Bangladesh will need to install more than 35 gigawatts (GW) of renewable energy capacity to reach its 30% clean energy target by 2040, , as set out in the newly drafted Renewable Energy Policy, according to a new report by the Centre for Policy Dialogue (CPD).

The findings come amid concerns that the government’s continued expansion of fossil fuel projects could jeopardise the country’s renewable ambitions. The report, “Revisiting Targets Set for Renewable Energy-based Power Generation by 2040: Projection of ‘SMART’ Target and Required Investment”, was unveiled on Sunday at a press conference at the BRAC Centre in Dhaka. The presentation was delivered by Mehadi Hasan Shamim, programme associate at CPD.

Fossil fuel expansion threatens renewable growth

CPD warned that fossil fuel-based capacity is set to overshoot electricity demand for years to come. By 2030, fossil generation capacity is projected to reach 29,773MW – almost 7,000MW above the anticipated demand of 22,702MW. This imbalance is expected to persist through 2040.

“Without halting new fossil fuel projects and planning for the retirement of existing plants, the grid will continue to prioritise fossil-based generation, limiting renewable energy integration,” the report cautioned. As of March 2025, renewable energy accounts for just 3.6% of the national grid, compared with 43.4% from gas and a rising share of imported coal.

Conflicting policy targets

The report also highlighted inconsistencies in Bangladesh’s clean energy ambitions. The Climate Prosperity Plan calls for 30% renewable energy by 2030, whereas the Renewable Energy Policy 2025 postpones the same goal to 2040.

Meanwhile, the Integrated Energy and Power Master Plan (IEPMP) sets a higher ambition of 40% by 2040, although only 9% of this is expected from conventional renewables. To align these targets, CPD said Bangladesh must secure 35,713MW of renewable capacity by 2040, with the greatest potential in solar (17,229MW), followed by wind (13,625MW) and hydropower (3,567MW).

Investment requirements

The report estimated that between $35.2 billion and $42.6 billion in investment will be needed between 2025 and 2040. Of this, $16.5 billion would have to be directed to solar, $12.6 billion to wind, and $6 billion to hydropower, with a further $7.4 billion required for imports and other related needs.

CPD stressed that achieving this level of financing will require a coherent policy framework to give investors clarity and confidence. It urged the government to mobilise concessional loans from development partners and foster strong private sector participation.

Calls for policy reform

Imran Karim, former president of the Bangladesh Independent Power Producers Association (BIPPA), noted that renewables currently account for only 2% of electricity generation. He argued that scaling this to 20% by 2030 would alone require $12–14 billion in investment. “Private sector participation will be vital,” he said, adding that faster processing of government tenders is equally important to accelerate deployment.

The CPD recommended that the government adopt a unified renewable energy target of 30% by 2040 across all national strategies, alongside a clear fossil fuel phase-out plan with milestones for 2030 and 2035. The report further called for urgent modernisation of the grid and expansion of storage capacity to support the integration of variable renewable sources.

It also urged Bangladesh to import renewable power from Nepal, Bhutan and India to address short-term supply gaps and build stronger regional energy cooperation. In parallel, the report stressed the need to tap climate finance through strategic engagement with multilateral lenders such as the Asian Development Bank (ADB), the Asian Infrastructure Investment Bank (AIIB) and the World Bank.

Government stance

Fahmida Khanam, additional secretary at the Ministry of Environment, Forest and Climate Change, reiterated the government’s commitment to renewable expansion as part of its climate resilience agenda. “Bangladesh has set ambitious goals, but achieving them will require strong policy alignment, technology transfer, and substantial investment support. We need coordinated efforts between the government, private sector, and development partners to ensure that renewables can play a central role in our future energy mix,” she told the event.

The CPD report concluded, “Bangladesh stands at a crossroads: one path leads to continued fossil fuel expansion and wasted resources, while the other offers a clean, reliable, and low-carbon energy future.” Panel participants included Fahmida Khanam, Rezwan Khan, chairman of Power Grid Bangladesh, Imran Karim of BIPPA, Mirza Shawkat Ali, director of the Department of Environment, and other stakeholders.

News Link: Bangladesh needs 35GW renewables, $42b to meet 2040 target: CPD