The government is prioritising megawatt-scale industrial solar projects to rapidly expand renewable energy generation and address the country’s energy crisis, shifting its immediate focus away from small-scale and retail initiatives.
This strategy has become clearer following recent regulatory changes by the Ministry of Finance.
After issuing a notification on 8 June granting tax exemptions for solar equipment imports, the ministry introduced a corrective amendment on 30 June that significantly simplifies duty-free imports for large-scale engineering firms and industries undertaking solar projects.
However, energy analysts and industry stakeholders say the revised policy, while designed to accelerate large renewable installations, contains administrative requirements and eligibility conditions that make it difficult for rural households, small businesses and retail consumers to benefit from the same incentives.
Instead, the government’s approach reflects a deliberate effort to maximise capacity by concentrating on the country’s largest electricity consumers.
Shafiqul Alam, lead energy analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA), said the government appears to be targeting the consumers who can set up larger rooftop solar systems.
“By targeting this high-consuming industrial segment with generous tax incentives, the government can quickly scale up rooftop systems with comparatively little administrative complexity.”
Industry experts estimate that fully utilising large factory rooftops alone could add between 3,000MW and 4,000MW of solar generation capacity to the national grid within a relatively short period.
The latest amendment reflects that priority by easing implementation for industrial-scale projects.
The revised SRO formally brings Engineering, Procurement and Construction (EPC) companies under the tax exemption framework, allowing them to import eligible solar equipment duty-free.
It also removes an earlier operational restriction by allowing factories to qualify for tax exemptions regardless of whether the electricity generated is consumed entirely on-site or supplied to the grid through net metering.
Another significant change removes the requirement to submit detailed physical layout plans to customs authorities, reducing paperwork for large projects.
Shafiqul Alam said the benefits of the revised policy could extend beyond large factory-owned projects if duty exemptions are effectively applied under both CAPEX and OPEX financing models.
Under the solar CAPEX (Capital Expenditure) model, consumers purchase the system outright to secure all tax benefits and energy generated, whereas the OPEX model involves a developer owning and maintaining the plant while selling cheaper electricity to the user at fixed rates lower than grid prices.
“Duty benefits for projects under both models will likely play a pivotal role in the national rooftop solar programme,” he said. “Area or location-specific demand aggregation could also help spur rooftop solar capacity additions under the initiative.”
While these revisions simplify implementation for industries, analysts say the same framework remains largely inaccessible for smaller consumers.
Alam said, “Think of a villager, a small agricultural farm or a local mosque in a district such as Tangail planning to install a 500-watt or one-kilowatt solar system. That villager is unlikely to receive support from major Dhaka-based EPC firms because such projects are not commercially viable for them.”
Instead, these consumers would depend on local technicians who source equipment from retail markets such as Nawabpur in Old Dhaka, he added.
Because retail traders cannot produce the large, project-specific corporate contracts required to obtain customs exemptions, they continue importing equipment under the previous duty structure, he continued.
“The additional import costs are eventually passed on to rural consumers, making small solar systems significantly more expensive,” Alam added.
Analysts also believe the government’s stricter documentation requirements serve another objective beyond encouraging large projects.
The amended policy strengthens quality control by requiring solar inverters, solar panels and lithium batteries to carry manufacturers’ certificates confirming the products are brand new and comply with international standards.
Shafiqul Alam said enforcing such standards at the retail level would be extremely difficult, but SREDA should be strengthened and find a mechanism to ensure quality installation in the country.
“By tying duty exemptions to large, verifiable corporate contracts, the government also limits the incentive for traders to import low-quality or refurbished electronic equipment under the guise of renewable energy products.”
He noted that while duty waivers will drive rooftop solar expansion, it remains to be seen whether the government can extend similar benefits to households.
“When a trader buys components from an EPC, a certain level of quality is guaranteed if the EPC follows the SRO guidelines,” he explained. “The next step is making those traders eligible for duty benefits. The challenge now is ensuring an all-inclusive framework for the entire renewable energy sector.”
