Investment in off-grid solutions is increasing in Myanmar, as the country seeks to boost connectivity and move towards providing universal access to electricity within 15 years.

Tower

In mid-May the Ministry of Agriculture, Livestock and Irrigation announced it was accelerating its programme for off-grid power projects in rural areas. Under these plans, 10 villages will be linked to standalone power sources as part of a pilot programme to improve connectivity in remote regions.

By 2021 the ministry aims to link more than 35,000 households to mini-grid systems and install solar panel units at a further 460,000 homes.

Announcing the plan, the minister for agriculture, livestock and irrigation, U Aung Thu, said the scheme would require input from the private sector, state agencies and overseas support.

“Our target is to generate 30 MW from off-grid power sources, and we hope to supply about 500,000 households within the first five years,” he said. “Private sector participation is very critical for accomplishing that goal.”

Long-term power plan

Under its National Electrification Plan (NEP) launched in 2014, Myanmar has set a goal of bringing electricity to every household by 2030 using a budget of some $5.8bn. The latest World Bank data place the overall electrification rate at 33% as of 2014, and at just 16% in rural areas, though the national grid has seen expansion in recent years and security of supply in urban areas has improved.

While the main connectivity boost will come from an expanded grid, the NEP concedes that universal access to power will also require off-grid investments in mini-grids and home solar systems for individual or small-scale settlements. It is also likely that, where the costs of connection with the national grid prove prohibitive, some communities will have to rely on off-grid solutions in the longer term.

International lenders have moved to support the targets, including the World Bank – which in September 2015 approved a $400m loan to the NEP – the Asian Development Bank, the Japan International Cooperation Agency and Germany’s international development agency, GIZ.

Groundwork still needed

With the strong potential for returns on electricity investment, the focus on off-grid solutions promises to offer increased opportunities for service and materials providers, as well as renewable energy independent power producers (IPPs).

However, speaking to OBG, Ken Tun, CEO of Parami Energy Group, highlighted that further work is needed to create strong foundations for renewable IPP projects to succeed.

“There are a lot of uncertainties when looking at renewable IPP projects, and the tariff is one of them. Markets such as India have put in place a good policy environment and financial arrangements to enjoy a tariff of around $0.05 per KWh,” he told OBG. “Technical studies should also be conducted to make sure the current grid can take the additional capacity from renewable energy sources, meaning the government could take more time to approve renewable IPP projects.”

Curbing growth and communications

Gaps in connectivity are hindering economic development in Myanmar’s rural regions, particularly in the telecoms sector.

While mobile phone operators can provide coverage to around 80% of the country, the final 20% of the market is proving difficult to penetrate, mainly due to internal conflict, poor transport links and weaknesses in electricity supply.

“A lack of access to power hinders expansion of telecoms infrastructure and adds to maintenance costs,” Daw Phyu Phyu Win, CEO of ABC Telecomm, told OBG.

Philippe Luxcey, CEO of telecom tower company Apollo Towers, expanded on the issue, saying, “Maintenance can be very challenging as it is very difficult to bring, refill and maintain generators at mountain sites in very remote areas. There are many additional costs that the operators are not willing or ready to support”.

 

Source: OXFORD BUSINESS GROUP (23 Jun 2017 )