Tax Cuts and Incentives Lift Rooftop Solar as Grid Contribution Rises to 1,283 Megawatts

Government incentives, tax and duty exemptions on imports of solar equipment and various policy initiatives are expanding the use of solar power in the country. Alongside encouraging solar panels on the roofs of homes, commercial establishments and government buildings, the system also allows surplus electricity to be supplied to the national grid. The government is focusing on lowering installation costs and increasing investment at individual and institutional levels.

Engineer Md Akhtaruzzaman of Kechuadubi village in Moghi Union of Magura Sadar Upazila has installed solar panels on the roof of his own establishment, Saleha Oil Mill, to meet its electricity demand. His system, which started production in December 2023, has 9 panels with a total generating capacity of 5.23 kilowatts. It cost him Tk 184,000 to install.

Akhtaruzzaman uses part of the electricity in his own establishment and supplies the surplus to the national grid through net metering. He says he installed the system to generate environmentally friendly electricity. Alongside meeting his own demand, he supplies an average of 550 units of electricity to the national grid every month and earns Tk 6,000 to 7,000 a month from it.

He says he plans to expand the system further if he gets financing. Although various institutions offer financing facilities, general customers face limitations in getting direct loans. As a result, many people find it difficult to expand solar systems despite their interest.

Sabbir Hossen, a resident of Chokgopal village in Niamatpur, Naogaon, has reduced his electricity bill by installing solar power on his own initiative. His system has seven panels of 585 watts each, with a total installed capacity of 4,095 watts or about 4.1 kilowatt-peak. The whole system cost him about Tk 173,000.

Sabbir Hossen uses solar power for his home's electricity needs as well as to run a water pump motor. After the system started, his electricity bill fell; it used to be about Tk 1,500 in normal times and now stays between Tk 700 and Tk 900. However, he says he has not been able to start supplying surplus electricity to the national grid because he has not received net metering permission.

According to the Sustainable and Renewable Energy Development Authority, SREDA, the contribution of on-grid solar power to the national grid was 1,020 megawatts in January this year. At the beginning of November it rose to 1,283 megawatts.

To make financing easier for solar expansion, the government has initially allocated a fund of Tk 1,500 crore and will arrange the necessary funds in phases. The government plans to add 3,000 to 4,000 megawatts of solar power to the national grid before the summer season begins.

If a customer uses solar power and supplies the extra electricity to the national grid, the government will buy it at Tk 10.50 per unit until 2030. The Power Division issued a notification on 1 September to this effect. The benefit will be available if a net metering connection for solar power is obtained by February next year. Under net metering, applications can be made online and bills can be adjusted based on the amount of electricity supplied by the customer.

To reduce installation costs, the National Board of Revenue, NBR, has given tax exemptions on imports of eligible solar equipment and machinery. The total tax rate on imports of designated equipment has been brought down to 1 percent. Previously, these items required a total of 17 percent tax, including 15 percent VAT and 2 percent advance income tax.

On 19 October the government issued the Special Solar Power Installation Ordinance, 2026. It allows projects on roofs, courtyards, abandoned land, tea gardens, water bodies and under agri-solar arrangements, with projects of up to five megawatts capacity under prescribed conditions. The ordinance includes provisions on Opex-model financing, net metering, selection of service providers and project monitoring, as well as punishment for theft, vandalism, illegal connections and obstruction of work.

Under the ordinance, the relevant authority will maintain district-wise lists of service providers. A National Policy Council chaired by the prime minister will be formed for solar expansion and policy coordination. A district technical and coordination committee chaired by the deputy commissioner and an upazila technical and coordination committee led by the upazila nirbahi officer will monitor activities at field level.

The government has set a target of generating 20 percent of total electricity from renewable sources by 2030. To achieve it, there is a plan to add about 10,450 megawatts of renewable generating capacity between 2026 and 2030, including 5,500 megawatts from rooftop solar and 4,500 megawatts from ground-based solar. All government institutions have been instructed to install solar power on their roofs and a one-stop service has been launched to make services easier.

On 3 and 4 November, the Power Division and Infrastructure Development Company Limited, IDCOL, organised a Solar Expo. In his inaugural speech, Prime Minister Tarique Rahman sought support from development partners to expand the renewable energy sector. He said financing and technical cooperation opportunities exist not only for large projects but also for local small entrepreneurs and small businesses, and that expatriate Bangladeshis also have easy investment opportunities in the solar sector.

Energy expert Shahriyar Ahmed Chowdhury, director of the Center for Energy Research at United International University, welcomed the government's initiatives including the duty reduction. He said a large share of general customers buy equipment from the local market, so the benefit of import duty cuts does not reach them directly. He said local-market tax and VAT cuts, incentives for two to five years, easy financing, long-term loans and easy instalments, and a simpler net metering approval process are necessary for solar expansion.