Myanmar Solar: Lots of Potential, But a Cloudy Outlook for Solar Energy Development and Growth

Solar energy is just beginning to gain some traction in Myanmar, a country that has been gradually opening up its economy and society to the world since 2011. Demand for energy has been growing fast, in parallel with the ASEAN (Association of Southeast Asian Nations) member’s economy, and solar energy is competing against a variety of conventional, as well as alternative low- or zero-carbon, energy resources for its share of Myanmar’s energy mix.

Renewable energy, in the form of large-scale hydroelectric power, already accounts for around 60%, the single largest share, of Myanmar’s electricity generation mix. The country also has an abundance of natural gas, an important export and the source of hard, foreign currency export revenues, as well as domestic power generation.

Solar could play a big role in achieving Myanmar’s energy access, renewable energy and climate change goals, as well as go a long way towards setting Myanmar firmly on a sustainable development pathway, however. Levels vary widely across this geographically diverse Southeast Asian nation, but on the whole, Myanmar is endowed with an abundance of solar energy resource potential,

an average solar irradiance of 4.5–5.1 kilowatt-hours per square meter per day (kWh/m2/day).

“Myanmar has incredible potential for solar energy: the International Growth Centre has estimated Myanmar’s solar potential to be 51.973 TWh (terawatt-hours) annually,” according to FinerGreen and ABO Wind, the authors of the SolarPower Europe Emerging Markets Task Force’s Myanmar research report, which was released in May.

However, there is still a lot of work to be done by the government to unleash this solar potential and attract foreign direct investment in the solar industry in Myanmar.

Energy access and Myanmar’s economy

A nation of some 55 million and growing as of a 2014 census, just 42% of Myanmar households had access to electricity , according to the first, June 2019 nationwide assessment of distributed energy market potential in Myanmar, which was produced by Smart Power Myanmar, a national platform with a mandate to advance a modern energy ecosystem in the country.

Myanmar is one of the most poorly electrified countries in Southeast Asia, with an average electrification rate of 39% at the end of 2017. According to the Germanwatch Global Climate Risk Index, Myanmar was also one of the countries that was most affected by extreme weather events in the years between 1997 and 2016. The country would therefore benefit from decentralized power generation solutions, like solar.

—SolarPower Europe’s Myanmar research team pointed out.

That said, Myanmar’s economy grew from 5.6% to 8% from fiscal year 2011 to 2015, fueled by strong growth in the construction, manufacturing and services sectors, according to the Asian Development Bank’s (ADB) December 2016 Myanmar: Energy Sector Assessment, Strategy and Road Map report. ADB forecast that GDP growth would accelerate to 8.3% in fiscal year 2015 and continue around that level in 2016.

“This optimistic projection is based on the country’s abundant natural resources; strategic location at the crossroads of Asia; and a large, youthful population. To realize it, however, the country needs to successfully implement extensive reforms and integrated policies, build basic infrastructure, and tackle many bottlenecks. The development of energy sector is key to the country’s future,” the ADB report authors wrote.

Myanmar is able to produce between 2.9 gigawatts (GW) and 3.1 GW of electricity, according to media sources. Recent estimates by the World Bank forecast energy consumption in Myanmar would grow at an average 11% rate out to 2030. The World Bank also forecast that peak electricity demand would rise to 8.6 GW by 2025 and 12.6 GW by 2030.

Half the electricity produced in Myanmar is consumed in Yangon, its largest city and commercial hub. Rolling blackouts and brownouts are common occurrences across the country, however. Furthermore, electricity consumption per capita ranked among the lowest in the world at just 110 kilowatt-hours (kWh) as of 2011, according to ADB’s 2016 report. That compares to a world average of 3,000 kWh per capita and an average of 174 kWh per capita for least-developed countries.

“According to the Ministry of Electricity and Energy (MOEE), there are 10.9 million households in Myanmar of which only 4.71 million are on the national grid. Myanmar’s National Electrification Project (NEP) aims to supply electricity to nearly 700,000 households in more than 8,000 villages by 2021 ,” according to SolarPower Europe’s Myanmar research team.

“Traditional biomass (mainly firewood and agricultural wastes) is widely used by most rural people, particularly for cooking and lighting, and access to conventional energy resources is very limited, which impacts the welfare of these people. After the country’s opening in 2011, the demand for energy from industry, commerce, and residential sectors is on the rise, placing pressure on the limited energy infrastructure,” ADB elaborates in its report.

ADB estimated that Myanmar would need to double its energy sector investments to some US$2 billion per year , double historic levels to realize the multilateral development bank’s economic growth forecast. Five gigawatts of new electrical power capacity would need to be added to Myanmar’s generation capacity by 2025, roughly three times the capacity that was added over the same period in the past.

More recent projections from the World Bank expect economic growth to rise to 6.5% in the 2018–19 fiscal year. In addition to the need to invest US$2 billion annually to add new electricity generation capacity, projects would need to be implemented three times as fast as they have been to meet growing demand.

A need to boost and accelerate energy sector investment and capacity additions

Rising electricity demand, rapid demographic growth and rapid growth of installed solar power capacity in neighboring countries, such as China, India and Thailand, offer opportunities for Myanmar to increase its installed solar power capacity, SolarPower Europe’s Myanmar researchers highlight. “Average annual total of solar power production in Myanmar varies between 1,150 kWh/kWp (kilowatt-peak) and 1,600 kWh/kWp, with high values in the central region. In the mountains, power production is lower: up to 20% or more due to terrain shading,” according to their Myanmar research report.

Myanmar’s solar power potential is estimated to total around 35 gigawatts-peak (GWp). “So far, less than 1% has been installed so there is huge solar potential,” they highlighted. Very good solar potential exists in the central lowlands of Myanmar, where demand is the highest, they added. “Solar can effectively counterbalance the electricity shortage during the dry season, while not occupying too much grid capacity during the rainy season.”

“Low energy access rates, high solar irradiance for most of the year, supply lagging behind the demand, [and the] high cost of electricity generation,” are key factors that make Myanmar an attractive destination for solar energy investment and deployment, Richard Harrison, Smart Power Myanmar CEO, told Solar Magazine. Furthermore, the economics of solar are increasingly attractive given electricity rates having been hiked substantially this past June.

On the other hand, the lack of a supportive, consistent regulatory policy and broader institutional framework serves as a barrier to solar and renewable energy market and industry development and growth, Harrison added. So does fossil fuel subsidies.

“Improving framework conditions for doing solar business would be an important step in developing Myanmar’s solar potential. Currently, the prevalence of state-owned enterprises is limiting foreign investment in the country. Tendering renewable energy projects with non-discriminatory and transparent allocation schemes—instead of signing bilateral agreements—would support project development and attract investment,” according to SolarPower Europe’s Myanmar research team.

“Moreover, solar can help ensure a just energy transition for citizens affected by energy poverty...Furthermore, 75–85% of Myanmar’s population of lives within a 25–50-kilometer radius of high voltage power lines, which makes for ideal locations to develop medium- and large-scale solar projects,” they noted. “Since many households have no electricity at all, solar has already helped many homes with very small systems. This is very positive for many people. As of now, there is no scheme for utility-scale solar power plants in place.”

Initial, tentative steps to foster solar, renewable energy development and growth

Myanmar has taken initial steps towards realizing its renewable energy, climate change and universal electrification goals. Myanmar’s government has set modest goals of renewable energy resources generating 8% of national output by 2021 and 12% by 2025, as well as universal electrification by 2030. In addition, a total of 68 townships and 5,191 villages had received 24x7 access to electricity services between 2016 and 2019, according to state media.

“Following the lifting of sanctions in 2011, Myanmar launched an ambitious investment program, with both government and private sector participation, to develop its energy infrastructure and provide universal electricity access by 2030,” the World Bank highlighted in its June 2019 Myanmar Economic Monitor. “The program delivered positive results: electrification rates increased from 30% to 42% and installed generation capacity almost doubled from 2,800 MW in 2010/11 to 5,640 MW in 2017/18. In addition, living conditions for millions of people improved as they gained access to modern electricity.”

A draft Renewable Energy Law has been created, but the government has yet to approve it. In addition, there haven’t been any beneficial changes made “to establish competitive tenders or incentives for renewables, which makes them expensive and with the current electricity tariff that does not guarantee cost-recovery. It’s difficult to compete with hydro or fossil fuel projects,” Smart Power Myanmar’s Harrison said in an interview.

That said, Myanmar’s Department of Rural Development is leading an initiative to deploy “renewable energy-based mini-grids for rural electrification, replacing diesel and kerosene as the sources of rural energy. Private companies, such as Yoma Micropower, are also developing off-grid projects: commercial and industrial, as well as residential microgrids,” Harrison said.

Solar energy projects in Myanmar

State Counselor Aung San Suu Kyi in June 2018 officially commissioned the first, 50-MWdc/40-MWac, phase of Myanmar’s inaugural commercial solar power facility, the 220-MWdc/170-MWac, US$297 million Minbu Solar Power Plant. The project is being carried out over a projected four-year period by Green Earth Power, a joint venture between an international consortium made up of East Coast Furnitech, Scan Inter, Thailand’s META Corp. as project developer and lead contractor, and the Myanmar government.

All told, Minbu is expected to produce some 3.5 gigawatt-hours (GWh) of emissions-free electrical energy annually, enough to power some 210,000 average households. Electricity from the plant will be sold to the state’s Electric Power Generation Enterprise (EPGE) as governed by the Ministry of Electricity and Energy.

Moving down in scale, both ADB and Smart Power Myanmar see bright prospects for solar-plus-storage mini- and micro-grids to play a central role in realization of Myanmar’s universal electrification, sustainable development, renewable energy and climate change goals.

“The Dry Zone, consisting of the Magway, Mandalay, and Sagaing regions, is highly suitable with average radiation of more than 5 kWh/m²/day and limited variation in radiation during the rainy season,” ADB highlights in its 2017 guidebook, Developing Renewable Energy Mini-Grids in Myanmar. Irradiance can drop as much as 50% during the rainy season outside the Dry Zone, hence more in the way of battery energy storage capacity would be required to provide continuous electricity service, the guidebook’s authors point out.

Exploring the feasibility of hybrid mini-grids that add back-up diesel generation to mini-grids centered on solar, hydro or wind power production is another option worth exploring, according to ADB. “This provides backup to the renewable component and can ensure a continuous supply of electricity in case the renewable resource is insufficient to meet the demand, for example, hydro in the dry season or solar in the rainy season. A hybrid system may also allow for a smaller battery pack, which is one of the most expensive components and most prone to failure,” the report authors elaborate.

“A number of commercial and industrial projects are being installed throughout the country, impossible to track the installed capacity to date,” Harrison told Solar Magazine. Similar to independent residential solar installations is the government’s Solar Home Systems program, which is supported by the World Bank, he added.

Lighting Myanmar, a program led by the International Finance Corporation (IFC), is a key element of Myanmar’s universal electrification initiative, SolarPower Europe’s Myanmar research team pointed out. Launched in 2016 and to be completed in 2022, the program, they explained, “focuses on supplying local households with solar lanterns, solar home systems and potentially off-grid systems.”

Distributed solar, renewables and productive use

Finding ways of making mini-grid access affordable to local residents and businesses is key to the success of Myanmar’s rural electrification drive, as they are in any country where residents and businesses are unaccustomed to, or never have had, access to modern electricity services. So is community outreach, education, training, participation and equity in order to increase the likelihood local will make productive use of these new energy assets.

With funding from the Japan Fund for Poverty Reduction, ADB, working with Myanmar’s Ministry of Agriculture, Livestock, and Irrigation (MOALI) as the executing agency, the Department of Rural Development (DRD) and regional and local government agencies, installed demonstration solar mini-grid systems in 12 rural villages in the country’s Dry Zone. ADB funding covered 80% of the projects’ total deployment costs. Villagers contributed the remaining 20%. Mini-grid installation and three-year operations and maintenance contracts were awarded to two Myanmar solar companies following a tender, SolaRiseSys and Zaburitz Pearl.

Each of the solar mini-grids consisted of three principal components: pilot mini-grids, a geospatial planning and off-grid investment plan and a capacity-building program designed to strengthen the government’s mini-grid development capacity. Twelve were standalone, off-grid projects, one was a diesel-hybrid system and one project was built to grid standards so that it could be connected to the national grid when it’s extended to the village. In addition, a Village Electrification Committee (VEC) was established in each of the communities and given responsibility for collecting mini-grid service payments from villagers.

Myanmar: Solar mini-grids

Similarly, Smart Power Myanmar’s Decentralized Energy Market Assessment demonstrates that solutions such as mini-grids can play a crucial role to bring reliable power to off-grid households and businesses in Myanmar while grid electrification progresses. Mini-grids are in many cases cheaper and faster than grid electrification and, unlike solar home systems, can be integrated into the main grid and have the capacity to supply businesses and larger commercial loads such as telecoms towers. This means mini-grids can also play a key role in Myanmar’s socio-economic development, including boosting business activity, incomes, living standards, utilization of public infrastructure, and yield health, education and environmental benefits.

Smart Power Myanmar was established in May 2018 by a group of founding members and U.S.-based international development agency Pact with core funding provided by The Rockefeller Foundation. “We are a platform based in Myanmar that helps unify and scale the integrated electrification efforts. We help align the skills, resources and energy of private power developers and development and financing institutions to promote integrated electrification in Myanmar,” Harrison explained.

“We are committed to expanding energy access and use across Myanmar through the creation of a viable, decentralized renewable energy ecosystem. This report sheds important light on how we can achieve this goal, which would help make a marked dent in economic poverty in the country,” stated Harrison.

Mini-grid deployment isn’t commercially viable without financial support at present, Smart Power Myanmar highlights. Smart Power Myanmar presents three key policy pillars as the foundation of a strategic framework that it believes can serve as the basis for reducing the risks and enhancing the economics of developing renewable energy mini-grids in order to attract private sector investment.

• Pillar 1: Promote de-risking of mini-grid projects and access to finance; the goal of this pillar is to put in place comprehensive initiatives to maximize the number of “investible” mini-grids, including villages in Phase 3 of NEP, by de-risking grid arrival and to decrease the hurdle IRR rate required to develop mini-grids.
• Pillar 2: Support growth of electricity demand in off-grid villages; the goal of this pillar is to boost demand to increase the viability of mini-grids—following results of scenario analysis and of economic impact assessment, the focus should be on productive demand.
• Pillar 3: Support generation of economies of scale; the goal of this pillar is to enable the development of large mini-grid pipelines of projects to optimize overall costs through economies of scale.

To date, 39 solar mini-grid projects have been approved with capacities ranging from 40 kW–150 kW. In addition, “commercial banks are showing interest in offering project finance, [and] the government increased electricity rates—both, residential and commercial —for the first time in five years,” Harrison pointed out.

Looking ahead, SolarPower Europe’s Myanmar research team points to growing demand for electricity, particularly in rural areas, and frequent power cuts as factors that highlight the need for independent power production. Instituting policies and taking actions to support that can open up substantial business opportunities, they point out. “In particular, the manufacturing sector increasingly requires low-cost electricity, which solar could provide.” That said, the amount of new solar power plants expected to be built in Myanmar over the next 10 years is small as compared to other ASEAN countries, such as Thailand, Vietnam and Indonesia, especially given Myanmar’s abundant solar energy resources and growing energy demand, according to SolarPower Europe’s Myanmar researchers. However, “Myanmar’s large-scale solar pipeline is estimated to be between 470 MWp and 1.5 GWp, according to different sources,” they noted.

Smart Power Myanmar’s Harrison pointed towards national elections, which are planned for 2020, as a possible pivot point for the Myanmar government’s energy policy. “The government is pressured to take actions towards meeting increasing energy demand, so there might be some positive development with approved projects. However, it’s unclear whether those will be implemented, as happened with projects approved by the past government,” he concluded. comment↓

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