Bangladesh Opens Rooftops and Water Bodies to Private Solar Investment Under New Ordinance

Solar projects of up to 5 MW get a new legal framework

Bangladesh has issued the Special Solar Power Installation Ordinance, 2026, opening rooftops, courtyards, unused land, tea gardens and water bodies to solar projects of up to 5 megawatts. The government wants to add 3,000 to 4,000 megawatts of renewable capacity before next summer as the war in the Middle East exposes the risks of relying heavily on imported fuel.

The ordinance was published in the official gazette on Monday, following cabinet approval on 18 October 2026. It gives building owners and solar companies two ways to finance installations, sets requirements for contracts and equipment disposal, and introduces criminal penalties for theft, damage and interference with installations.

Government, semi-government, autonomous and local government institutions, state-owned companies, private buildings and residential properties fall within its scope. Eligible uses include irrigation pumps powered by solar energy, solar cold storage facilities and charging stations for electric vehicles. Large solar farms built on the ground sit outside this framework.

For a property owner, the central choice is straightforward: pay for a solar system and own it, or allow a company to finance and operate it in return for payments for the electricity it produces. Customers using net metering can send surplus electricity to the national grid and receive credits against their bills, with payments also possible at government rates.

The ordinance gives smaller installations a clearer route to development. Its success will depend on whether contracts, financing, procurement and local electricity networks can support a rapid expansion across many separate sites.

What changes for owners and solar companies?

Cabinet Secretary Nasimul Gani said the ordinance addresses gaps in existing legislation concerning electricity tariffs over long periods, rooftop rental payments and maintenance arrangements. Those details matter when a company installs equipment on a building it does not own and expects to recover its investment over years.

Under the OPEX model, a solar company finances the installation, operates it and recovers its costs through the electricity generated. The building owner provides no money upfront. OPEX stands for operational expenditure, although the arrangement described here also places the initial investment with the service provider.

Under CAPEX, short for capital expenditure, the owner pays for the system and keeps it. That requires money at the start, but gives the owner direct ownership of the equipment and responsibility for arranging its operation.

Every OPEX project must have an agreement involving the customer, the solar company and the appropriate government authority. The ordinance states:

A tripartite agreement shall be executed among the consumer, the service provider, and the appropriate authority for the purpose of installing and operating a special solar electricity system under this ordinance.

The standard government contract must address access to the roof or land, equipment quality, electricity prices, net metering and equipment disposal. Shafiqul Alam, lead energy analyst at the Institute for Energy Economics and Financial Analysis, said agreements involving three parties already existed under net metering, so the ordinance principally streamlines the process.

More than panels on residential roofs

Floating solar and agrivoltaics extend the ordinance beyond conventional rooftop installations. Floating solar places panels on structures supported on water. Agrivoltaics combines electricity generation with farming, allowing crops to grow beneath or beside panels.

Tea garden rooftops, adjacent vacant land and courtyards offer other eligible spaces. Solar irrigation pumps and cold storage connect the policy directly to agricultural activities, while charging stations connect it to growing demand for electricity in transport.

The government's target equals 3 to 4 gigawatts, or 3,000 to 4,000 megawatts. As a measure of scale, delivering that entire amount through projects at the ordinance's maximum size of 5 megawatts would require 600 to 800 installations. A programme containing smaller systems would need more sites. The target covers renewable capacity more broadly, with distributed solar expected to provide a large share.

How surplus electricity can earn money

Net metering allows a customer to use solar electricity at the property and export unused electricity to the grid. The meter records the exchange, and the exported power is credited against electricity bills under the applicable rules.

A related Power Division gazette issued on 1 September provides a specific incentive for households installing rooftop systems with batteries by 28 February 2027: Tk10.50 for every unit of surplus electricity supplied to the grid, guaranteed until February 2030. A unit of electricity means one kilowatt-hour, the amount used by a device drawing one kilowatt for an hour.

The battery requirement and installation deadline define that incentive's eligibility. Customers planning projects under the broader ordinance will need to check the payment terms applicable to their particular system.

The Power Division puts the maximum generation cost for the eligible systems at Tk8 per unit and describes the tariff calculation as including a 20% profit margin and an 11.25% premium. Distribution companies must record exported electricity and transfer payments to bank or mobile financial service accounts, rather than pay cash.

The Tk10.50 export rate is Tk0.10 above Bangladesh's average retail electricity tariff of Tk10.40 per unit. That narrow difference makes reliable accounting and payment important for both households earning revenue and distribution companies purchasing their surplus power.

The dates shaping the rollout

The ordinance arrives alongside tariff incentives, import duty relief and longer national targets. Together, they create several different planning dates for customers, developers and electricity distributors.

• 1 September 2026: The Power Division issued the gazette setting the Tk10.50 surplus electricity rate for eligible rooftop systems with batteries.
• 18 October 2026: The cabinet approved the draft ordinance at its 25th meeting, chaired by Prime Minister Tarique Rahman.
• Monday following cabinet approval: The ordinance was published in the official gazette.
• 28 February 2027: Installation deadline for households seeking the specified battery rooftop incentive.
• February 2030: End of the guaranteed Tk10.50 rate under that incentive.
• 2030 and 2040: The Renewable Energy Policy 2025 targets renewable sources supplying 20% and 30% of electricity, respectively.

The fiscal year 2027 budget also waives import duties on panels, inverters and key solar components until 2031. Inverters convert the electricity panels produce into the form used by buildings and the grid. Lower component costs can help projects, while loan costs and the terms of electricity contracts still determine what customers ultimately pay.

Faster procurement brings demands for clearer rules

CAPEX projects can purchase goods and services worth up to Tk5 crore, equivalent to Tk50 million, through limited tendering. This means inviting selected suppliers rather than opening bidding to the entire market. Relevant procurement is also exempt from compulsory use of the Electronic Government Procurement system, known as e-GP.

The measures are intended to shorten the time needed to begin projects. Industry representatives want more detail on who can bid, what technical qualifications they need and how participation will work.

Shafiqul Alam called for clarification on whether the limited tendering requirements apply to private industrial companies installing panels on their own premises. For those businesses, the answer affects how they choose equipment suppliers and contractors.

Mostafa Al Mahmud, president of the Bangladesh Sustainable and Renewable Energy Association, warned that expensive loans could increase the cost of solar electricity. He also said procurement without transparency could allow political favouritism to exclude genuine investors and businesses.

Imran Chowdhury, a director of the association, said small projects may have limited appeal for foreign investors unless they are combined into larger portfolios. Grouping installations allows investors to assess and finance several sites together, rather than negotiate a separate investment for every roof. He called for clearer bidder eligibility, technical standards and participation procedures.

Mostafa also called for a broader law covering renewable technologies and projects of all sizes, arguing that it would attract more investment from Bangladesh and abroad. The new ordinance concentrates on a narrower segment of that market.

Renters and electricity networks need attention

Bangladesh Bureau of Statistics figures show that 68.58% of households in city corporation areas live in rented homes, more than two in every three. For those households, finding the money is only part of the problem: access to a suitable roof usually depends on the building owner.

Researcher and energy policy analyst Ismot Hasnine Masrur E Khuda and academic and public policy analyst Rassiq Aziz Kabir have proposed shared solar arrangements, financing accessible to renters and group or virtual net metering. Those approaches would allow several customers to share electricity credits from a common installation. They are recommendations for widening participation.

The analysts point to IDCOL's solar home systems programme, which has loan collection rates of around 96%, as an existing financing example. Its use of partner organisations and credit helped rural households obtain solar systems without paying the full cost immediately.

Distribution networks present another practical constraint. Each local circuit has a limit on how much electricity it can accept safely. Publishing that capacity would help developers identify suitable sites before spending money on equipment and applications.

Australia provides a useful comparison: residential export limits commonly stand at 5 kilowatts per household, and some congested networks allow no exports. Those limits show why permission to install panels and permission to send electricity into the grid require coordinated planning.

Vietnam illustrates the pressure created by a firm tariff deadline. It installed more than 9 gigawatts of rooftop solar in 2020, around 6 gigawatts in December alone, before its incentive expired. Networks in areas with concentrated installations struggled to absorb the output, and generation was curtailed, meaning some available electricity could not be used.

For Bangladesh, the February 2027 deadline makes installer availability, equipment quality and connection checks immediate concerns. The two analysts recommend a gradual reduction in rates for new entrants to spread demand over time, alongside protection for payment commitments already made to existing producers.

Equipment waste becomes a contractual responsibility

OPEX contracts must include electronic waste management and take-back schemes, under which manufacturers collect discarded equipment. This places end-of-life responsibilities inside the agreement from the beginning of a project.

Shafiqul Alam welcomed the provision but said further frameworks would be needed to make it work. Mostafa Al Mahmud said the expansion of solar installations would increase panel waste and require proper collection, recycling and disposal systems.

Bangladesh already faces difficulties managing electronic waste as battery powered auto-rickshaws spread and demand for electric vehicles grows. A larger solar industry adds equipment that will eventually need replacement or disposal, making clear collection responsibilities important before installations multiply.

Mostafa said recycling could create investment opportunities and jobs if properly managed. Turning that opportunity into a functioning service requires arrangements for collecting equipment, moving it to suitable facilities and paying for the work.

Who oversees projects and enforces the rules?

A National Policy Council headed by the prime minister will guide policy. District and upazila committees will coordinate implementation locally, while the Sustainable and Renewable Energy Development Authority, or SREDA, will record installed systems and check that they are operating.

The ordinance also creates penalties intended to protect installations and the people working on them. Stealing solar electricity or equipment carries up to three years in prison, a Tk50,000 fine, or both. Buying, selling or holding stolen equipment carries the same punishment.

Damaging panels or equipment can bring up to five years in prison or a fine of up to Tk5 lakh, equivalent to Tk500,000. Illegal connections, or obstructing workers installing, inspecting or maintaining systems, can bring up to three years in prison or a Tk5 lakh fine. Cases will go before first-class or metropolitan magistrates, with some eligible for mobile courts.

The government has established a route for many smaller sites to contribute electricity. Property owners and investors now need workable contracts, affordable finance, dependable grid connections and clear procurement procedures to turn that legal opening into operating systems.

Key Points

• The Special Solar Power Installation Ordinance, 2026, covers eligible solar projects of up to 5 megawatts, including rooftop, floating and agrivoltaic installations.
• OPEX allows a company to finance and operate a system; CAPEX allows the owner to pay for and own it.
• OPEX agreements must address electricity prices, site access, equipment standards, net metering and waste management.
• CAPEX purchases worth up to Tk5 crore can use limited tendering, with industry representatives seeking clearer participation rules.
• A related incentive pays Tk10.50 per surplus unit from eligible household rooftop systems with batteries installed by 28 February 2027.
• Bangladesh aims to add 3,000 to 4,000 megawatts of renewable capacity before next summer, with financing, renter access and grid capacity central to delivery.