Potential for Green and Clean Energy
1. Rural Myanmar
Status of electrification in rural Myanmar and electricity demand
Myanmar is a large country having an estimated population of 54 Million as on Apr 2019 spreading over an equally large area of 676,577 square kilometers. Yangon region is the most densely populated region among the fourteen states and regions and one union territory, with a population of 8.3 Million and a density of 716 people per square km as compared to the national average of 76 people per square km.
The electrification in Myanmar is quite unequal with Yangon metropolitan area being highly electrified whereas there are states and regions where the coverage is below national average and is less than 40 percent. Although all of 390 towns in Myanmar are electrified only 47% of total of 56,954 villages are electrified through grid and non-grid as on 2017 (Source : MOEE)
Rural Myanmar has varied demand for electricity and an access to reliable and affordable energy is essential for its development, job creation, literacy improvements, better agriculture productivity and poverty reduction. Myanmar is an agrarian society that employs 60 percent of labor force and a lack of electricity results in low utilization of productivity equipment and in minimal usage of emerging agritech. No electricity also means that people cannot recharge phones and batteries, clinics cannot refrigerate medicines, farms cannot store the fresh produce and children have to rely on candles/ kerosene lamps for their studies. The non-electrification of village areas also impacts the smooth running of telecom infrastructure as the telecom towers need electricity for its microwave equipment.
The rural demand can be segmented based on the consumer requirements. Rural Myanmar has varying agriculture landscape, population density, hydro, wind and solar characteristics, employment source which gives rise to specific electricity demand from a village in a state or region. Targeting the lower tiers should not be underestimated despite lower income levels, and like food and shelter, electricity is a basic requirement which should be made available to everyone.
Overall electricity demand is expected to grow from 3075 MW in 2017 to three times (low case) / five times (high case) by 2030 according to MOEE/ JICA study.
2. Potential for rural electrification
Electricity supply and factors influencing promotion of rural electrification
Myanmar is high on renewable sources of electricity generation and 57.7% of its installed electricity generation is through hydro power projects. According to the Masterplan on ASEAN Connectivity 2025, Myanmar’s potential hydropower capacity is 108 GW. However, hydropower dams take eight to ten years to complete and have adverse impact on the surrounding population and environment.
The Myanmar government has signed agreements with six companies in 2018 who will be developing the LNG plants to help meet the growing energy demands of the country. Siemens and France’s Total will be developing a 1,230 MW plant in Kanbauk, China’s Zhefu and Myanmar’s Supreme will be building a 1,390 MW plant in Mee Laung Gyaing, Thailand’s TTCL will be developing a 356 MW plant in Yangon.
Compared to LNG or gas-fired generation, solar or wind power is cheaper and cleaner. Minbu solar power plant completed first phase of 40 MW in 2019 with a total capacity of 170 MW.
Key laws and players in the Electricity sector:
A. Electricity Law:The 2014 Electricity Law sets the legal framework for the electricity sector in Myanmar. Only Ministry of Electricity and Energy (MOEE) and state/region governments are authorized to grant licenses. The licensing authority of state/region governments is limited to generation and distribution systems smaller than 30 MW unconnected to the grid.
B. Myanmar Investment Law (MIL):Electricity generation under 10 MW is generally reserved for local investors, but with MOEE approval, foreign investors can have up to 80 percent equity in a joint venture for projects under 10 MW. Foreign investors are also allowed to operate as Independent Power Producers (IPPs) in Myanmar and receive concessions for natural gas turbines, hydropower, solar power, waste-to-energy, and wind power (DFDL 2016).
C. Myanmar Investment Commission (MIC):MIC reviews, approves and issues permits for investment proposals.
D. Electric Power Generation Enterprise (EPGE): The EPGE is solely responsible for purchasing power from public and private power producers, including BOT project companies, and reselling that power on to the ESE, YESC and MESC. In addition, the EPGE operates and maintains gas fired thermal power generation; mini hydropower plants (above 66kV) and controls all transmission lines and substations.
E. Electric Supply Enterprise (ESE), Yangon Electric Supply Corporation (YESC) and Mandalay Electric Supply Corporation (MESC): These enterprises deliver power to electricity consumers in States and Regions, Yangon and Mandalay.
F. Department of Rural Development (DRD):DRD has the mandate to support off-grid electrification in rural Myanmar. DRD has been issuing calls for proposals for mini-grids since 2016, to attract private-sector developers and investors interested in off-grid electrification. Under the program, the government covers up to 60 percent of the capital cost of the mini-grid, while the remaining equity portion must be agreed upon by the project developer and the beneficiary communities.
Case study : India’s Solar Power Success Story
Solar energy and decentralized energy solutions such as mini-grids can play a major role in creating a modern, reliable, decentralized energy system. Solar power can be harnessed faster and varied business models have emerged for commercial mini- grid operations depending on company’s objectives and local requirements/ conditions.
Among the various renewable energy resources, solar energy potential is the highest in India. In most parts of India, clear sunny weather is experienced 250 to 300 days a year. The annual radiation varies from 1600 to 2200 kWh/m2, which is comparable with radiation received in the tropical and sub-tropical regions. The country has set an ambitious target of installing 175 GW of renewable energy capacity by the year 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power. India has already achieved 28GW of installed solar capacity.
India regularly conducts solar power auctions. In renewable energy auctions the auctioneer issues a call for tenders to procure a certain capacity of renewables-based electricity. Project developers who participate in the auction typically submit a bid with a price per unit of electricity at which they are able to realise the project. The auctioneer evaluates the offers on the basis of the price and other criteria and signs a power purchase agreement with the successful bidder.
3. Investment opportunity
Key considerations while investing in energy in Myanmar
According to the World Bank, Myanmar needs to invest up to US$2 billion yearly in its electricity sector to sustain economic growth. The investors need to clearly understand the policies, laws, regulations, concessions, grants, tax reliefs, labor, land lease and foreign remittance requirements among others. They need to work closely with the players in the electricity sector, understand the risks and their mitigations. They should conduct detailed surveys and market assessments to avail the best quality of data and information for understanding the market, granular demand pockets at village, businesses and household levels in relation to key power metrics to size up the opportunity. Here is an opportunity for getting the returns as well as for transforming Myanmar towards development.
Please connect with us at info@quantaleap.sg to discuss on the Energy sector in Myanmar.