Pakistan’s Solar Boom Shows What’s Holding Bangladesh Back

When Pakistan considered tightening net metering policies—lowering buyback rates and limiting system sizes—its rooftop solar customers didn’t wait. They started adding battery storage to their solar. Because it’s no longer just a green idea, it’s an economic reality. According to the Institute for Energy Economics and Financial Analysis (IEEFA), connecting batteries equal to all of Pakistan’s existing net metering capacity could reduce annual electricity demand from the grid by 1.5 terawatt-hours (TWh), or 1.1% of the country’s total demand by 2024. The bigger picture is that Pakistan already has about 11.5 gigawatts of off-grid solar capacity. IEEFA’s analysis suggests that storing just 25 per cent of that electricity could reduce grid stress by 11.5 TWh—8.4% of Pakistan’s 2024 demand. In 2024 alone, Pakistan imported 1.25 gigawatt-hours of lithium-ion batteries, which, if used in a single daily cycle, could reduce grid demand by 438 gigawatt-hours annually.

Pakistan’s road is not smooth. But its solar transformation is real, scalable, and customer-driven.

Solar Boom In Pakistan

Pakistan’s solar transition has accelerated at a pace unmatched in South Asia. According to Reuters, solar power supplied an average of 25.3% of Pakistan’s utility electricity during the first four months of 2025, up from a marginal share just a few years earlier, making it one of fewer than 20 countries globally where solar accounts for at least a quarter of electricity generation. The transformation has been driven by a surge in solar imports, with purchases of Chinese solar modules increasing nearly fivefold from 3.5 GW in 2022 to 16.6 GW in 2024. At the same time, battery adoption is expanding rapidly. The IEEFA estimates that Pakistan imported 1.25 GWh of lithium-ion battery storage systems in 2024 and another 400 MWh in the first two months of 2025. Between FY2019 and FY2025, the country imported 32.8 GW of solar photovoltaic modules, with around 11.5 GW already deployed in off-grid applications. Together, these trends illustrate how market incentives, falling technology costs and consumer demand are driving a renewable energy transition that increasingly operates beyond the traditional power grid.

The contrast with Bangladesh is striking. While Pakistan’s solar market is increasingly being driven by consumers and businesses responding to economic incentives, Bangladesh continues to rely on government targets that have yet to translate into large-scale deployment.

Pakistan’s Lesson for Bangladesh: Incentives Drive Adoption

According to the IEEFA, Pakistan imported a total of 32.8 gigawatts (GW) of solar photovoltaic (PV) modules between the fiscal years 2019-20 and 2024-25, of which about 11.5 GW has already been installed in off-grid systems. Along with the rapid expansion of solar power, battery storage technology in the country is also growing rapidly. Pakistan imported about 1.25 gigawatt-hours (GWh) of lithium-ion battery packs in 2024 and imported another 400 megawatt-hours (MWh) of batteries in the first two months of 2025. According to the IEEFA analysis, connecting batteries to existing solar installations can reduce the national grid’s annual electricity demand by about 11.5 terawatt-hours (TWh), equivalent to about 8.4 per cent of Pakistan’s total electricity demand in 2024. This trend shows that the country’s consumers and businesses are increasingly investing in solar power and battery storage systems to reduce rising electricity costs and dependence on the grid.

Pakistan’s experience indicates that the expansion of renewable energy does not depend solely on government spending. Clear market signals, supportive policies, and predictable incentives can encourage private investment. The challenge for Bangladesh is to create such an environment.

Bangladesh’s Ambition Continues to Outpace Implementation

In Dhaka city—where rapid expansion of rooftop solar is essential—the total installed solar capacity is only 113.67 MW. Of this, only 18.39 MW is under net metering. It would be wrong to call this slow progress. It is a policy failure, measured in megawatts.

Meanwhile, renewed volatility in global energy markets, driven by escalating tensions in the Middle East and wider geopolitical instability, has once again exposed Bangladesh’s heavy dependence on imported fuels. Price fluctuations have translated into domestic pressure, with visible strain across transport and logistics systems.

The garment industry, a key export driver, has reported production disruptions and scheduling delays, raising concerns about cost competitiveness and supply chain reliability in an already-tightening global market.

According to energy governance data compiled from BPDB and independent datasets, Bangladesh’s renewable capacity has grown from around 385 MW in 2015 to over 1.1 GW in 2024, with annual additions peaking at around 170 MW in 2021. The trajectory is uneven and heavily backloaded, with bursts of incremental expansion followed by long periods of stagnation.

Here, the gap between ambition and implementation is a chasm. In 2017, Bangladesh commissioned its first utility-scale solar plant in Sarishabari, Jamalpur, with a capacity of just 3 megawatts. Nearly a decade later, renewable energy still accounts for only about 2.3% of total electricity generation, underscoring how marginal the transition remains in the national energy mix.

When Bangladesh unveiled its first renewable energy policy, total green power capacity stood at 244.4 MW—almost entirely from hydro (230 MW), with solar home systems contributing just 14.4 MW. Fast forward 17 years to December 2025, and the figure has risen to only 1,690.7 MW, reflecting slow scaling despite repeated policy commitments and target revisions.

The arithmetic is stark. At this pace, Bangladesh is running a marathon at walking speed. To meet its 2030 target of 20% renewable energy—about 5,851 MW—the country must add roughly 760 MW of new renewable capacity every year from 2026 to 2030. Yet only 358 MW is currently under construction, leaving a significant shortfall between the stated pipeline and the required pace of deployment.

The pipeline, however, suggests some momentum is building. As of now, 26 renewable energy-based power plants with a combined capacity of 1,172 MW are under construction across the country. In addition, 15 projects totalling 665 MW are at the tendering stage and are expected to be connected to the national grid by 2029. Despite this, the scale of approved and upcoming projects still falls short of what is required to close the widening gap between targets and actual deployment.

The government also aims to install 10,000 MW of solar power by 2030, but progress remains constrained by implementation bottlenecks, financing gaps, and project delays that continue to slow large-scale deployment.

Experts say the constraint is not simply financial. M. Zakir Hossain Khan, Co-Founder and Managing Director of Change Initiative, bluntly puts it, “Bangladesh’s solar transformation is not stalled by lack of funding, it is stalled by misdirected funding.”

Is Bangladesh Bank’s Policy Hindering Renewable Energy Financing?

The progress of Bangladesh’s renewables is increasingly hampered by a structural financial imbalance, in which central bank policies and banks’ lending practices prioritise short-term, low-risk energy-efficiency projects, while long-term, investment-based renewable energy projects remain neglected.

According to Bangladesh Bank data, as of December 2025, loans disbursed to the energy and resource efficiency sector amounted to Tk 319.31 billion, while only Tk 60.45 billion went to the renewable energy sector—a more than five-fold difference. In percentage terms, 41.4% of total green finance went to the efficiency sector, while renewable energy accounted for only 7.8 percent. Even in the October-December quarter of 2025, only Tk 3.53 billion was financed for renewable energy, compared with Tk 34.54 billion in the efficiency sector.

This trend clearly shows that existing refinancing schemes and policies are encouraging projects that deliver quick returns but are failing to create the sustainable financing framework required for long-term, capital-intensive solar and other renewable projects.

Zakir Hossain Khan said, “Bangladesh’s solar transition is not constrained by money, but by misaligned finance. With just $5.1 billion in strategic investment—backed by carbon pricing, subsidy reform, and diaspora capital—the country can unlock $2 billion in annual fuel savings, stabilise its economy, and achieve energy sovereignty without deepening debt.”

Pakistan’s solar expansion demonstrates how policy certainty, market incentives and investment can rapidly accelerate renewable energy deployment. Bangladesh already has targets, policy commitments and access to financing. The missing element is implementation. Unless project execution, rooftop solar deployment and financing structures improve substantially, the country’s 10,000 MW solar target is unlikely to translate into the energy security gains policymakers are seeking.

Shafiqul Alam, IEEFA’s Lead Analyst, Energy, for Bangladesh, said, “Scaling up solar capacity to such a level will require a clear roadmap and action plan, including the contributions of different sources—such as rooftop solar, utility-scale solar, solar irrigation, etc. Bangladesh should devise a time-bound implementation plan, map sources of investment and track the progress toward the target.” He further added that the government should urgently reduce or waive high import duties ranging from 28.73% to 61.8% on rooftop solar components to scale up deployment.