Bangladesh has just made one of its most forward-looking policy decisions in years. The government has approved the Enhancement of Private Participation in the Renewable Energy-based Power Generation policy, allowing private companies -- both local and foreign -- to generate renewable power and sell it directly to customers through the national grid. For the first time, power producers will not be limited to selling only to the Power Development Board under rigid long-term contracts.
This might sound technical, but it is a game-changer. The move breaks a long-standing barrier that slowed down renewable energy growth and discouraged private investment. By opening the market, the government has created the conditions for faster innovation, more competition, and a significant step towards a cleaner, more resilient energy system.
From a sustainability angle, this shift is crucial. Direct sales from renewable producers mean faster adoption of solar and wind energy and a gradual reduction in dependence on imported fossil fuels. That is not only good for the environment, it is also smart economics. Lower fuel imports mean less pressure on foreign reserves, fewer emissions, and healthier air for our cities. Bangladesh currently generates only about three per cent of its power from the renewables. This policy could finally put the 20 per cent renewable target for 2030 within reach.
The benefits do not stop there. When producers compete for customers, inefficiency fades and innovation rises. Industrial clients, especially those in export-oriented sectors such as garments and textiles, will now have the option to buy renewable electricity directly. For companies facing pressure from global buyers to decarbonise their supply chains, this is a breakthrough. It makes Bangladesh's exports cleaner, greener and more competitive.
On a national scale, this is about energy security as much as sustainability. A decentralised, renewable-driven grid reduces the country's exposure to global fuel price shocks and supply chain disruptions.
Of course, execution will determine whether this vision delivers. The power grid must be upgraded to handle variable renewable output. That is where sustainable finance can make a difference. Public funding alone cannot finance this transition. Financial institutions, investors, and development partners have a huge opportunity to step in. Green bonds, blended finance models and ESG-linked loans can unlock capital for renewable projects and related infrastructure. Development finance institutions can help de-risk investments, while carbon credit mechanisms can create new revenue streams for power producers. Financing innovation will be just as critical as technological innovation.
Tanzina Ahmed Choudhury, CFA
Banker
izznishat@yahoo.com
