Power Sector of Bangladesh in 2025-26

Bangladesh's power sector in FY 2025-26 continued expanding through aggressive capacity expansion, creating a massive reserve margin and widespread plant underutilization, yet localized load shedding persists. This unreliability stems not from a plant shortage, but from acute fuel supply failures. Meanwhile, heavy reliance on expensive imported fossil fuels and persistent capacity payments place severe financial stress on the sector as domestic gas depletes. With renewable energy adoption lagging critically behind, the sector remains caught in a structural gap between aggregate capacity abundance and real world supply reliability.

Key Findings

Installed Capacity Growth Rate Rise from 2.0% to 3.1%: Installed capacity grew 3.1 percent yearly to 31,951 MW, a cumulative increase of 37.9 percent since FY2021-22. Yet renewable and hydro based capacity accounts for only 3.61 percent of total installed capacity (1,154 MW) and just 2.3 percent of actual generation (2,489 GWh), confirming that capacity growth to date has been overwhelmingly fossil fuel and import based, not renewable.
Total Generation Growth Slows to 3.6% from 4.76%: Generation growth fell from 8.1 percent in FY 2023-24 to 4.76 percent in FY 2024-25, and slowed further to 3.6 percent this year, reaching 105,838 GWh. Yet installed capacity continued climbing to 31,951 MW despite a slower pace, showing the sector keeps adding capacity even as output growth cools.
Contribution of Coal in Power Generation Share Climbs to 31.7% from 27.1%: Coal's share of generation jumps fivefold from 6.7% to 31.7% in five years since FY2021-22, while HFO's share fell from 24.9 percent to 8.2 percent. Gas generation has dropped 12.6 percent over the same 5 year period and still holds the largest share of the mix, while imports rose 10.8 percent to 17,720 GWh.
One Third of Bangladesh's Power Capacity Sits Unused as Reserve Margin Hits 86%: An installed capacity of 31,951 MW against a system peak generation of 17,201 MW implies an effective reserve margin of 86 percent, more than four times the 20 percent margin recommended internationally.
Not Capacity Gap but Fuel Shortage is the Key Reason for 211 Avg MW Daily Peak Hour Load Shedding: Despite this large capacity cushion, the system recorded an average daily peak hour load shedding of 211 MW (cumulatively totaling 76,847 MW across the year) system wide in FY2025-26. Fuel shortage remained the leading cause of generation shortfall, with about 30.9% of recorded outage instances driven by fuel shortage and grid management, rather than a shortage of installed capacity.
Mymensingh Hit Hardest by Load shedding at 5.6% of Demand: Mymensingh recorded the highest load-shedding ratio in the country at 5.6% of peak demand, followed by Rangpur at 2.55 %. Dhaka, despite being the biggest deficit division, sees the least impact at just 0.63%. Even surplus generating divisions like Sylhet, Khulna, Barishal, Rajshahi, and Chattogram still record their own load shedding.
HSD Fuel Cost Reaches a Staggering BDT 45.16 Per Unit: HSD and HFO remain the most expensive sources of power supply, with HSD costing BDT 45.16 per unit compared to just BDT 3.50 for gas and BDT 6.34 for coal. This continued reliance on costly liquid fuels drove total fuel expenditures to approximately BDT 641 billion for the year.

Recommendations

Accelerate Massive Solar Deployment: Accelerate distributed and large scale solar deployment within generation deficit divisions (Mymensingh, Rangpur, and Dhaka), rather than spreading new renewable capacity evenly across the country.
Halt Unnecessary Capacity Additions: Stop adding new fossil fuel based plants. Rebalance the investment strategy toward upgrading transmission, distribution, and grid modernization to handle the current ~86 percent reserve margin and facilitate solar grid integration.
Phase Out Expensive Liquid Fuels via Solar: Continue displacing exorbitant HSD and HFO fuel based power generation. Instead of just shifting to coal, strategically replace these expensive liquid fuels with solar power to balance economic efficiency with environmental sustainability.
Address Divisional Inequities: Deploy decentralized solar microgrids and community/rooftop solar in Mymensingh, Rangpur and Dhaka, where load shedding is 2–3 times the national average, to reduce dependence on long distance transmission from surplus divisions.
Investigate Outage Data Discrepancies: Mandate immediate investigations to close plants that are out of generation without claiming any reason (Undisclosed) and low PLF plants, which together account for a large and growing share of recorded outage instances, to ensure full accountability in grid management.

Expected Citation

Mehedi, H., Arman, A.B., & Khatun, M. (2026). Power Sector of Bangladesh in 2025-26. Coastal Livelihood and Environmental Action Network (CLEAN): September 2026.