Rapid urbanization in developing nations has intensified municipal solid waste (MSW) generation, posing critical challenges to sustainable urban development and energy security. This study presents a comprehensive techno-economic and environmental evaluation of an anaerobic digestion-based waste-to-energy (WtE) system tailored for Dhaka, Bangladesh-where over 72.25 % of MSW is biodegradable. A 40 MW biogas power plant was modeled using HOMER Pro software, incorporating load profiles, grid interaction, and system cost dynamics. The proposed system achieves a competitive levelized cost of electricity (LCOE) of 8.7 Tk/kWh ($0.0733), significantly outperforming conventional Independent Power Producers (14.62 Tk/kWh), rental and quick rental plants (12.53 Tk/kWh) and imported power (14.02 Tk/kWh). Annual GHG emissions were reduced to 1143,159 kg CO₂ and 1150 kg NOₓ, compared to 638,442 tons CO₂e from open dumping, as quantified using the SP1 methane emission model. These findings establish anaerobic digestion as a scalable, low-carbon alternative for urban energy systems in resource-constrained settings, aligning with circular economy and climate resilience goals.