The government is set to unveil the Policy for Enhancement of Private Participation in Renewable Energy based Power Generation, 2025 today, aimed at boosting private sector participation in electricity generation for the export oriented industries including textile and ready-made garments (RMG) industries in order to reduce their carbon footprint.
The policy will be placed before the Advisory Council meeting chaired by the Chief Adviser, a senior Power Division official confirmed.
Officials said the move would help the RMG and textile sectors cut carbon emissions and secure preferential trade benefits, including carbon levy exemptions from European markets starting in 2027.
Under the draft policy, the Bangladesh Power Development Board (BPDB) will purchase up to 20% of electricity produced by private generators, depending on demand.
Under the policy, global brands like H&M will be able to invest directly in Bangladesh’s merchant power projects, an official of the Power Division said. He added that this marks a major step towards achieving Bangladesh’s Net Zero goal.
The most important think, the public utilities in power sector barred from setting up MPPs (merchant power plants) to avoid conflict of interest.
The government will support coastline and near shore based wing power under the policy, according to the officials.
Framed as part of the government’s energy transition plan, the Policy on Solar-Based Private Power Generation/Install 2025 seeks to reduce reliance on fossil fuels, enhance industrial competitiveness, and promote renewable energy adoption.
By investing in solar power, industries are expected to lower costs while contributing to the Sustainable Development Goals (SDGs).
Globally, solar has become one of the most cost-effective energy sources, and many countries already impose carbon levies on fossil fuel-based power. Bangladesh is moving in that direction, targeting 20% of total electricity generation from solar by 2030.
Legal framework
The new policy builds on the Enhancement of Private Participation in the Power Sector 2008 and introduces the Corporate Power Purchase Agreement (CPPA), which allows industries and commercial establishments to directly purchase renewable energy.
Stakeholder consultations on the draft were held in July 2025 with representatives from SREDA, KfW Bank, Ditrolic Energy, Dentons Rodyk & Davidson LLP (Bangladesh), BSRM Ltd., Bangladesh Textile Mills Association (BTMA), H&M, and other stakeholders from the renewable energy and industrial sectors.
Key provisions
The draft policy, structured into nine sections and 32 sub-sections, outlines several key provisions. It allows industries to install solar power plants on rooftops, open lands, or through consortiums, thereby expanding renewable energy capacity across different industrial setups.
Captive solar generation will be encouraged to reduce dependence on fossil fuels, helping industries lower costs and carbon emissions at the same time. Surplus electricity generated by these plants may be sold either to the national grid or to third parties through a wheeling arrangement, ensuring efficient use of excess capacity.
To support fair trade of renewable energy, the policy introduces net metering and net billing, which will enable proper adjustment of exported electricity against consumption. In addition, a Model Power Producer (MPP) framework has been proposed to attract both small and large-scale investors to the sector.
The policy also provides for long-term agreements under Public-Private Partnership (PPP) models, creating stability and predictability for investors. To make financing accessible, low-interest loans will be offered, with Bangladesh Bank extending refinancing support under its green financing schemes.
The draft emphasises strict compliance with environmental, safety, and technical standards to ensure that renewable power projects are sustainable, reliable, and aligned with international best practices.
The policy also stresses dispute resolution, transparency, modern technology use, and skilled manpower to attract both local and foreign investment.
Once finalised and approved, the policy is expected to create significant opportunities for investment, employment, and clean energy expansion, while strengthening Bangladesh’s industrial competitiveness in global markets.
Global pressure for green policy
There is increasing global pressure on the export sector to reduce carbon footprints and adopt environmentally friendly production policies, particularly in the ready-made garment and textile industries. Compliance with these conditions is becoming a priority and is expected to become mandatory in the near future. A green energy policy will be crucial for maintaining competitiveness in the global market. The European Union has announced plans to impose a carbon levy on export items starting in 2027.
Power Division secretary Farzana Momtaz told the Just Energy News the Merchant Renewable Energy Policy is one of the most significant initiatives of the interim government to encourage private sector participation in expanding renewable energy.