Urgent policy reforms needed to unlock rooftop solar potential: CPD

The Centre for Policy Dialogue (CPD) tomorrow (23 June) called for sweeping policy reforms to scale up rooftop solar adoption in Bangladesh, saying that the country risks repeating the "retention failures" of its off-grid Solar Home System (SHS) era unless structural barriers in financing, taxation, and regulation are urgently addressed.

The think-tank made the observations at a programme at a city hotel, titled "Solar Revolution in Pakistan in the Eyes of Country's Leading CSO: Lessons for Bangladesh from National Budget Perspective."

Presenting the keynote, CPD Research Associate Atikuzzaman Shazeed traced Bangladesh's solar energy journey from the off-grid SHS programme launched in 2003, which electrified over 20 million people to the collapse of that model as the national grid reached rural areas, and the subsequent emergence of rooftop solar as the new frontier.

He noted that SHS installations peaked at 853,000 units in 2013 before plummeting to just 3,455 by 2018, a 99.6 percent decline in five years, as grid electricity rendered the off-grid model obsolete.

According to CPD's SHS Survey 2025, nearly 47% of all installed solar home systems are now non-functional, largely due to battery failure and the absence of any structured transition or retrofitting pathway.

On the on-grid side, Bangladesh currently has 4,551 net metering rooftop installations with a combined capacity of 213.3 MW, with 1,531 units installed in 2025 alone but 60.4 percent of installations remain concentrated in Dhaka division.

CPD identified multiple obstacles hampering faster growth.

On the residential front, cumulative import duties of 27.5% to 33.6% on panels and inverters inflate upfront costs, while banks avoid small, long-tenor solar loans and Bangladesh Bank's green refinancing window suffers from heavy documentation burdens and slow disbursement.

Regulatory bottlenecks, including system-size caps and inconsistent net-metering approvals, further discourage smaller users.

For the industrial segment, banks' demand for 100 percent asset-backed collateral effectively blocks the lower-cost OPEX model, as solar assets and power purchase agreements are not recognised as bankable security, it said.

SME access remains skewed toward large firms with existing capital and technical capacity.

On solar irrigation, CPD flagged that more than 90% of Bangladesh's 3,100-plus solar irrigation pumps remain off-grid, with only the Bangladesh Rural Electrification Board (BREB) model offering farmers both ownership and grid connectivity yet BREB implements just 8.6% of all solar irrigation pumps.

Grant dependency remains heavy, with financing ranging from 50% to 100% subsidy, while actual investment payback periods of 15 to 20 years far exceed the official eight-year estimate.

To address these challenges, CPD recommended simplifying net-metering eligibility and launching a unified digital application platform across utilities, rationalising duties on photovoltaic components, establishing a Renewable Energy Service Company (RESCO) collateral framework that recognises power purchase agreements as bankable security, and expanding net metering to solar irrigation pumps to unlock their off-season surplus capacity.

CPD also called for a national distributed renewable energy coordination body under Sustainable and Renewable Energy Development Authority (SREDA) to track retention, not just installations, and for redesigning institutional incentives so that partner organisations are rewarded for continued use rather than disbursement alone.