Bangladesh is shifting focus to increase solar capacity through mid-size and utility-scale power plants  as its fossil-fuel dominated grid expands, surpassing participation in the world’s largest off-grid solar program.

The country’s evolving solar trajectory offers lessons for other nations balancing incremental grid expansion with off-grid programs that meet electrification needs more quickly.

Bangladesh’s Solar Home Systems (SHS) program, which delivered off-grid power to households lacking access to the national electricity grid, brought significant benefits to locals, according to a 2021 World Bank report. However, SHS saw declining support as Bangladesh’s grid expansion efforts gained momentum. That prompted the report authors to recommend that future programs must align with clear goals, such as universal access, and be coordinated at the highest levels of government.

The authors also advised other countries implementing off-grid programs to “ensure that the government and development partners integrate new resources using coordinated approaches—rather than running parallel initiatives with same/similar objectives.”

Renewable energy expansion is an important policy goal in Bangladesh, which ranks as the seventh most climate vulnerable country in the world and has suffered several devastating natural disasters in recent years. By 2050, one in seven people in the country are expected to be displaced by climate change.

The country’s push to deploy off-grid solar panels began in 2003, with $1 billion in international financing through the World Bank. Its government worked with 56 partner organizations and offered incentives for rooftop solar installers to install 4.1 million solar systems in remote areas until installations ended in 2018. In its 15 years, SHS brought off-grid power to 14% of the population as well as 200,000 rural businesses and religious facilities. The program officially ended in 2021.

SHS played a crucial role in replacing the kerosene lamps that many off-grid households relied on. Bringing those homes solar power increased the time that children spent studying while households “enjoyed greater safety, comfort, and convenience,” the World Bank reported. Overall, the program cut out 4 billion litres of kerosene use from 2003 to 2021.

Meanwhile, the Bangladesh Rural Electrification Board was working to expand the country’s grid services. Grid connections rose by 280% between 2015 to 2019, making SHS redundant in some areas. The World Bank said that lack of coordination between the two efforts ultimately undermined SHS, as many households that had installed off-grid solar chose to switch over to the grid. Some subsequently defaulted on their loan payments for installations, creating financial strain for the program.

More SHS participants plan to switch to grid connections as they become available.

“Electricity connection through the grid is yet to come to our area,” Mahidul Islam told The Daily Star last spring, citing the Ghugumari village where he lives in the northern district of Kurigram. At the time, Islam’s home was still powered by SHS. But if grid connections become available, he said, “we will switch as well.”

Bangladesh’s grid is still 98% powered by fossil fuels, primarily gas and oil, but solar electrification efforts are now focused on larger solar power facilities that will supply the national grid. Bangladesh’s government plans to increase the country’s renewable energy capacity from its current 1.2 gigawatts to 4.1 gigawatts by 2030, 2.3 gigawatts of which will be from solar, says Enerdata.

In 2024, the country’s renewable capacity grew at its fastest pace ever, most of it contributed by utility-scale projects. But future efforts face challenges, reports the Institute for Energy Economics and Financial Analysis (IEFFA).

Despite opening tenders for 12 new projects last December, the government has caused concern among project developers by canceling 31 others that had signed letters of intent under the previous administration, following a change in government last August. Those cancellations, combined with the fact that only 500 megawatts of new projects are in advanced stages of construction, leave Bangladesh with limited momentum for expanding renewable capacity in the coming year.

“A lack of investment-ready projects in 2025-26 could limit the sector’s progress,” IEFFA writes. “The clean energy sector lacks coordination between government agencies and the private sector, with stakeholders battling capacity gaps.”