. Providing advice to the government regarding electricity generation, transmission, marketing, supply, distribution and storage of energy.
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Energy regulation role

The government, through the MPEMR, is responsible for the overall planning and development of the energy sector, through the issuance of policy directives relating to energy. The President appoints the Commissioners of the Commission, on recommendation of the Ministry. Through its responsibility in energy planning, the government also has the responsibility to sustainably develop the energy sector, for the conservation of energy for future consumption.

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Regulatory barriers

A well-functioning institutional context for the implementation of RETs would entail the removal of the following barriers. Firstly, there is a lack of financial incentives to encourage private sector investments in RE, market-oriented implementation, and use. Most of the programs in Bangladesh are government and/or donor-funded, and focus on research and development, rather than product commercialisation. Secondly, there is a lack of standardized power purchase agreements for power generation from RETs (due to unfavorable utility regulations for RE development). Thirdly, RE is dealt with by various ministries, agencies, and institutions. Establishing a good coordination between them is a necessity. Fourthly, the process for project approval is lengthy and difficult. Finally, many RET implementation activities are dependent on national budgets, which creates uncertainties and time delays. Related to this, the government budgets for renewable energy projects are limited, whereas demand for financing various national priorities (health, education, disaster management, etc.) is high.

In the absence of a power supply-related specific legal framework in Bangladesh, independent power producers may not be able to invest in RE facilities and sell power to the utility or to third parties under so-called “power purchase agreements.” Similarly, utilities may negotiate power purchase agreements on an individual ad hoc basis, making it difficult for project developers to plan and finance projects on the basis of known and consistent rules. Utilities may not allow favourable transmission access to renewable energy producers, or may charge high prices for transmission access. Transmission access is necessary because some renewable energy resources like windy sites and biomass fuels may be located far from population centres. Transmission or distribution access is also necessary for direct third-party sales between the renewable energy producer and a final consumer.

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Ministry of Finance – Government of the People´s Republic of Bangladesh. Power and Energy. 2010. Available at: [Accessed 10th September 2013] 

Rahman, Samina and Azim, Mohammad. Sustainability and the Environment: Prospect and Challenges of Renewable Energy in Bangladesh. 30 October 2011. [Restricted Access 10th September 2013]

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Ministry of Power, Energy and Mineral Resources Government of the People´s Republic of Bangladesh. Website. Power Sector Structure. Available at: [Accessed 10th September 2013]

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South Asia Regional Initiative for Energy (SARI/ Energy) website. Mission Statement. Available at: [Accessed 10th September 2013] 

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India Semiconductor Association (ISA). Solar PV Industry 2010. Contemporary scenario and emerging trends. 2010. Available at: [Accessed 10th September 2013]  

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Ministry of Power, Energy and Mineral Resources. Government of the People´s Republic of Bangladesh. Power Division. Website. Bangladesh Energy Regulatory Commission (BERC). [Accessed 10th September 2013] Close References