Why Bangladesh must rethink its energy security

What was once a simple step to allocate sufficient dollars to import energy to meet its demand is no longer so simple for Bangladesh. Global energy supply disruptions and growing import dependence have made energy imports very difficult for Bangladesh. On top of this, rising energy demand may increase the country's vulnerability further.

The question is therefore about energy security and feasible ways to ensure a sufficient energy supply in the foreseeable future. To that end, the country can no longer rely significantly on imported fossil fuels. Instead, it should explore its domestic gas resources, shore up renewable energy, and cut back on consumption, supported by energy efficiency and conservation. It should also assess the benefits of regional cooperation.

Shafiqul Alam, lead analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), Bangladesh, made the observations in an interview with The Business Standard recently.

How do you see the future trend of energy and power demand?

In recent years, Bangladesh experienced subdued growth in primary energy consumption. Between 2020-21 and 2024-25, primary energy consumption increased from around 41.5 million tonnes of oil equivalent to approximately 46 million tonnes of oil equivalent, growing just over 2.7% per year (biomass excluded). On the other hand, maximum peak power demands recorded in 2024 and 2025 were almost the same.

"Bangladesh has focused increasingly on power security by adding generation capacity. It should now shift its attention towards the broader question of energy security."

However, peak power demand showed a rapid rise from June 2026 onwards. In late August, peak demand surpassed 19,000MW at 9 pm compared to 17,099MW recorded in 2025, demonstrating a massive year-on-year rise. In 2024, peak power demand was 17,200MW.

With summer temperatures raising cooling demand during peak hours and people adopting electric cookstoves amid low pressure in piped gas and high prices of LPG, demand for grid power is soaring.

As IEEFA highlighted in its study released in May 2026, one million electric cookstoves could result in a sudden spike in demand of around 2,000MW. Bangladesh reportedly has more than 40 million households. Besides, air conditioners and other appliances will increase power demand. Therefore, demand for grid power, driven by households, may significantly rise in the next decade.

On the primary energy front, the current gas demand-supply gap of 1,300 million cubic feet per day means the annual primary energy shortfall is around 11 million tonnes of oil equivalent. The gas supply shortage alone means that Bangladesh needs to increase primary energy supply by around 24% now. As many industries await commercial operation and require energy supply, we need to increase primary supply by more than 24% to minimise the current demand-supply gap.

How concerning is Bangladesh's growing import dependence in the energy sector?

Import dependence in the energy sector increased from 47.7% to 62.5% between 2020-21 and 2024-25. Due to this, the growing stress on utilities is visible. Insufficient fuel supply forces the government to increase load-shedding by even more than 3,500MW.

Illustration: TBS

However, as IEEFA projects that fossil fuel import dependence may reach 74.5% post-2030, excluding electricity imports through India, Bangladesh must try to limit this trend. Otherwise, infrastructure alone may not be able to ensure uninterrupted power and energy supply in 2030 and beyond. Elevated import prices, the requirement for support from MDBs and the subsidy burden may continue to make imported fuels unaffordable.

A pertinent point is what the power generation cost would be if the government passes on the additional cost of more than Tk100 per cubic metre of gas to the power plants that pay Tk15.5 per cubic metre (when LNG is purchased at USD28/MMBtu). This is also relevant for other sectors of the economy, as they pay well below the purchase price of LNG.

Can domestic gas provide some relief to Bangladesh's energy challenges?

Bangladesh will need its own gas, apart from renewable energy and energy efficiency, to manage its energy sector better. While there is a question about the risk of limited discoveries against the investment in exploration, the benefits will outweigh risks. If Bangladesh invests $1 billion in gas exploration over three years, the annual investment is just over $330 million per annum. However, Bangladesh paid around $3.8 billion in 2025 to import 327 billion cubic feet of gas, costing more than USD11/MMBtu. At current prices, the import cost is even higher.

On the other hand, the discovery of new gas will offer a significantly higher financial benefit.

How can Bangladesh tap clean energy at scale?

Bangladesh must utilise the potential of distributed renewable energy systems. Thousands of villages provide significant opportunities to install rooftop solar. While the government has offered Tk10.5/kWh for supplying surplus power to the grid from rooftop solar, the first step would be to encourage rural and semi-urban households to install rooftop solar for self-consumption. Generating surplus by installing battery energy storage systems will not be feasible for many rural and semi-urban people due to the scale of investment.

Industrial rooftop solar will also play a pivotal role in the country's renewable energy transition.

The government should ensure that utilities approve the request for net metering connections within the stipulated 10-15 days. Going forward, with the rising share of rooftop solar, Bangladesh will require installing smart meters for better predictability on the part of utilities.

Besides, utility-scale projects under the PPP and merchant power policy (MPP) could contribute significantly. However, in the case of MPP, the government should rationalise the open access cost, including the injection charge, to encourage investment. As utilities are already stressed due to insufficient fuel supply, it would be practical to encourage projects under MPP to help meet industry's share of its demand.

To address land scarcity, Bangladesh could certainly look into char areas (islands) and public lands. The government can only achieve its goal of installing 10,450MW of renewable energy by 2030 if it can utilise all instruments, such as net metering, PPP, and MPP, effectively. Moreover, Bangladesh may consider procuring cheap renewable energy sold at the day-ahead market through its regional cooperation.

While harnessing renewable energy, the government should also focus on energy efficiency and conservation. Better demand management will be key for Bangladesh to ensure continuous supply of energy to consumers. The government may consider finalising standards and labels for all important household appliances by 2030 and help consumers select efficient appliances.

In addition, fixing energy savings targets for large consumers could help limit the growing energy demand in the country.

While Bangladesh has increasingly focused on power security in the past, relying on increasing power generation capacity, it should now focus on enhancing energy security.