The government has granted initial approval for a 10-megawatt solar “merchant power” plant in Tangail, marking a key step in implementing its newly introduced renewable energy policy aimed at reducing reliance on fossil fuels.
The Power Division approved the proposal on Tuesday, submitted by e-Trycatch Technologies Ltd., to set up the plant and supply clean electricity directly to industrial consumers.
The approval comes under the “Renewable Energy-Based Commercial Power Generation Policy, 2025”—commonly known as the Merchant Power Policy—designed to boost private sector participation in clean energy and promote efficient use of the country’s depleting natural resources.
Under the policy, private power producers can independently secure industrial buyers and supply electricity at mutually agreed tariffs through a business-to-business model.
Producers may also use the national transmission and distribution network by paying an “open access tariff” to relevant state entities such as the Power Grid Company, Bangladesh Rural Electrification Board, and others.
However, producers must first sign a power purchase agreement (PPA) with buyers and obtain a generation licence from the Bangladesh Energy Regulatory Commission (BERC).
The open access tariff will be set with BERC approval, and utilities will be required to provide non-discriminatory access to infrastructure under service level agreements.
The policy also allows private producers to sell up to 20% of their generated electricity to the government, depending on demand and grid capacity.
Officials say the initiative comes at a crucial time as the European Union moves to impose carbon taxes on imports produced using fossil fuels, increasing pressure on Bangladesh’s export-oriented industries—especially the ready-made garment sector—to shift to renewable energy.
Industry insiders note that electricity costs under the merchant model could drop significantly. While industrial users currently pay around Tk15 per unit for grid electricity, costs under merchant arrangements—including generation and transmission—could fall to about Tk10 per unit.
The proposed open access tariff structure is currently under review by BERC. Authorities have instructed utilities to propose cost-based tariffs covering only transmission and distribution losses, without profit margins, in line with fiscal constraints and conditions tied to international financial support.
The approved Tangail solar project is expected to supply renewable electricity to several industrial clients, including cold storage facilities and manufacturing groups, as well as bulk consumers connected to the national grid.
Before granting approval, the Power Division sought technical and financial opinions from the Bangladesh Power Development Board, Power Grid Bangladesh PLC, Bangladesh Rural Electrification Board, and Northern Electricity Supply PLC.
Officials said the approval reflects a coordinated assessment by these agencies and signals the government’s commitment to accelerating private investment in renewable energy.