The government of Bangladesh currently applies a 26.2% import duty on solar panels, a 37% tax on solar inverters, and a 58.6% import duty on mounting structures. But according to several analysts at an event in Dhaka last week, these high import duties are a major barrier to solar deployment in Bangladesh.

“We have demanded the government to cut the duties on solar products in the coming budget to help grow the sector,” Dipal C. Barua, chairman of the Bright Green Energy Foundation (BGEF).

He said the reduction of import duties could significantly reduce PV system costs, especially in the residential and commercial and industrial (C&I) segments, as well as the solar irrigation business.

“With the reduction of cost by 10% or so, garment factory owners will be increasingly interested in setting up rooftop solar,” said Barua. “The distributed solar production is highly affected by the high duties on solar products.”

Barua, a former president of the Bangladesh Solar and Renewable Energy Association, said a recent drop in solar module prices helped to offset the impact of the duties to a certain extent.

“But as the high duties ultimately increase the prices of solar products, banks show less interest to open letters of credit since Bangladesh has been experiencing severe dollar shortage during the last couple of years,” he added.

Atiur Rahman, a former central bank governor, echoed Barua's sentiments.

“The government should remove duties and taxes on such solar inputs so that the cost of installing solar systems is lessened by 8% to 11% aiming to promote solar energy in Bangladesh,” said Rahman.

Khondker Morshed Millat, a faculty member at the Bangladesh Institute of Bank Management, said solar entrepreneurs need the right tax incentives to capitalize on available green finance from commercial banks and non-bank financial institutions.

Nasif Shams, director of the Institute of Energy at the University of Dhaka, said that tax incentives should also be introduced to help reduce the prices of solar energy systems.

Figures from the International Renewable Energy Agency (IRENA) show that Bangladesh had deployed 767 MW of solar by the end of 2023, up from 524 MW at the end of 2022.

The Bangladeshi authorities approved 2.1 GW of solar in 2023, including 630 MW in December 2023 alone. In April of this year, the government approved the construction of another three solar plants, each with a capacity of 100 MW.