Burma - EnergyBurma - Energy
Overview
It is essential that the Government of Myanmar continues to reform and expand its energy infrastructure to support the country’s continued economic growth. Currently, less than 40 percent of Myanmar’s population has access to electricity while 37.2 percent of the total population in FY 2016-2017 and 34 percent in FY 2015-2016 consumed power.
According to the Ministry of Electricity and Energy (MOEE), the annual need for power consumption in Myanmar is increasing annually from 15 percent to 17 percent. To fill the gap of energy needs, the GOM plans to implement an energy mix that includes hydropower, natural gas, coal and renewable energy to distribute electrical power sufficiently.
The country’s electricity originates from 83 power plants, including 62 hydropower stations, 20 gas-fired plants and 1 coal power plant. The average generation cost of hydropower varies from Myanmar kyats (MMK) 35 to 70 per kilowatt hour while gas costs vary from MMK 120 to 130 per kilowatt hour. In June 2019, MOEE announced to the public new electricity tariff rates, effective from July 1, 2019 which could be considered as a sustainable solution for future energy generation. The new tariff pricing is dependent on electricity consumption units and has been categorized by domestic and industrial channels, in which the latter has been priced much higher (an increase of over 50 percent) than the former. Even though guaranteed access to stable and enough electricity supply in Myanmar is challenging, businesses and manufacturers expect secure and stable power supply over the long term, especially in light of the new electricity tariff rates.
The Government of Myanmar, in conjunction with the Myanmar Energy Master Plan (MEMP), and the Myanmar National Electrification Plan (NEP) have established benchmarks to provide 47 percent sustainable power in 2020, 76 percent in 2025 and 100 percent in 2030. In order to accomplish this goal, a grid electrification rollout and off-grid program will be implemented under the NEP. A total investment of $5.4 billion will be required to initiate the electrification rollout and $40 billion will be required for investment concerning the transmission and distribution portions. The proposed investment for the distribution alone is approximately $670 million of which the World Bank will provide $400 million. Another $270 million will be required to supply approximately 1.7 million households with electricity from 2015 to 2019.
As of May 2018, the Directorate of Investment and Company Administration (DICA) states that the cumulative approved FDI in the power sector is $21 billion. This represents the second highest ranking sector, accounting for 27.5 percent of total FDI.
In the energy sector, MOEE is taking a key role in establishing and implementing policies, rules and regulations related to electrification, oil and gas development and promoting foreign direct investment across the sector and it also oversees the MEMP and the NEP. Under the umbrella of MOEE, there are seven electricity-related departments: the Department of Electric Power and Planning (DEPP), the Department of Hydropower Implementation (DHPI), the Department of Power Transmission and System Control (DPTSC), the Department of Electric Power Generation Enterprise (EPGE), the Department of Electricity Supply Enterprise (ESE), the Yangon City Electricity Supply Corporation (YESC), and the Mandalay Electricity Supply Corporation (MESC).
Public-Private Partnership: Private participation in the energy sector is forecast to increase in the upcoming years, enhanced by the GOM’s signing of executive power purchase agreements (PPAs) for five gas-fired plants in early 2016. A good example of a PPA with the government is the Myingyan power plant, worth $315 million, representing a significant milestone for private energy investment.
| 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | |
| Peak Demand (MW) | 2,490 | 2,802 | 3,075 | 3,587 | 4,032 | 4,531 |
| Generation Capacity | - | - | 3,100 | 3,539 | ? | ? |
| Gap (Reserve Margin) | - | - | - | -48 | ? | ? |
| Hydropower | Coal-fired | Gas-fired | |
| Number of Installed plants | 62 | 1 | 20 |
| Installed capacity in MW | 3,033 | 120 | 1,823 |
| Number of proposed plants | 51 | 10 | 1 |
| Proposed capacity in MW | 46,000 | 7,994 | 270 |
| Number of ongoing plants | 7 ( out of planned 51) | 1 | 2 |
| Capacity of ongoing plants in MW | 1,656 | 405 | 625 |
Leading Sub-Sectors
The Ministry of Electricity and Energy (MOEE) is drafting a renewable energy law by aiming to generate 8 percent of the country’s electricity through renewable sources by 2021. The target is for 12 percent of all electricity generated in Myanmar to be renewable by 2025. Currently, Myanmar has a total installed capacity of approximately 3,300 Megawatts by renewable energy sources. As Myanmar has an abundance of renewable energy resources with 50 percent of land covered by forest and four major rivers flowing across the country, there is potential that, if renewable energy sources were managed efficiently, Myanmar could meet its future energy requirements for sustainable development in the country.
Among renewable energy sources in Myanmar, hydropower currently plays a major role and, in the future, solar and wind energy will play key roles to fulfill the additional energy requirements while mini-grids and/or micro-grids will fill the gap of energy requirements in remote areas.
Hydropower: Myanmar’s four main rivers, the Ayeyarwady, Chindwin, Thanlwin and Sittaung represent an untapped natural energy resource. The Asian Development Bank (ADB) stated that Myanmar has significant hydropower potential, more than 100,000 MW of installed capacity. Myanmar possesses 7.7 percent of the hydropower resources in Asia; hydropower plants generate almost 62 percent of Myanmar’s power. The Government of Myanmar has mapped out potential locations for 41 new power projects which will be under construction during FY 2016-17 to FY 2030-31.
The new power plants are being built to increase electricity generation capacity to 29,000 MW by 2031. New projects have to also take into consideration that during the dry season heavy reliance on hydropower could lead to shortages in power supply.
According to the policies set by MOEE, electricity generation from hydropower is still a key part of the long term plan for the country’s energy needs while gas turbine power generation is a key to the short term plan. According to the government’s 2030 plan, it will reduce the reliance on hydropower to 57 percent, on coal to 30 percent and on non-hydro renewables to 8 percent (with solar power 5 percent).
According to MOEE, one hydropower project with 9MW Yazakyo project in Sagaing region is under implementation in 2018; there will be two additional projects in the upper Kyaing Taung and upper Yeywa region in Shan State with 51MW and 280MW respectively, which will be implemented during 2019-2021 through the national budget, overseas loans or private investment.
The GOM is facing certain challenges implementing hydropower projects, concerning environmental impact issues, extensive project construction timelines, unpredictable weather conditions, insufficient financial support, defects in aging transformers and limited coal production, according to the MOEE.
Solar: Myanmar has tremendous solar resources potential, especially in the middle of the country and extensive dry zones. Mini-grids and solar energy home systems are renewable energy solutions that could solve power shortage problems in rural communities because they are not directly connected to the electric power grid. As a result, the government is committing sizable resources for off-grid renewables. The overall potential for solar power is approximately 51,973 terawatt-hours per year. According to MOEE, there is a plan to build two solar power plants in Myingyan and Wundwin in the Mandalay region and these are expected to have the capacity to generate 150MW of electricity each.
Wind: As a very first project for wind power in Myanmar, MOEE signed an agreement with China’s Three Gorges Corporation to develop a 30MW wind power project in Chaung Thar, Ayeyarwady Region. Myanmar is an agriculturally based economy with plenty of land which provides huge potential for wind-powered projects. These could be developed in Chin State, Rakhine State, Ayeyarwady Region, Yangon Region, Shan State, Kayah State, Tanintharyi Region, Mon State and Kayin State, literally in most parts of the country and ADB forecasts that Myanmar has a technical potential for the development of 4,032 MW from wind energy.
Mini-grid: Across Myanmar, there are already numerous hydro minigrids and hybrid solar-diesel mini-grids in operation. The potential for further mini-grid development in dry zones is large, particularly in the Magway and Sagaing regions. Direct combustion and gasification are relevant technologies for mini-grids in Myanmar. Mini-grids could solve power shortage problems in rural communities because they are not directly connected the electric power grid. As a result, the government is committing sizable resources for off-grid renewables.
Coal-fired: All contracts for coal-fired power plants signed by the former government with international and regional companies have stalled due to public opposition and concerns about pollution and other environmental impacts. Although Myanmar has estimated domestic coal resources of 540 million tons, coal extraction has remained slow due to low investment and the remoteness of the country’s identified coal sites.
Opportunities
The Myanmar’s energy sector is promising due to the increasing high demand of electricity consumption and the government’s ambitious growth plans to double the electric power capacity by 2020-21. Energy is the Government of Myanmar’s top priority sector and the government is committed to constantly increasing the electricity access for the Myanmar people. Some of the leading sub-sectors are hydropower, renewable energy, gas and solar.
To achieve Myanmar’s electrification goals, serious investment in infrastructure development and power generation is needed. The drive to go from the current installed capacity of just over 4,800 MW to double the power capacity is an opportunity for U.S. companies which provide technical expertise, consultancy, engineering and design, project management services and building, maintaining and installation of power plants to the oil and gas, renewables, LNG and conventional power sectors.
In late 2015, the World Bank approved a $400 million interest-free credit from the International Development Association (IDA), to provide financing and technical assistance for Myanmar’s National Energy Plan. According to the World Bank, the project is expected to benefit over 6.2 million people by bringing electricity to more than 1.2 million households by 2021. According to the MEMP, the World Bank plans to invest up to $1 billion in the sector including electricity generation, transmission and distribution.
However, the sector has some significant challenges for foreign investors, such as no clear rules and guidelines, a lack of a clear policy framework, a shortage of skilled labor, high corruption, lack of transparency in the tender and procurement process, and banking issues (currently no U.S. banks are operating in Myanmar, therefore, intermediary banks are required to transfer and receive payments). According to the MOEE website, MOEE will need $5.8 billion to construct medium and low voltage lines and transformer/substations under NEP plan. The government hopes to cooperate with the private sector for speedy implementation.
The following are opportunities in the energy sector as highlighted by DICA:
- Construction of medium to large-scale hydro and gas-fired power plants in Public-Private-Partnerships
- Investments into the transmission system (e.g. high-voltage transmission lines between the North of Myanmar and Yangon)
- Realization of small-scale hydro-power projects (e.g. to supply a village tract)
- Establishment of solar energy farms and wind power farms
- Provision of efficient and practical solar-power kits to communities currently off-grid as well as of solar-power based solutions (e.g. solar-powered pumps, solar lighting)
- Upgrading of the current power infrastructure in urban centers and industrial zones
Rising electricity demand from 3075MW in 2017 to between 9100MW-14,542MW by 2030 will make renewable energy resources critical in the future. As Myanmar’s national grid system is not very strong and not accessible to most villages in rural areas, renewable mini-grid can be an affordable option to rural people, including solar power, wind-power, biomass and geothermal. U.S. firms with solutions for rural electrification and green or renewable energy will find opportunities in Myanmar.
Web Resources
Ministry of Electricity and Energy
Ministry of Industry
Ministry of Natural Resources and Environmental Conservation
Directorate of Investment and Company Administration
Contact Information
U.S. Commercial Service
Dr. Khine Wah Lwin
Senior Commercial Specialist
Email: KhineWah.Lwin@trade.gov