As the interim government’s term comes to an end, power is set to be transferred to the democratically elected leadership. While the outgoing authorities removed some of the most controversial practices of our energy sector, the long-term reforms are going to be the responsibility of the new government. One of the first tests for the new authorities will be whether they can build resilient renewable-energy institutions over the ruins of the previous authoritarian regime’s mishaps and the interim era’s quick fixes. This is the time to create a structured framework for green, renewable power.
One of its most decisive actions by the interim was the repeal of the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act, 2010, also known as the “Quick Rental” act. For over a decade, this indemnity law allowed shady power deals by bypassing competitive bidding and normal scrutiny. Its annulment removed a key legal shield for politically connected contracts.
The interim period also called out the habit of announcing ambitious renewable targets without the institutional capacity to deliver them. Bangladesh aimed for 10 percent renewable electricity by 2020 and later targeted 40 percent clean energy by 2041. Yet by 2025, renewables still account for only around 4-5 percent of installed capacity. Promises were made, but the groundwork was missing.
The interim government also cancelled 31 pending renewable power projects, which were approved under the Quick Rental Act. These projects were worth $6 billion in potential investment, although they were mostly unsolicited solar deals. The energy adviser Muhammad Fouzul Kabir Khan argued that many of these contracts were riddled with high tariffs and unjustified capacity payments.
However, Transparency International Bangladesh (TIB) warned that simply scrapping projects is only a legal clean-up, not an energy strategy. Moreover, this move sent a negative signal to foreign investors. Such ad hoc discretion is dangerous whether used to approve or cancel contracts. Only strong institutions can provide both integrity and predictability. The interim government’s moves proved that without proper rules and planning, even anti-corruption efforts can create uncertainty.
Bangladesh’s stagnating renewable energy adoption is rooted in persistent institutional and policy gaps. First are the regulatory complications surrounding renewable energy. The newly drafted Renewable Energy Policy, 2025, assigns the Sustainable and Renewable Energy Development Authority (Sreda) broad responsibilities to promote and oversee renewables. But licensing and approval powers are distributed among other agencies.
For example, the Bangladesh Energy Regulatory Commission (BERC) has been made the licensing authority for large renewable projects, creating overlap and bureaucratic complexity. Sreda was meant to be a one-stop agency for green energy, but it lacks the authority to go past this red tape. Meanwhile, the credibility of BERC got weakened by years of political interference and conflicting mandates. Although the interim government restored some independence in August 2024 by revoking executive pricing powers, the commission is still struggling to re-establish its credibility.
Moreover, Bangladesh produced multiple energy plans and targets and they clash with each other. The Mujib Climate Prosperity Plan had actually aimed for a 30 percent renewable energy share by 2030, while the Integrated Energy and Power Master Plan (IEPMP) in 2023 proposed a 40 percent clean energy share by 2040, mostly through imports, nuclear and large hydro, with only nine percent coming from domestic renewables. At the same time, approvals for new fossil fuel projects such as coal and LNG-based plants have continued.
This lack of alignment suggests that the renewable transition, for all its stated importance, has not yet been placed at the centre of national planning. Centre for Policy Dialogue (CPD) cautioned that without halting new fossil projects, the grid will remain over-supplied with conventional power and crowd out renewables.
Lastly, there are practical barriers to slowing down renewables. Land acquisition is a major hurdle, as many of the cancelled solar projects struggled to secure suitable land. Lengthy approval processes for environmental clearance and local permits further slow down the progress. Meanwhile, the national power grid is not yet ready for a large influx of renewables. Analysts point to the absence of a modern smart grid, limited transmission capacity, and weak distribution infrastructure as factors discouraging initiatives like rooftop solar and wind turbines. All these challenges explain why Bangladesh has been cancelling more renewable capacity than it is commissioning.
Today’s elected government will inherit an energy sector partially cleared of malpractices but still lacking a clear construction strategy. The repeal of the Quick Rental Act closed a dangerous legal loophole, but legal clean-up alone does not generate electricity. The real challenge is converting this reset into predictable, bankable renewable projects.
First, reforms must be locked in. Any return to emergency procurement laws for power would weaken investor confidence. Transparency and competitive bidding should be embedded firmly in the Renewable Energy Policy, 2025, and its implementing rules, including mandatory disclosure of power purchase agreements.
Second, institutional roles must be clarified. A clear division of labour is needed between Sreda, BPDB, and BERC. Sreda should be empowered to coordinate renewable energy planning and project pipelines, while overlaps in licensing must be reduced. At the same time, BERC must retain full independence in tariff-setting and licensing to prevent ad hoc political intervention.
Third, competitive reverse auctions should replace unsolicited deals. A multi-year auction schedule would signal that transparent competition is now the only route to market. Clear ceiling tariffs and standardised Power Purchase Agreement (PPA) would further reduce uncertainty.
Finally, grid and land reforms must align with renewable targets. Think tanks estimate Bangladesh will need more than 35 GW of renewables by 2040, requiring coordinated investment in transmission, storage, and land access alongside generation.
The foundation of any successful energy transition is trust, from investors in stable rules, consumers in affordable service, and citizens that public money is spent responsibly. Strong institutions are the foundation of that trust, and Bangladesh’s renewable transition will rise or fall on institutional strength. For the next government, the first test is not announcing new targets but building credible institutions that turn policy into power.
Mohammad Iftekharul Islam is research associate at South Asian Network on Economic Modeling (Sanem). He can be reached at [email protected].
Views expressed in this article are the author's own.
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