Empowering
Rural Electrification in Myanmar:
Opportunities and Policies
Tungapuri Hotel
Nay Pyi Daw, Myanmar
Dr. Chris Greacen
March 9, 2013
Outline
• Early indications of ADB/IFC/World Bank
strategies
• Empowering rural electrification strategy:
– Off-grid small power producers
– Grid extension
• Supporting regulations
Electrification 26%
Early indications of power sector
development strategies:
ADB / World Bank / IFC
ADB/IFC/World Bank
•
•
•
•
Stated goals
“Inclusive
economic growth”
“Reduce poverty
and improve
quality of life”
“ADB’s vision is an
Asia region free of
poverty”
“Regional
integration”
Power sector strategies
• Committed $600 million for energy
sector
• “Private sector participation”
– Creation of legal and regulatory
frameworks to lower risks to private
sector (including foreign investment)
– Unbundling
– Bidding
• Focus on:
–
centralized, large-scale generation
(each plant > 100 MW)
• Coal
• Natural gas (CCGT)
• Large hydropower
– 500 kV transmission
POWER SECTOR (IV)
• Future Generation Expansion
– 92 Hydro potential sites (46,000 MW)
– 13 by MOEP1 (2,572 MW)
– 7 BOT by local private sector (560 MW)
– 44 FDI (BOT or JV) - 42,145 MW; 2 coal, 870 MW,
– 1 gas power generation, 470 MW
– 1 coal in Yangon, J power, 600 MW? (new)
• Power Demand projections: 2001, no systematic
approach
– A power demand master plan is needed: generation,
transmission and distribution
– Planning softwares and capacity building is needed
ADB/IFC/World Bank
Stated goals
• “World without
poverty”
• In Myanmar: “focus on
energy infrastructure
development“
• “Connecting people
and businesses to a
reliable electricity grid
is critical for Myanmar
to realize its enormous
social and economic
potential”
Power sector strategies
• Short-term:
– Committed $420 million with focus on
energy
– Replacing gas turbines
– Providing $80 million grants for
community-driven development
• health, education, water supply, rural
electricity
• Long-term focus still unclear, but
World Bank articles on Myanmar
give example of WB work extending
the grid in Laos and Vietnam.
• Telephone call with IFC in February:
“focusing so far on centralized
electricity”
Electricity for whom?
Empowering rural electrification strategy:
extending the grid and encouraging rural mini-grids
Customers
National
Grid
Large Plants
Customers
MiniGrid
Small Power
Producer
Energy
export $
Electrification Fund
Donor
funds $
Regulatory framework allows for fair treatment of both
•Mae Kam Pong, Chiang Mai, Thailand
•Built by government & community
•40 kW
•Used to be off-grid;
•Making arrangements to sell electricity to grid
•Mawengi village, Njombe, Tanzania
•LUMAMA hydropower project
•300 kW – remote mini-grid
4 MW hydro - Tanzania
electricity to 4000 households in >15 villages & sells to the grid
Rice husk gasifier
Myanmar – Kayuklot Township
electricity to 500 households
Reduces air and water pollution
Biogas from
Pig Farms
Produces fertilizer
Produces electricity
8 x 70 kW generator
Sugarcane bagasse -- Tanzania
• capacity: 17.5 MW
• powers factory, irrigation, hospital,
school, thousands of homes
• sells 4 MW to main grid but can also
operate as isolated minigrid
16
Electrification
• faster if local
entrepreneurs
are also
empowered to
build mini-grids
Electrification
• faster if local
entrepreneurs
are also
empowered to
build mini-grids
Electrification
• faster if local
entrepreneurs
are also
empowered to
build mini-grids
Supporting laws and regulations
Include SPPs in national energy law
• Provides mini-grids with legal right to exist
• Provides for establishment of:
– Rural Energy Agency (REA)
• (if suitable agency does not already exist)
– Small Power Producer (SPP) regulations
Rural Energy Agency (REA)
• Provides technical and financial
support to SPP developers;
• Manages Rural Energy Fund:
– Pays up to $500 subsidy per new
connection – EITHER on-grid or
isolated mini-grid if built to national
standard;
Website of Tanzania REA: http://www.rea.go.tz/
– Subsidizes SPP business plans and
feasibility studies
Small Power Producer (SPP)
regulations
$
Thai “Very Small Power Producer” documents : www.eppo.go.th/power/vspp-eng/index.html
Tanzania “Small Power Producer” documents: www.ewura.go.tz/sppselectricity.html
SPP program includes
• Streamlined licensing and approval
• For grid-connected SPP:
– Streamlined grid interconnection procedures
– Standardized Power Purchase Agreement (PPA)
– Standardized tariffs
• For off-grid SPP:
– Flexibility in tariff setting
– Provisions to reduce risk when main grid expands to
formerly isolated SPP mini-grid
VSPP results in Thailand
What to do when the “big grid”
expands to reach the “little grid”?
• Allow formerly off-grid
generators to sell back to
the grid; and/or
• Allow mini-grid operators
to purchase wholesale
electricity from the grid
for resale to retail
customers.
Who owns the minigrids?
• Nepal:
– rural communities
– local private sector
• Cambodia:
– local private sector
• Tanzania:
–
–
–
–
local private sector
church,
communities,
utility
Low cost
financing
Revolving Fund
• Thai Government loans funds at 0% interest to commercial banks for
investment in:
• Energy efficiency improvement projects
• Renewable energy development and utilization projects
11 local financial institutions have participated.
Max loan amount: 50 MB
Max. interest rate: 4%
Max. loan period: 7 years
January 2003 – present
7000 M Baht
Tax
incentives
Tax Incentives
Thailand’s Board of Investment (BOI)’s tax incentives for
renewable energy projects:
• Corporate income tax holidays up to 8 yrs. Additional 50% reductions of
corporate income tax for 5 yrs
• Import duty reductions or exemptions on equipment and raw materials
28
Summary
• Question of "electricity for whom" must be in forefront.
• Concern that the ADB (and World Bank/IFC?) likely to focus on
centralized approach unless requested to do otherwise.
• Better strategy involves both grid extension and encouraging
off grid small power producers.
• Include SPPs in new national energy law.
• Rural energy fund (REF) capitalized by donor funds leveraged
by revenues from energy exports.
• REF available as per-connection subsidy both to off-grid and
on-grid, also subsidizes feasibility studies and business plans.
• SPP rules provide for streamlined interconnection to grid,
standardized PPAs and tariffs.
• Isolated mini-grids can connect if/when main grid arrives.
Resources
• Tanzania Rural Energy Agency (REA): www.rea.go.tz
• Tanzania Small Power Producer (SPP) rules and documents:
www.ewura.go.tz/sppselectricity.html
• Thai VSPP regulations and documents:
http://www.eppo.go.th/power/vspp-eng/index.html
• Electricity Authority of Cambodia (license, regulations, tariffs
for mini-grids): http://www.eac.gov.kh/
Chris Greacen
Palang Thai
chris@palangthai.org
www.palangthai.org