Alleging structural imbalance in the FY2026-27 fiscal framework, the Bangladesh Sustainable and Renewable Energy Association (BSREA) has said the announced incentives for solar energy have been concentrated within a narrow segment of the renewable energy market, limiting broader sectoral impact.
Initial market response to the budget was largely positive, with investors, businesses and consumers welcoming the announcement of zero duty and tax on solar equipment and expecting wider fiscal support for renewable energy expansion.
A review of subsequent statutory regulatory orders issued by the National Board of Revenue (NBR), however, indicates that the incentives are largely confined to selected commercial solar power producers and projects operating under the renewable energy service company (RESCO) model.
According to BSREA, this design effectively sidelines the country’s dominant solar ecosystem, which includes thousands of engineering, procurement and construction (EPC) firms, distributors, dealers and retailers serving residential, commercial and agricultural users who typically finance rooftop and distributed solar systems through capital expenditure.
The current incentive structure, the association said, effectively makes power purchase agreements (PPAs) a prerequisite for availing fiscal benefits, thereby favouring third-party financed models while offering limited support to households, small businesses, farmers and rural consumers.
Speaking at a press briefing on Sunday, the association said the largest consumer groups have been left outside the government’s announced incentive framework.
Market distortions could emerge from such design choices, BSREA warned, arguing that preferential treatment of one business model risks undermining competitive neutrality.
EPC firms and related service providers, the association noted, have played a central role in developing Bangladesh’s renewable energy ecosystem and generating thousands of jobs. Removing them from fiscal incentives, it added, could dampen investment, weaken competition and negatively affect employment across the sector.
Concerns were also raised over public perception, with BSREA saying many consumers believe customs duties on solar panels and equipment have been fully removed. In reality, it said, most renewable energy products continue to face existing tax and duty structures, creating confusion in the market and pressure on businesses.
Further criticism was directed at the budget’s treatment of solar irrigation, despite Bangladesh operating around 1.7 million diesel-powered irrigation pumps. The association said no clear roadmap or financial mechanism has been introduced to support their transition to solar-powered systems.
Disappointment was also expressed over the continued use of a weight-based customs valuation method for renewable energy equipment, rather than an internationally recognised transaction-value approach. BSREA argued that inflated assessments are raising project costs and discouraging investment.
Beyond taxation, financing constraints were identified as the most significant barrier to sector expansion. The budget, the association said, does not introduce meaningful measures for long-term low-cost financing, green funds, payment security mechanisms, risk mitigation tools or broader investor protection frameworks.
Calling for a structural rethink, the industry body urged equal treatment of capital expenditure and operational expenditure models, allowing consumers to choose freely between self-financed and third-party financed solar installations.
Among its recommendations, BSREA proposed extending zero-duty treatment and related tax incentives across all renewable energy equipment importers, EPC firms, distributors and investors without model-based restrictions.
It also called for a 10-year tax holiday for renewable energy investments, expanded incentives for residential and agricultural users, and targeted support for solar irrigation, rooftop solar systems and battery energy storage systems.
The association argued that distributed renewable energy should be positioned as a central pillar of national energy policy, stating that equitable access to incentives is critical for meeting renewable energy targets, reducing fuel import dependence and strengthening long-term energy security.
