The most common reason people give for not installing solar is the upfront cost. In 2026 that barrier is lower than it has ever been: low-interest loans at around 5–6% a year are now available for homes, businesses, factories and irrigation pumps. Here is how each option works.
Updated October 2026 · Written and reviewed by the Frostec Solar Powers engineering team
- The government has created a Tk 1,500 crore solar fund, lent through IDCOL, BIFFL and PKSF, for households, institutions and industries.
- On 18 October 2026 the Finance Division and IDCOL signed a Tk 500 crore agreement; IDCOL and BIFFL will provide Tk 1,000 crore at a maximum of 6% interest.
- IDCOL’s rooftop solar loan: up to 80% of project cost, 10 years, 1-year grace on principal, 6% fixed.
- Bangladesh Bank’s Tk 1,000 crore green refinance scheme caps customer rates at 5% for eligible green industry projects.
- Commercial loans typically cost 9–12% — so concessional finance can cut total interest roughly in half.
The four main financing routes
| Source | Who can borrow | Key terms (as published) |
|---|---|---|
| Government solar fund (Tk 1,500 crore via IDCOL, BIFFL, PKSF) | Households, institutions, industries | Rate capped at about 5–6% including all fees; 1-year grace; up to 10 years |
| IDCOL rooftop solar programme | Industrial and commercial sponsors (RMG, textile, pharma, cold storage, agro-processing and more) | Up to 80% of project cost; 10 years; 1-year grace on principal; 6% fixed; quarterly repayment |
| Bangladesh Bank green refinance (Tk 1,000 crore, June 2026) | Green industries and factory buildings, through banks and NBFIs | Customer rate capped at 5%; 3–10 years; up to 1-year grace |
| Ordinary bank loan | Anyone who qualifies | Commercial rate, typically 9–12% |
Reports of the government fund give the end-borrower ceiling as both 6% and an effective 5% including all fees. Always confirm the final rate, fees and tenor with the lender before you sign.
The new government fund in detail
A Finance Ministry circular created a Tk 1,500 crore fund. The government lends Tk 500 crore each to IDCOL, Bangladesh Infrastructure Finance Fund Ltd (BIFFL) and PKSF at 0.5%, and they lend to end users directly or through partner organisations. Eligible items include:
- Rooftop solar with net-metering connection
- Solar home systems
- Industrial solar installations
- Solar irrigation pumps — see solar pump vs diesel
- Inverters, meters and batteries for solar generation and storage
The money cannot be used to repay existing loans, buy land or shares, or for personal consumption. On 18 October 2026, the Finance Division and IDCOL signed the first Tk 500 crore agreement, and IDCOL will reach borrowers through its demand aggregators.
Worked example: what will the instalment be?
A family installs a 5 kW hybrid system costing about ৳3.75 lakh (Frostec’s indicative ৳75 per watt) and borrows 80% — ৳3 lakh.
| Concessional loan at 6% | Commercial loan at 11% | |
|---|---|---|
| Grace year (interest only) | ≈ ৳4,500 per quarter | ≈ ৳8,250 per quarter |
| Next 9 years (36 quarterly instalments) | ≈ ৳10,850 per quarter (≈ ৳3,600 a month) | ≈ ৳13,230 per quarter (≈ ৳4,400 a month) |
| Total interest over 10 years | ≈ ৳1.08 lakh | ≈ ৳2.09 lakh |
In our Tk 10.50 incentive example, the same 5 kW system saves and earns about ৳6,500 a month. At 6%, the instalment of about ৳3,600 a month is covered by the savings from the first month — the system effectively pays for itself while you repay. (Illustrative figures using the annuity method; lenders may use fixed-principal repayment, which gives higher early instalments and lower later ones.)
Documents lenders usually ask for
- National ID and TIN of the applicant or company trade licence
- 12 months of electricity bills and the sanctioned load
- Proof of ownership or a long-term lease of the building or roof
- An engineered design and an itemised quotation with equipment model numbers
- Bank statements and, for businesses, financial statements
- For factories: a structural assessment of the roof
Industrial sponsors can start IDCOL’s process by filling in its assessment sheet and emailing it to rts.re@idcol.org; IDCOL then contacts the sponsor for screening.
Loan or no loan? Other ways to pay
- Own funds (CAPEX): highest return, no interest.
- Concessional loan: keeps your cash free; savings cover the instalment.
- Third-party ownership (OPEX / RESCO): an investor builds and owns the system, and you pay for electricity below the grid rate — no upfront cost. Compare in CAPEX vs OPEX.
Frequently Asked Questions
Can I get a loan for rooftop solar in Bangladesh?
Yes. A government fund of Tk 1,500 crore is lent through IDCOL, BIFFL and PKSF to households, institutions and industries at about 5–6% interest. IDCOL also offers 6% rooftop solar loans of up to 80% of project cost for 10 years.
What is the interest rate on a solar loan in Bangladesh in 2026?
Concessional solar loans are capped at about 5–6% a year. Bangladesh Bank’s green refinance scheme caps customer rates at 5%. Ordinary commercial loans typically cost 9–12%.
Can households get the government solar loan?
Yes. The fund is intended for household, institutional and industrial users, including rooftop solar, solar home systems, irrigation pumps and batteries. Applications go through the participating institutions and their partners.
How much of the system cost can be financed?
IDCOL’s rooftop solar programme finances up to 80% of project cost. Other lenders set their own limits.
Will the savings cover the loan instalment?
In many cases, yes. For a 5 kW hybrid system costing about ৳3.75 lakh, an 80% loan at 6% costs about ৳3,600 a month after the grace year, while savings and export income can be around ৳6,500 a month for a high-consumption household.
Get a Lender-Ready Solar Proposal
We prepare the design, yield estimate and itemised quotation your bank or IDCOL partner needs — so your loan file moves faster.
Questions? Call or WhatsApp +880 1805-208117 or email info@frostecsolarpowers.com. Figures in this article are indicative and approximate; final values depend on your site survey, design and the manufacturer terms of the equipment supplied.
