Bridging the Energy Gap: Demand Scenarios for
Mini-Grids in Myanmar
Myanmar’s future growth and prosperity depends on reliable, affordable and high-quality access to electricity throughout the country. More than two-thirds of the country’s 55 million people lack access to reliable electricity, many of them live in rural villages. Currently, more than 30,000 rural villages across Myanmar are not connected to the national grid. Even if the expansion of the grid through Myanmar’s National Electrification Plan goes according to plan, many would still remain under-electrified for many years to come. However, such plans across the developing world have, all too often, underperformed. In an attempt to bridge this gap and to provide insights into current and potential future energy uses and related demand and supply side challenges, Pact Myanmar commissioned TFE Consulting in October 2017 to conduct a survey of 50 villages in Myanmar’s Dry Zone (44 of them non-grid connected, NGC). The work encompassed an assessment of current energy demand, and the outlining of scenarios of future energy use.
Insights from the report
Dr. Tobias Engelmeier, Founder and Managing Director, TFE Consulting GmbH (LinkedIn)
Mr. Mohit Anand, Director of Consulting, TFE Consulting GmbH (LinkedIn)
Dr. Sam Duby, Director of Africa and Energy Access, TFE Consulting GmbH (LinkedIn)
Mr. Nabin Gaihre, Consultant, TFE Consulting GmbH (LinkedIn)
Mr. Andre Perez, Consultant, TFE Consulting GmbH (LinkedIn)
Ms. Francesca Marasca, Consultant, TFE Consulting GmbH (LinkedIn)
Pact has worked extensively in 11 States and Divisions, and remains one of the longest-serving and largest integrated development organizations in Myanmar. In our 20 year history in Myanmar, we have focused on community development through adaptive integration of microfinance, rural electrification, livelihoods; economic empowerment; health; water, sanitation & hygiene; and agriculture. With MOUs with several Government Ministries, we have worked with a variety of funders, including foundations, corporations, and governments, implementing projects ranging from $60,000 to $70 million. With financial support from Chevron, ABB, and Shell, and investing its own incubation funds, Pact has rolled out Myanmar’s first community energy financing vehicle, the Ahlin Yaung Revolving Capital Fund for Energy, which enabled the purchase of quality affordable SHS solutions to 185,000 homes. In 2016, Pact’s Myanmar launched its first energy-focused strategy to enable electricity access in rural communities through minigrids, in collaboration with donors, investors, the private sector, MFIs and other stakeholders. In early 2018, Pact was awarded a grant from The Rockefeller Foundation to establish and manage the Smart Power Myanmar, which aims to connect 10 million rural people to reliable electricity in the next several years.
DRI is a socioeconomic development consulting firm based in Nay Pyi Taw, Myanmar. DRI is engaged in consulting, research, training and development solutions through project implementation in three areas: (i) village and township development planning and building capacity for community driven implementation of development schemes; (ii) rural micro and small enterprises development; and (c) facilitating rural producers gain access to energy, markets for goods and services, financial services, and technology and technical services.
India is the fifth largest car market in the world and has the potential to become one of the top three in the near future – with about 400 million customers in need of mobility solutions by the year 2030. That is one side of the coin. The other side is that the country needs a transportation revolution. The current trajectory of adding ever more cars running on expensive, imported fuel and cluttering already overcrowded cities suffering from infrastructure bottlenecks and intense air pollution is unfeasible. India’s cities will choke. A transportation revolution will have many components – better ‘walkability’, public transportation, railways, roads – and better cars. Many of these ‘better cars’ will likely be electric.
Insights from the report
India’s roads are bursting at their seams with more than 210 million cars, motorcycles, 3-wheelers, and trucks. Over the past five years, the number of vehicles grew by as much as 23% cumulatively, just short of growth in China.
The future of India is definitely electric. Long term cost benefits, lowered pollution and a strong government thrust will drive the transition to EVs. And I think, India will see a large-scale transition to EVs as early as 2025.
Kunwer Sachdev, Managing Director of Su-Kam Power Systems Limited
By 2030, as many as 40% of new vehicles sold in India, approximately 24 million, could be battery powered. The number of EVs sold in India in 2030 would thus surpass the total number of vehicles sold in India in 2016, which was 22 million.
Solar PV is currently experiencing high growth in India and the country has become the third largest solar market globally. Driven by cost competitiveness, solar is now the preferred choice for new power plants by the federal and most state governments. Access to large amounts of capital is essential for the market to maintain its momentum. The report shows that the financing ecosystem in India is stepping up to meet the needs of the market.
Insights from the report
As the solar market has grown, local, commercially-driven capital has stepped up. This has tilted the financing landscape in favor of domestic Indian sources, which in 2016 contributed more than 85% of financing.
Indian solar market lenders are some of the most active financiers in the market with deep relationships with domestic industrial conglomerates and specialized solar financing teams. A number of Indian power sector majors have been the early equity investors and continue to lead in the market.
With over INR 210 billion (Euro 3 billion) of debt financing lent by Indian banks to solar projects just in 2016, solar has evolved from a fringe infrastructure asset class to a mainstream option for both domestic public and private sector banks.
Kenya shows that the global microgrid market is ready for significant private investment. While there still remain some challenges – especially around the regulatory framework and aggregation of projects – there are now enough businesses with viable business models to provide early stage, strategic or even crowd investors with commercially attractive opportunities. The medium-term growth potential for the microgrid market in Kenya, as well as in other energy access markets including in Africa, South and South-East Asia, is very high.
Insights from the report
For many of Kenya’s 48 million inhabitants, access to electricity is still a distant pipe dream. Only about 20% have access to grid power 7. This is a stunningly low number, especially when compared to the 88% of people registered as mobile phone users.
Investment costs can vary widely depending on a variety of factors such as the remoteness and accessibility of the site, availability of materials and labour, the cost and ease of securing land and permits and local perceptions of the services being offered. Costs will also vary according to the standard to which the infrastructure conforms; strict safety and compatibility standards to ensure later grid compatibility, for ex- ample, will be more expensive than the infrastructure set up by informal local grid operators.
Under the right conditions, there is a valid business case.