Solar mini-grids to take off in Myanmar, support electrification ambitions

Solar mini-grids in Myanmar are expected to take off as the private sector sees solar energy as a potentially commercially viable solution in Myanmar’s journey towards full electrification.

With a US$1.6 million mini-grid installed, more than a thousand households on the island of Yesagyo in Magway Region were connected to electricity for the first time last month. The project was partly funded by the World Bank and Myanmar firm Parami Energy.

Parami Energy said they aimed to eventually electrify the rest of the households – more than 4000 – on the island with the mini-grids.

Mandalay Yoma Energy also sees the potential in the sector and operates over 40 solar hybrid mini-grids Myanmar. It is a joint venture between French Engie Group’s GDF International SAS and Singapore-based consultancy Sol Partners.

CEO Kapil Smith expects his firm to double the electricity generation capacity this year.

“It is fulfilling to see how the sector has grown in Myanmar in the past two years versus other countries which have been trying for years,” he said.

The rising business interest in Myanmar solar mini-grids reflects the vast potential of solar energy in the country as well as the role solar panels could play in bridging the nation’s energy deficit.

Only less than half of Myanmar’s population has been connected to electricity, and rural areas generally lag behind cities in terms of electrification rate. The energy ministry’s National

Electrification Plan aims to provide access to electricity to three-quarters of the population in 2025, and complete electrification by the end of this decade. The scheme is supported by the World Bank’s US$400 million worth of loans.

However, access still seems like a distant dream for communities residing in islands and mountainous areas. The World Bank estimated it could take years or even more than a decade for the roughly 1.3 million people in remote areas in Chin, Kachin, Kayin, Shan, Rakhine, Tanintharyi and Sagaing states and regions to be connected to the national grid.

“Off-grid solutions provide an alternative for communities in a decentralised manner, which is particularly useful for locations that will not receive access to the national grid for a significant period of time,” said Jordan Zele of Myanmar Energy Monitor.

Mr Zele is confident these off-grid solutions can continue to play a role in providing electricity to those rural areas.

Currently, the Department of Rural Development under the agriculture ministry has been tasked with off-grid electrification with the support of the World Bank as well. Most of the decentralised solutions sold in Myanmar have been solar mini-grids.

Solar stands out

“Both investment cost and operating cost on a kwh[kilowatt hour] basis is cheaper, resulting in – overall – cheaper power prices for solar,” said U Lin Tun, managing director of Yangon-based energy infrastructure company Quasar Resources.

Myanmar enjoys the lowest cost per unit of average solar photovoltaic in Southeast Asia, according to a recent study by the United States Agency for International Development and American National Renewable Energy Laboratory.

A significant increase in electricity tariffs last July made solar solutions an even more cost-effective proposition. Companies, especially manufacturers, have shown more interest in installing solar panels.

Costs of solar photovoltaic worldwide have also continued to drop. With the rapid advancement of solar technology, the price dropped 11 percent in ten months in 2019, according to Bloomberg’s energy research consultancy BloombergNEF.

Compared to neighbouring economies, Myanmar stands out in terms of technical solar potential with the highest 26,962 megawatts per year, a 2015 Asia Development Bank report suggests.

Geographically, the irradiation has concentrated in the Myanmar heartland where the demand for electricity is the highest, it said.

Hydropower has made up the majority source of Myanmar’s energy generation at around 56pc, while gas accounts for roughly 42pc, and coal and diesel occupying a small percentage.

Despite the natural limit of solar – no generation after sunset and less generation during rainy days – solar irradiation peaks during the time of year when Myanmar sees the least precipitation, which translates to water that the country’s important hydropower plants rely on.

“Solar perfectly complements hydro in adding generation to the system,” said U Lin Tun.

Lack of regulations

Though the sector continues to grow, it remains a challenge to create a commercially viable model for off-grid solar-powered solutions, said Mr Zele from research consultancy FMR.

The absence of regulatory frameworks not only makes private investments into mini-grid less attractive, often due to the lack of access to funding, but stalled the process of electrification as rural communities would have to wait for the arrival of the national grid.

For off-grid solutions to play a significant role in Myanmar’s NEP, regulation is essential to ensure cooperation between these mini-grids and the national grid, Mr Zele added.

Companies share this concern but are hopeful that the private sector can help inform policy-making.

“It is tough not to have legal frameworks in place,” said Anton Safronov, chief commercial officer of Parami Energy. Past experience, he added, suggests that when commercial players begin to operate in this type of environment, they could also help inform the policy and legal framework in moving forward.

Source: Myanmar Times

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