Moving beyond Megawatt Illusion: Regional Cooperation for Energy Security

Bangladesh’s energy strategy has often assumed that greater generation capacity would bring greater energy security. The country now has nearly 29,000MW of installed capacity, well above normal demand. Yet homes and businesses are again enduring prolonged power cuts. Last week, the government ordered shops and markets to close by 8 pm, echoing measures taken in 2009 and 2022, as gas shortages constrained generation. Days earlier, load-shedding peaked at 3,757MW: demand stood at 16,262MW, while generation was barely 12,500MW.

This is the ‘megawatt illusion’: equating installed capacity with energy security. Bangladesh has invested heavily in power plants without securing enough fuel, finance and infrastructure to operate them reliably. During the recent crisis, significant capacity remained idle due to fuel shortages, maintenance backlogs and financial strain. The lesson is clear: energy security cannot be measured in megawatts alone. It requires a more diversified and resilient energy system, with regional cooperation as an important part of the solution.
For decades, domestic natural gas gave Bangladesh a crucial advantage. But production from ageing fields has steadily declined while demand has surged. Daily gas demand now stands at roughly 4,000 million cubic feet, against supply of just 2,600 million. The gap is increasingly filled by imported LNG, coal and petroleum products, leaving Bangladesh exposed to global price shocks, shipping disruptions and foreign-exchange pressures. The recent Middle East crisis and the disruption at one of the Moheshkhali LNG terminals exposed this vulnerability. A disturbance thousands of kilometres away can now ripple through Bangladesh’s power grid, fertiliser plants and industrial factories.

The financial strain is equally serious. Bangladesh allocated Tk37,000 crore in power subsidies for the FY2025-26, while only about 2% of development spending goes to renewables, according to the Centre for Policy Dialogue. Capacity payments for underused plants, potentially reaching Tk52,608 crore in the FY27, have already cost over Tk1 lakh crore since 2009. Meanwhile, Bangladesh Power Development Board (BPDB) generates electricity at $0.10 per unit but sells it at $0.05, with projected losses of $4.15 billion in FY2025. This burden is no longer merely fiscal; it is weakening Bangladesh’s investment climate and economic growth.
Addressing the energy crisis requires a multi-pronged approach: diversifying LNG sources beyond the Middle East, accelerating domestic gas exploration, targeting 10,000MW of renewables by 2030 with rooftop solar leading the way, improving efficiency through net-metering reforms and integrating nuclear power. But domestic diversification alone is not enough. This is where energy diplomacy must become a stronger pillar of Bangladesh’s foreign and economic policy, linking domestic energy security with regional opportunities.
Regional cooperation offers perhaps our greatest untapped energy opportunity. The Hindu Kush Himalaya region holds an estimated 882GW of hydropower potential, of which only 49% is currently harnessed. Nepal and Bhutan already generate 100% of their electricity from renewable sources. Bangladesh has also crossed an important threshold by importing 40MW of hydropower from Nepal through the Indian grid. The volume is modest, but the model is significant: Bangladesh, India and Nepal have demonstrated that clean electricity can move across national borders.

The strength of this regional cooperation lies in the region’s complementary energy resources. Nepal and Bhutan offer vast hydropower potential, Bangladesh combines rising demand with growing solar capacity, while India provides the transmission backbone connecting them. Bangladesh’s daytime solar, flexible Himalayan hydropower and seasonal surpluses could complement each other through cross-border trade. A sub-regional electricity market under the Bangladesh, Bhutan, India, Nepal (BBIN) framework could turn these shared strengths into greater energy security for the region.

However, scaling up this opportunity will require diplomacy as much as infrastructure. The additional 20MW of planned Nepalese power that could not proceed this year due to transmission constraints through India illustrates precisely where the bottleneck lies. Cross-border transmission must therefore become an investment priority alongside new generation. The BBIN framework offers a practical platform to integrate hydropower, solar, wind and pumped storage while strengthening regional grid reliability. Bangladesh could take the lead in advancing a dedicated BBIN Secretariat with a clear legal mandate to coordinate energy planning, transmission investment and dispute resolution, turning regional potential into a reliable and sustainable energy partnership.

This also creates an opportunity to place energy diplomacy more firmly within Bangladesh’s foreign and economic policy. A balanced strategy combining domestic gas, renewables, nuclear power, diversified fuel imports, efficiency and regional electricity trade can deliver more reliable and affordable energy. Bangladesh’s energy future therefore lies both within its borders and in the shared opportunities of the region. 
For too long, installed capacity has created the comforting illusion that our energy problem was largely solved. Megawatts on paper cannot run factories, reassure investors or sustain economic progress. Moving beyond the megawatt illusion, thus, requires Bangladesh to build not simply more generation capacity, but a secure, diversified and financially sustainable energy system, backed by smart investment, regional cooperation and determined energy diplomacy.
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The writer is an academician and development strategist, currently serving at a foreign diplomatic mission in Dhaka. He can be reached at [email protected]