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Bangladesh’s ready-made garment (RMG) industry faces growing pressure to adopt renewable energy. Global sustainability requirements and buyer decarbonisation commitments are reshaping international trade. While the sector has improved environmental compliance, renewable energy adoption remains limited.
As of July 2026, renewable energy accounted for just 5.69% of Bangladesh’s installed power capacity. This falls well below the national target of 20% by 2030. Despite declining solar power costs, several challenges continue to slow adoption. These include financing constraints, regulatory barriers, and fragmented institutional responsibilities. Small and medium-sized garment manufacturers face particularly significant difficulties in making this transition.
LightCastle Partners developed this diagnostic brief through Bunon 2030 under the Oporajita initiative. LightCastle Partners developed this diagnostic brief through Bunon 2030 under the Oporajita initiative, supported by the H&M Foundation, with The Asia Foundation serving as the backbone organisation.
The report examines opportunities and challenges surrounding renewable energy adoption in Bangladesh’s apparel sector. It draws on sectoral research, policy analysis, and stakeholder engagement. Together, these findings reveal the structural barriers preventing the industry from transitioning towards cleaner energy.
The analysis covers Bangladesh’s energy landscape, the commercial viability of renewable energy, and existing financing mechanisms. It also explores the regulatory and institutional challenges affecting adoption. Additionally, the report examines renewable energy policies, fiscal incentives, and lessons from peer economies. These insights help identify opportunities to accelerate the transition.
The findings show that renewable energy is becoming increasingly economical, yet implementation challenges remain. Rooftop solar can generate electricity at approximately BDT 6–8 per unit, below prevailing industrial grid tariffs. However, limited access to affordable financing and lengthy approval processes continue to discourage investment. Gaps in institutional coordination create further obstacles. These barriers disproportionately affect smaller garment manufacturers. Many lack the financial resources and technical capacity to pursue renewable energy projects independently.
Evolving international sustainability requirements further increase the urgency of this transition. European Union regulations and global buyers’ decarbonisation targets are placing greater emphasis on environmental performance. The Digital Product Passport framework also highlights the growing importance of emissions measurement and product traceability. Meanwhile, Bangladesh faces changing trade conditions linked to its anticipated Least Developed Country (LDC) graduation. Together, these developments make renewable energy adoption increasingly important for export competitiveness and long-term market access.
The report presents practical recommendations to address these challenges and accelerate renewable energy deployment across the RMG sector. Key priorities include stronger institutional coordination, expanded green financing, and improved regulatory efficiency. The findings also emphasise financing models that support smaller manufacturers. Other recommendations focus on improving installation quality, strengthening investor confidence, and creating a predictable policy environment.
Implementing these measures will require cooperation among government agencies, financial institutions, industry associations, manufacturers, and development partners. Greater renewable energy adoption can help Bangladesh’s RMG industry reduce energy costs and strengthen resilience. It can also support compliance with evolving sustainability requirements and improve competitiveness in global markets.
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