A recent study report on the impact of solar-based power on Bangladesh's small and medium enterprises (SMEs) has captured significant attention, not only for its environmental implications but also for its strong economic cause. Prepared by the Change Initiative, the report suggests that SMEs in Bangladesh could reduce operational costs by 30-50 per cent through decentralised rooftop solar adoption, while simultaneously strengthening their long-term competitiveness in export markets by complying with increasingly stringent environmental standards. These findings were presented at a press conference in the capital, alongside detailed factory-level assessments of energy consumption and carbon emissions across selected SME clusters.
SMEs are the backbone of Bangladesh's industrial economy. They represent over 90 per cent of industrial units, employ around 85 per cent of the industrial workforce, and contribute approximately 25-30 per cent to the national GDP. Despite their central role, SMEs remain highly vulnerable due to their dependence on a fossil fuel-dominated energy system, where nearly 95 per cent of electricity is generated from non-renewable sources. This dependence exposes businesses to fluctuating global fuel prices, supply disruptions and increasing regulatory pressures tied to carbon emissions. In such a context, solar power offers not just an alternative energy source, but a strategic pathway towards resilience and sustainability.
One of the most compelling advantages of solar power for SMEs is cost stability. Traditional electricity costs are subject to frequent changes driven by global energy markets, currency fluctuations, and domestic supply constraints. In contrast, rooftop solar systems provide a predictable and often significantly lower cost of electricity once installed. For SMEs operating on tight margins, this predictability can improve financial planning, reduce risk and free up capital for reinvestment in production, technology upgrades, or workforce development. Over time, the savings generated from solar adoption can substantially enhance profitability and competitiveness.
The study focuses on four key sectors within BSCIC industrial estates -- tannery, plastic manufacturing, plastic packaging and light engineering -- which together account for an estimated 46.99 million tonnes of CO2 equivalent emissions annually. Importantly, these sectors also present significant opportunities for emissions reduction through energy efficiency improvements and solar integration. For instance, plastic manufacturing shows the highest potential, with a possible 33-49 per cent reduction in emissions, followed by tannery and light engineering sectors with 19-33 per cent and 19-31 per cent reduction potential respectively. Even the packaging sector, with relatively lower margins, could achieve a 15-28 per cent reduction.
Beyond cost savings and emissions reduction, solar power adoption can directly influence SMEs' access to international markets. Global buyers, especially in Europe and North America, are increasingly prioritising suppliers that meet environmental, social, and governance (ESG) standards. For export-oriented SMEs, integrating solar energy into their operations can serve as a powerful signal of sustainability compliance, potentially unlocking new business opportunities and strengthening relationships with environmentally conscious clients. In some cases, failure to meet such standards may result in lost contracts or reduced market access, making the transition to clean energy not just beneficial but necessary.
The report highlights the transformative potential of solar deployment in BISCIC estates. By allocating just 10 per cent of BSCIC estate space to solar installations, Bangladesh could develop approximately 57 MW of solar capacity, generating nearly 83,000 MWh of electricity annually and reducing emissions by over 51,000 tonnes of CO2 equivalent each year. This demonstrates that even modest spatial investments can yield substantial energy and environmental returns. Moreover, estate-level solar systems can enable shared infrastructure models, reducing individual investment burdens for SMEs and fostering collective efficiency.
Another critical benefit lies in energy independence. Many SMEs currently rely heavily on grid electricity and, in some cases, costly diesel generators to manage power outages. Solar systems, particularly when paired with battery storage, can provide a reliable backup power source, ensuring uninterrupted operations. This is especially valuable in sectors where production downtime can lead to significant financial losses or damage to materials. By generating their own electricity, SMEs can reduce dependence on external energy suppliers and enhance operational continuity.
However, despite these clear advantages, the adoption of solar power among SMEs faces several barriers, including high upfront costs, limited access to financing and a lack of technical knowledge. The report underscores the importance of supportive policy measures to address these challenges. Tax incentives, subsidies, and innovative financing mechanisms -- such as green loans, carbon pricing frameworks, and philanthropic grants -- can play a crucial role in lowering entry barriers. Additionally, capacity-building initiatives and technical support can help SMEs better understand and implement solar solutions effectively.
Ultimately, the study presents an urgent case for rethinking how SMEs approach energy consumption. With an estimated 14 million tonnes of carbon emissions at stake and a potential 50 per cent reduction in operational costs within reach, the shift towards solar energy represents both an environmental imperative and an economic opportunity. As the lead researcher of the study noted, factory rooftops across the country remain largely underutilised, representing untapped potential for clean energy generation.
Solar power no doubt offers a multifaceted solution for SMEs in Bangladesh -- reducing costs, enhancing competitiveness, improving energy security and contributing to climate goals. With the right combination of policy support, financial innovation and industry awareness, SMEs can transition from being passive energy consumers to active participants in a more sustainable and resilient energy future.
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