Bangladesh’s trade gap widens on energy imports; solar offers way out: Ember

Bangladesh’s widening trade deficit is increasingly being driven by its heavy reliance on imported fossil fuels, with as much as 59 per cent of the deficit linked to energy imports, according to a new report by Ember.

 

The report warns that ongoing geopolitical tensions, particularly the Iran war, could further deepen the country’s economic vulnerability by pushing up global fuel prices. In response, Ember has urged Bangladesh to accelerate the expansion of affordable and sustainable solar power as a long-term solution.

 

Titled “The Electric Fast-Track for Emerging Markets,” the report was released Thursday in collaboration with the Climate Vulnerable Forum and the V20.

 

The findings come at a time when Bangladesh is grappling with a severe energy crisis. The country’s dependence on imported fossil fuels has placed significant strain on its economy, while supply disruptions linked to the Iran war have begun to affect daily life across the country.

 

According to the report, total energy import costs for climate-vulnerable economies, including Bangladesh, reached $155 billion in 2024. This figure could rise by another $30 billion this year due to continued instability in global energy markets.

 

Despite these pressures, the report highlights a striking global trend: more than half of climate-vulnerable countries have already surpassed the United States in solar power adoption.

 

Bangladesh, however, lags behind. Renewable energy currently accounts for only around 3 per cent of the country’s total power generation capacity—far too low to shield it from external shocks.

 

M. Zakir Hossain Khan, managing director of Change Initiative, said the impact of rising fuel prices is already being felt at both household and national levels. “In LDCs, the $88 that families once saved annually for flood protection is now being consumed by a 40 per cent increase in fuel and food prices,” he said.

 

He added that Bangladesh is incurring an additional $5 billion in annual costs due to global energy disruptions, stressing that increasing the share of renewable energy to at least 50 per cent is now essential for economic stability.

 

The report also finds that the global transition to clean energy is advancing faster than official statistics suggest.

 

Around 46 per cent of member countries in the Climate Vulnerable Forum have already overtaken the United States in solar uptake.

 

In eight out of ten countries, solar panel imports are at least three times higher than reported installation figures, indicating a rapidly expanding decentralized energy market driven by households and small businesses.

 

At the same time, the cost of key technologies—including solar panels, batteries, and electric appliances—has dropped sharply by between 30 per cent and 95 per cent over the past decade.

 

Unlike fossil fuel-based systems that require large-scale infrastructure and high upfront investment, solar and battery technologies can be deployed incrementally. This makes them particularly suitable for Bangladesh, where expanding the national grid remains both costly and time-consuming.

 

The report outlines several advantages of this “electrotech” approach, including lower capital costs, faster access to electricity, reduced dependence on imports, and greater resilience against global price volatility.

 

It also notes that decentralized solar systems are already proving more cost-effective than grid expansion in many remote and underserved areas.

 

Shafiqul Alam, Bangladesh energy analyst at the Institute for Energy Economics and Financial Analysis (IEEFA), said the country’s past reliance on fossil fuels has exposed it to volatile international markets and mounting subsidy burdens.

 

He noted that renewable energy—particularly solar—offers a viable pathway to strengthen energy security, especially in an era marked by frequent geopolitical crises. He also pointed to growing interest in rooftop solar among industries, with a strong pipeline of future investments.

 

The report concludes that Bangladesh is not locked into a fossil fuel-dependent future. Instead, it has a unique opportunity to leapfrog to a clean energy system powered by increasingly affordable technologies.

 

Such a transition could not only improve access to electricity but also boost industrial productivity, reduce fiscal pressure from fuel imports, generate employment in the renewable sector, and enhance long-term economic resilience.

 

With global energy markets remaining uncertain, the report underscores that accelerating solar-driven electrification is no longer just an environmental priority—it is an economic imperative for Bangladesh.