S&P report recommends prioritising investments that ensure reliable generation rather than simply adding capacity.
Illustration: TBS
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Illustration: TBS
Bangladesh’s growing power generation capacity has failed to guarantee reliable electricity supply as fuel shortages and disruptions to imported energy expose vulnerabilities in the country’s power sector, according to a report by S&P Global published today (6 November).
The report, citing Power Grid Company Bangladesh (PGCB) data, said Bangladesh entered 2026 with around 30 gigawatts (GW) of installed generation capacity, implying a reserve margin of 66%.
As supply constraints worsened in late March amid geopolitical disruptions and limited generation due to plant outages, power shortages reached a three-year high of 1 terawatt-hour despite electricity demand falling 1.5% year over year in the first half.
The plant load factor (PLF) of gas-fired power plants fell to 48% in the first half, from 54%. By contrast, coal-fired plants recorded an increase, with their PLF rising from 47% to 54%, according to PGCB data and S&P Global Energy CERA analysis.
The report said declining gas utilisation and growing reliance on coal highlight a key vulnerability: installed capacity cannot ensure reliable supply without fuel security.
Moderating demand amid power expansion
Although electricity demand declined in the first half, Bangladesh’s longer-term consumption outlook remains strong, according to the report.
The 2026 Power and Energy Sector Master Plan projects peak electricity demand to grow at an average annual rate of 5% between 2025 and 2050. Grid electricity demand is expected to increase by an average of 3.8% annually between 2025 and 2060.
Electricity consumption is projected to reach around 362TWh by 2060, while peak demand could rise to 62GW. To meet the growing requirement, installed generation capacity is expected to more than triple from around 30GW in 2025 to 100GW by 2060.
Fuel security reshapes generation mix
Bangladesh’s power generation remains vulnerable to fuel shortages and international price volatility because of its heavy reliance on imported LNG, said the report.
Gas and coal account for 87% of installed capacity, while renewables make up just 2.6%. Solar dominates renewable capacity, accounting for 1.5GW of the total 1.8GW.
According to CERA, the generation mix is expected to diversify over the coming decades, with fuel availability and costs shaping the role of different technologies.
Declining domestic gas production will constrain gas-fired generation, while imported LNG will leave the sector exposed to global prices and supply disruptions.
Coal is expected to remain important in the medium term, supported by existing plants and committed projects, although no new capacity is assumed after 2046.
Coal plant utilisation is expected to rise in the near term as gas-fired generation declines amid shrinking fuel supplies. Oil-fired generation is projected to be phased out by 2028.
Nuclear power is expected to become a growing source of domestic electricity from the late 2020s, while imports will remain an important part of the supply mix. By 2060, nuclear, solar and imported electricity are projected to account for more than 60% of generation.
Infographics: TBS
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Infographics: TBS
Renewables emerge as growth area
S&P said solar-led renewable expansion gained momentum in the first half of 2026, but financing and implementation constraints slowed deployment.
The revised Power and Energy Sector Master Plan targets renewables at 20% of the power mix by 2030 and 30% by 2040, prioritising utility-scale and rooftop solar, wind and storage.
CERA said Bangladesh needs to focus not only on expanding its renewable project pipeline but also on ensuring that transmission, distribution and storage infrastructure develops.
Policy shifts towards diversification, energy security
The government has prioritised domestic gas exploration, while promoting investment in renewables, nuclear power, storage and regional electricity trade, the S&P report said.
However, the transition will depend on addressing constraints in fuel supplies, financing, grid infrastructure and project execution.
CERA recommends improving existing plants’ availability and utilisation, securing adequate fuel supplies and strengthening transmission infrastructure. Continued electricity imports could also help prevent shortages.
It stresses raising plant load factors where feasible and prioritising investments that ensure reliable and affordable generation rather than simply adding capacity.
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