Tuesday, July 25, 2017

Electrifying Myanmar’s power grids

By 2030, Myanmar is expected to consume around 80,000 gigawatt hours (Gwh) of electricity, more than six times its current consumption of approximately 13,000Gwh. This corresponds to a staggering growth of 14 percent year-on-year.

A workman takes pliers to an electric cable. Aung Khant/ The Myanmar TimesA workman takes pliers to an electric cable. Aung Khant/ The Myanmar Times

Myanmar’s power generation capacity has for many years struggled to adequately meet the growth in demand, and frequent cases of power outages have been a long-standing nuisance to Myanmar people as well as investors.

Hydropower generation capacity, which forms two-thirds of the power generation mix, is affected by seasonality, where during the parched seasons of December to March a significant portion of power generation capacity dries up. Myanmar’s electricity infrastructure is also old and prone to breakdowns. In addition, there are electricity export commitments in place.

Significant capacity additions are needed to meet Myanmar’s growing thirst for power. Some estimates indicate that the installed generation capacity in Myanmar could be as high as 24 gigawatts by 2030, corresponding to capacity additions of approximately 1.2 gigawatts per year, roughly one-quarter of Myanmar’s current installed capacity, each year over the next 15 years.

While in recent years independent power producers have started to fill this capacity gap and various memorandums of understanding have been signed for the development of new projects, there is still limited mid-term visibility of a clear and detailed power generation outlook.

There is no silver bullet to solve electricity shortages. Ensuring sufficient, reliable and sustainable power supply will require both short- and long-term measures.

Relieving shortages

Most urgently, Myanmar needs to improve the reliability of existing electricity generation, transmission and distribution infrastructure by systematically rehabilitating current facilities. This would include refurbishing power plants to extend life, reliability and output, as well as replacing critical power transmission infrastructure.

However, the government will need to attract financing for such initiatives, through multilateral development banks, international financing institutions, privatisation and public-private partnership schemes.

The use of temporary generation units, either on-land or via power vessels, can also provide an immediate boost to generation capacity, alleviating immediate shortfalls. If feasible, using the electricity from Myanmar’s existing hydropower capacity to the fullest rather than exporting abroad could also alleviate supply shortages.

Electricity supply, especially to off-grid border regions, can also be resolved by importing energy from countries such as Laos. The neighbouring country is a surplus power producer with planned capacity in 2020 of 12.5 gigawatts, five times more than its projected domestic demand.

The development of interconnecting grid infrastructure between the two countries would also enhance supply security for Myanmar. Selected generation projects should also be developed on a fast-tracked basis. Solar and gas power projects can be developed relatively quickly compared to other sources of power.

Solar projects in other comparable countries have been developed within eighteen months, while gas-fired power plants have been developed in six to 12 months in fast-tracked projects.

In comparison, a coal-fired power plant typically takes five years to complete. For gas, development may be constrained by the availability of domestic gas production in the short term. The development of liquefied natural gas (LNG) import infrastructure, such as the one planned at a special economic zone in Dawei, could relieve supply constraints.

Solar on the other hand is not constrained by fuel supply and could be feasible in off-grid applications. As such, there could be significant potential to use solar in certain regions to ramp up the electrification of rural areas that are not connected to the national grid.


Long-term charge

While the short-term measures are about relief and the quick provision of electricity, the longer-term measures must be aimed at enabling aspects, creating policies and instruments that support sector development.

To begin with, planning for the country’s generation, transmission and distribution infrastructure should result in visibility on firm projects over the next five years. Visibility on generation and transmission development plans will go a long way in boosting investor confidence.

At present, there is no standardized framework for the development of Independent Power Producers. Developing model power-purchase agreements would accelerate private investments in the power sector.

There are other institutional aspects to be strengthened. For instance, improving coordination between institutional entities, addressing the long-
term sustainability of a subsidised cost structure, and promoting strong social and environmental safeguards need to be addressed. This last point is especially critical in the development of environmentally sensitive projects such as coal-fired and hydropower.

But above all, planning and institutional changes should be met with an ambitious implementation agenda. A specialised implementation unit within the Ministry of Electricity and Energy could drive timely delivery of projects and initiatives.

With aggressive implementation, Myanmar should be able to strengthen its electricity supply sector in support of the country’s broader economic transformation and bring power to the Myanmar people.

Dieter Billen leads the Myanmar team at Roland Berger, a strategy consulting firm for the private and public sectors.