Overview
Bangladesh has made significant strides in expanding its power and energy sector over the past 15 years. Installed generation capacity has grown from less than 5,000 megawatts (MW) in 2009 to more than 30,000 MW in 2025, while electricity access has increased from 47 percent of the population to over 99 percent. This expansion has supported rapid economic growth, industrialization, and urbanization, and demand continues to rise by 7-10 percent annually. Under the Power System Master Plan (PSMP), peak electricity demand is projected to reach approximately 60,000 MW by 2041. To meet this need, the Government of Bangladesh (GOB) is pursuing an aggressive strategy to expand capacity, strengthen grid reliability, and diversify its energy mix.
The sector remains heavily reliant on natural gas, but domestic reserves are declining. To address this, Bangladesh is shifting toward imported liquefied natural gas (LNG), renewables, and cross-border power trade. Renewable energy currently accounts for less than 5 percent of generation, though the government has set ambitious targets for solar, wind, and waste-to-energy projects. Offshore gas exploration in the Bay of Bengal also presents the potential for new reserves. At the same time, upgrading transmission and distribution infrastructure, modernizing aging power plants, and deploying digital grid technologies are critical to ensuring system reliability and efficiency. Private power producers now supply roughly half of total installed generation, underscoring the importance of private investment in the sector.
Bangladesh also supplements domestic generation with power imports from India, which currently account for 15–17 percent of national supply. Despite the sector’s rapid growth, under-utilization of installed capacity remains a challenge due to fuel supply shortages, plant inefficiencies, and logistical constraints.
The GOB actively encourages foreign investment in the power and energy sector through public-private partnerships, independent power producer arrangements, and joint ventures. U.S. companies should note, however, that the sector faces challenges, such as regulatory complexities, fuel supply constraints, and bureaucratic delays in project approvals. Financing is also often a key challenge, as many large-scale energy projects rely on concessional loans, export credit agencies, or development partner financing. Establishing partnerships with local firms, aligning with government energy priorities, and leveraging development finance institutions can significantly improve market entry prospects.
Leading Sub-sectors
Gas
Natural gas is the cornerstone of Bangladesh’s power generation, accounting for approximately 50 percent of electricity supply, followed by around 33 percent from oil/furnace-oil/diesel-fired plants, and 12 percent from coal. Domestic natural gas production includes a U.S. company but does not meet current demand, driving an increasing reliance on LNG imports to sustain supply, especially for gas-fired power plants. To bridge this gap, Bangladesh has turned to Floating Storage and Regasification Units (FSRUs). Two FSRUs are currently operational in Moheshkhali, both U.S.-built and operated with a regasification capacity of approximately 500 million cubic feet each per day. Collectively, the country’s LNG import capacity stands at about 7.6 million tons per annum (MTPA), with demand projected to reach 8 MTPA by 2026.
Coal
The government previously considered increasing the share of coal in its fuel mix substantially—some earlier plans envisaged coal-fired plants contributing up to 50 percent of electricity generation by 2030. However, these ambitions have been scaled back or revised. Bangladesh officially cancelled 10 proposed coal-fired power plant projects, totaling approximately 8,451 MW of capacity, as part of a revision of its Power System Master Plan.
Renewable Energy
As of March 2025, renewable energy contributes approximately 3.6 percent of Bangladesh’s electricity supplied through the national grid. Total installed renewable capacity (on-grid and off-grid) is estimated at 1,550–1,600 MW. Solar power dominates the mix, representing roughly 80 percent of renewable capacity, followed by hydro (15 percent), wind (4 percent), and smaller shares from biomass and biogas.
Bangladesh has set ambitious new targets in its draft Renewable Energy Policy 2025: generating 20 percent of electricity from renewables by 2030 (about 6,145 MW) and 30 percent by 2041 (about 17,470 MW). Achieving these targets will require substantial investment, with the Centre for Policy Dialogue estimating financing needs of $35–42.6 billion between 2025 and 2040.
Nuclear Energy
Bangladesh is pursuing nuclear power as part of its long-term energy diversification strategy to reduce reliance on fossil fuels and enhance energy security. The country’s flagship project is the Rooppur Nuclear Power Plant (RNPP), located in Pabna District, which is being developed with Russian technical and financial assistance. The plant consists of two water-water energetic reactors (VVER-1200) with a combined capacity of 2,400 MW. Unit 1 is scheduled to come online in January 2026. Once operational, RNPP will supply a significant portion of Bangladesh’s baseload electricity and mark the country’s entry into civilian nuclear power generation. This nuclear power development is structured through a Bangladesh – Russia government-to-government cooperation agreement.
Opportunities
Bangladesh’s policy focus on energy diversification and private sector participation creates strong opportunities for U.S. firms. Key areas include:
LNG infrastructure and exports: development of terminals, storage, and regasification facilities as well as LNG exports.
Exploration and production services: expansion of onshore exploration and drilling; offshore drilling and field development in the Bay of Bengal.
Renewable energy technologies: solar, wind, and waste-to-energy solutions.
Grid modernization: digital management systems, smart grids, and transmission upgrades.
Energy efficiency: advanced technologies for modernizing aging power plants and improving thermal efficiency.