Power Expansion Needs a Reality Check 

We find it encouraging that the country may finally have an opportunity to rethink its approach to power-sector expansion. According to the Five-Year Strategic Framework for Reform and Development July 2026-June 2031, prepared by the Power, Energy and Mineral Resources Ministry, appropriate policymaking and timely reforms could reduce the annual capacity-payment burden of $1.5 billion to $1.8 billion. 

However, this opportunity will mean little unless the government moves quickly from policy formulation to implementation. Against this backdrop, the framework deserves serious attention for recognising that more generation capacity does not necessarily mean a stronger or more efficient power sector.

The underlying problem is the mismatch between generation capacity and actual demand. Installed capacity could reach around 25,714MW over the next five years, while demand is expected to grow by only 6 per cent. Meanwhile, power plants can receive capacity payments even when they are not producing electricity, leaving the country to pay for capacity that may remain idle. Gas shortages and transmission bottlenecks further limit the use of existing plants. Therefore, Bangladesh needs a reality check on its expansion plans. Future investments must be based on credible demand projections and actual system requirements rather than the assumption that adding capacity is always the answer.

The consequences of getting this balance wrong are significant. Capacity payments place pressure on public finances, while underused plants tie up resources that could instead strengthen transmission, support domestic gas exploration and expand cleaner energy. Moreover, dependence on imported fuels leaves Bangladesh vulnerable to international price shocks. Concurrently, poorly coordinated renewable expansion could create fresh problems. The framework rightly warns that solar generation may outpace transmission capacity, causing grid congestion and electricity curtailment. Even so, this should not discourage the renewable transition; it should encourage better planning. Generation, transmission, storage and demand management must develop together.

The government should therefore focus on improving the existing system before committing to substantial new generation. Better demand forecasting, faster gas exploration, removal of transmission bottlenecks and grid modernisation should be prioritised. The proposed 10,000MW solar target, rooftop systems, battery-backed projects and coastal wind development are also welcome. However, large investments, particularly in coal-fired generation, must undergo rigorous assessments of demand, cost and long-term viability. More importantly, renewable projects should be supported by the transmission and storage infrastructure needed to integrate them efficiently into the national grid.

Ultimately, we expect the government to make realistic planning the foundation of power-sector reform. The potential reduction in the $1.5 billion to $1.8 billion annual capacity-payment burden should be treated as a serious public-interest objective. We expect transparent power contracts, regular reviews of generation requirements and accountability for decisions that create long-term financial obligations. Thus, scarce resources can be redirected towards a more balanced and sustainable energy system. 

Bangladesh needs reliable electricity to sustain its economic ambitions; it does not need endless expansion that leaves capacity underused and the public paying the price.