Lighting Myanmar Solar Off Grid Electrification in Rural Myanmar

2020-02-27 144浏览

1.LightingMyanmar:Expansion of Solar Off-Grid Electrification in Rural Myanmar Xinping Song March 8th, 2018 A Policy Brief Submitted to Mr. U Aung Thu, Minister for Myanmar’s Ministry of Livestock, Fisheries and Rural Development (MLFRD) by Xinping Song, representing the Asian Development Bank (ADB) Executive Summary The purpose of this policy brief is to address the obstacles that cause the stagnation in the expansion of solar off-grid electrification in rural Myanmar. These obstacles are limited financial resources, inefficient and fragmented institutional framework, and social tensions at the community level. Confronted with the conflict between increasing energy consumption and the shortage of grid power supply, renewable, particularly solar off-grid electrification including solar mini-grids and Solar Home System (SHS) has been put on the table. Representing the Asian Development Bank (ADB), I would like to encourage Mr. U Aung Thu, Minister of Livestock, Fisheries, and Rural Development (MLFRD), to consider my policy recommendations to overcome the obstacles in Myanmar’s rural electrification process. The policies I would recommendare:(i) establishing a cooperative public-private relationship; (ii) creating a robust and coordinated institutional framework; and (iii) increasing the role of local community participation.
2.Statement of Issue/Problem Access to affordable, sustainable, and reliable energy is an essential aspect of the United Nations’ Sustainable Development Goals. Energy is connected to almost all significant challenges and opportunities, including public health, education, food production, climate change and so forth. However, a large number of people still have no access to sustainable and reliable power, especially in underdeveloped countries like Myanmar. In Myanmar, electrification coverage rate in the urban area is 95% (CIA The World Factbook), while only 49% of the population in rural area have access to electricity (World Bank). As Pode R., Pode G., and Diouf (2016) reported, “out of total 64,917 villages, there are approximately 57,557 villages in remote areas, which are far away from the national grid”. According to 2014 Myanmar Population and Housing Census, “The national grid provides electricity to about 33% of Myanmar’s 11 million households”, while the national grid coverage was merely at 15% in rural areas (World Bank, 2017). Under these circumstances, small businesses cannot manage themselves, and external investments are unlikely to create jobs, which constrains Myanmar’s economic growth to a great extent. According to Energy Sector Management Assistance Program (ESMAP) (2017), “Minigrids using locally engineered technology have played a key role in the provision of electricity for thousands of villages outside of the country’s limited national grid distribution network”. And mini-grid electrification has been promoted in Myanmar, primarily through diesel mini-grids, hydropower mini-grids, and solar mini-grids. Meanwhile, Solar Home System (SHS) as a representative solution of off-grid electrification has been established in some remote villages. But with multifaceted reasons, Myanmar is confronted with several challenges concerning renewable off-grid electrification which will be specified in the following sections. Concentrating on the expansion of solar off-grid electrification, this policy brief will 1
3.start with historical background of the electrification program and the expansion of solar offgrid electrification in Myanmar, then analyze the causes and main obstacles of this particular policy problem, evaluate the previous or current solutions to this problem, and conclude with some feasible and reliable policy recommendations intended to promote electrification from a long-term and more sustainable perspective through solar mini-grids and off-grid Solar Home System. Given the urgency of rural electrification, ADB urges Mr. U Aung Thu, the Minister of MLFRD to take necessary actions to build a cooperative public-private relationship, create a robust and coordinated institutional framework, and increase the role of local community participation. Origin/History of the Problem and Current Context In Myanmar, electricity consumption per capita is among the lowest in Asia and had been growing very slowly since the 1980’s (Dapice, 2012). Also, “Since at least the 1980’s, thousands of community-owned mini-grids have been established in a grassroots manner, whereas the technical quality and socioeconomic sustainability remains lacking” (Pawletko and Dietz, 2017). Those mini-grids emerged because of the driving force of the private sector and community-based organizations with little public support (ESMAP, 2017). At the same time, many international organizations also show great interest to support mini-grid projects in Myanmar’s villages, especially those “built around local renewable generation sources” (Sustainable Energy for All (SE4ALL), 2014). It is undeniable that Myanmar has been making progress in promoting solar off-grid electrification, whereas Myanmar is still confronted several challenges. A severe problem of rural electrification is insufficient financial support, which directly leads to poor infrastructure conditions in rural Myanmar. “Companies installing off-grid systems lack investment capital and working capital, including access to trade finance. Consumers have limited access to financing for electrification” (World Bank, 2016). “Where mini-grid 2
4.developers can get loans, they have short tenors and very high interest rates” (Greacen, 2016). Additionally, there is an issue of lack of efficient and robust institutional framework. Energy policy environment in Myanmar is highly complex and fragmented (World Bank, 2016). There has been an uncertainty of ministry ownership for mini-grids in the promotion of electrification in Myanmar’s government. Ministry of Electric Power (MOEP) is more concentrated on the national grid, while DRD under MLFRD mainly works on electrification based on household level (SE4ALL, 2014). Uncoordinated implementation of solar minigrids and off-grid Solar Home System is also reflected in other aspects, including lack of standard format to develop mini-grids and off-grid schemes and the role of community participation in capacity building (World Bank, 2015). Finally, social tensions at the community level is a significant challenge Myanmar is facing. Because of limited participation of communities, different types of social tensions are escalated and might affect capacity building in the future. In Myanmar, even though grassroots organizations and local communities are main stakeholders and had previous experience with off-grid electrification, they do not play such a role in the electrification process, which can be seen in gender issues, technical training, and maintenance (ADB, 2017). The main stakeholders in this policy problem are rural residents and local communities, government, and private companies. Rural residents are the ones having access to electricity who directly benefit from the electrification plan in rural Myanmar. Governments, both federal and local governments should undertake their responsibility to provide citizens reliable and sustainable access to electricity through policy and financial support. The role of private companies is relatively complex. On the one hand, the private sector can be the driving force of solar off-grid scheme and contribute to the electrification plan by providing technical and financial assistance. On the other hand, private corporations can also benefit 3
5.from the promotion of solar off-grid electrification. Critique of Policy Options In 2014, Myanmar’s government developed the National Electrification Plan with the help of the World Bank. “The NEP’s goal is to achieve national electrification by 2030, requiring a doubling of the current rate of grid extension and a total of $6 billion in investments. And a two-pronged approach has been adopted to achieve this target, which is based on a complementary and coordinated extension of the national power grid and off-grid electricity” (World Bank, 2016). However, there are still many areas that need improvements. As the SE4ALL report (2014) pointed out, “Firstly, regional governments and private sector are free to come up with ideas for mini-grids. Secondly, there is no standard format or process for developing mini-grids, which will increase the transaction costs in the end. Moreover, there is no instrument for channeling the union budget to mini-grids or for integrating mini-grids into a comprehensive program”. This plan shows the government’s determination to increase the access to electricity in rural Myanmar. But it is a considerable undertaking for Myanmar’s government to implement based on its ambitious goals and long-term commitment. Myanmar’s government has to bear high risks to complete this project. To begin, the NEP faces high political risks. Relatively weak institutional framework and insufficient experience in related institutional mechanisms may lead to unreasonable socioeconomic and political policymaking. Institutional overlapping and fragmentation will decrease the efficiency of policy implementation. Also, the government needs to build extra capacity to implement solar mini-grids and SHS in areas with more socioeconomic conflicts. Secondly, there is a severe issue concerning affordability. High capital investment costs, together with connection charges may prevent many households from connecting to the grid. Therefore, the government has to provide a significant amount of subsidy to bridge the gap (World Bank, 2015). Thirdly, it is very 4
6.challenging to balance the relationship between the public and private sector. Minister U Aung Thu once said that the off-grid power supply could not be completed by the government alone and the private sector’s participation is essential in achieving this target (Thant, 2017). However, in reality, private companies may be forced out of the areas where the NEP and private investments come to conflicts (World Bank, 2015). Not just the World Bank, many other international development organizations have been participating in the contribution to renewable off-grid electrification in rural Myanmar these years, such as Asian Development Bank, Germany’s Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), and the International Finance Corporation (Greacen, 2016). ADB will provide technical assistance in implementing rural electrification by applying a solar mini-grid system in 12 villages as pilot projects (Thant, 2017). And procedures and technical details of mini-grid electricity supply and standards are being drafted with the help of WB, ADB, and GIZ (Thant, 2017). At the same time, GIZ’s approach mainly involves three courses ofactions:concentrating on policy and regulation, human resources, and private sector participation (GIZ, 2017). Technical assistance from development organizations can be extremely beneficial to establish the solar mini-grids and SHS model to Myanmar at first, but it still does not solve the root problem. The institutional capacity building, technical knowledge training, local community participation should be put more attention in these projects. Policy Recommendations Based on Myanmar’s problems and models set up by some South Asia countries like India, Bangladesh, and Sri Lanka, in this section, I will be proposing three policy recommendations that might facilitate to overcome the obstacles of solar off-grid electrification in rural Myanmar. These policy recommendationsare:(i) fostering a cooperative public-private relationship; (ii) creating a robust and coordinated institutional 5
7.framework with clear accountability and responsibility; (iii) increasing the role of local community participation. I. Foster a Cooperative and Balanced Public-Private Relationship As mentioned above, lack of sufficient financing has been a significant challenge for the development of the solar off-grid program in rural Myanmar. To overcome this obstacle, both public and private sector should play an active role in the solar off-grid electrification program and foster a cooperative relationship. The government should “ensure that subsidies to vulnerable consumers are explicit, well targeted, adequately budgeted, and fiscally affordable” (World Bank, 2016). On the other hand, private sector investments should be mobilized more effectively in the solar off-grid program (Ibid). In the long run, Myanmar could follow Bangladeshi public-private cooperation model called Infrastructure Development Company Ltd. (IDCOL) to improve its financing environment. IDCOL’s mission is “to catalyze and optimize private sector participation in promotion, development, and financing of infrastructure as well as renewable energy, and energy efficient projects in a sustainable manner through public-private-partnership initiatives” (Infrastructure Development Company Ltd.). The key elements of its success are including “a single channel for dispersing financial support from international donors and multilateral development banks, concessionary finance to subsidize SHS in the early stages of the programme, and innovative financing model suitable for poor households” (Infrastructure and Cities for Economic Development, 2017). Additionally, the public and private sector should have more communications to increase the feasibility and efficiency of the use of investment to promote solar off-grid electrification. In many cases, the uncertainty concerning grid expansion may lead to the hesitation of off-grid developers to invest because they are not sure if the national power grid would arrive soon. Under this circumstance, more assessments are required, which will 6
8.increase the financial and time costs of the off-grid electrification program. As for the short-term obstacles, the main challenges for this policy recommendation might be the intransparent electricity market and lack of regulations and laws regarding this area. Public-private partnership initiative could be effective in an open and well-regulated environment. However, Myanmar does not have many strengths in this regard, which might cause new types of dysfunction in electricity and solar energy market. II. Create A Robust and Coordinated Institutional and Regulatory Framework In Myanmar, fragmentation of policymaking power in energy sector constrained the implementation of electrification plans. “Government decision-making in regard to energy and electrification is divided among eight or more Ministries. Data collection is weak, and electricity laws-which were recently updated-still lack adequate provisions” (KWR). Therefore, I recommend creating a robust and coordinated institutional framework where government agencies have clear responsibility and accountability. As Bhattacharyya and Palit (2014) asserted, “Decentralized projects like solar mini-grid and off-grid electrification can be more successful when implemented and managed in an organized way with the clear responsibility of different stakeholders”. In the Chhattisgarh State case, two crucial institutions-Chhattisgarh State Electricity Board (CSEB) and Chhattisgarh State Renewable Energy Development Agency (CREDA) were created. The former focuses on grid electrification; while the latter put more emphasis on “promoting renewable energy including off-grid/decentralized energy systems” (Bhattacharyya, Palit, 2014). But in Myanmar’s National Electrification Plan, although DRD under MLFRP plays a leading role, the fragmentation of power has not been solved yet. Therefore, it is necessary to reorganize the power with regard to renewable energy and electrification. Myanmar’s government agencies, especially MLFRD and MOEP, must be aware of their responsibility and accountability concerning this issue, which can create a 7
9.mechanism to bridge the union budget to the mini-grid and contribute to high-quality and well-directed policymaking. Besides, a strong and robust institutional framework can facilitate to establish a standard format or process for developing the off-grid scheme and bring up an effective oversight mechanism to ensure the motivation for continuing maintenance of the system (Ibid). As for the long-term obstacle of implementing this policy, insufficient experience with institution building could be a potential challenge, particularly because “following Myanmar’s 2010 election, the nation began to move from military rule and almost 60 years of stagnation, toward a democratic government and more open economy” (KWR, 2015). But with the development of political democratization and other neighboring countries’ models to follow, Myanmar might well create its path to strengthen its institutional and regulatory framework. III. Increase the Role of Community Participation In rural Myanmar, different types of social tensions have been affecting and defining the renewable off-grid electrification process. Difficulty in having access to electricity in rural Myanmar causes communities’ resentment. “In the past, rural communities protested the existence of subsidized power in Yangon and Naypyitaw while they endured high off-grid pricing” (KWR). Furthermore, based on different responsibilities and activities, men and women usually have different priorities, which reminds us the importance of gender issue in the solar off-grid electrification process. For example, as the ADB (2017) reported, “Women may prioritize more lamps enabling children’s school homework in the evenings and electric appliances for improving their kitchen and cooking standard”. Community participation is crucial for the development and sustainability of any decentralized electrification system. “Especially for community-managed projects, substantial efforts need to be made to build the community’s capacity to properly operate and 8
10.manage the mini-grid” (ADB, 2017). In the Bangladesh case, one of the keys to its success is to maintain a partnership with community-level organizations (Yee, 2016). Therefore, I recommend increasing the role of community participation in promoting solar off-grid scheme by providing the local community more opportunities to take professional training classes and build a more straightforward and efficient communication mechanism between the government and local communities. To increase the engagement of local communities, first, more technical training workshops should be open to not only agency staff, but also the local communities. Operating and maintaining the solar off-grid system relies on technical support to a large extent. And training workshops can contribute to human resource development and capacity building in rural Myanmar. In this way, the program can meet the long-term requirements and needs of the local communities and benefit the socioeconomic growth in these regions. Second, a more efficient communication mechanism should be established throughout the whole process of the solar off-grid and mini-grid project from designing to operating. Worldwide experience from mini-grid projects shows that involving the beneficiary community from the very beginning and throughout a mini-grid project will help improve the design to be optimal for the local conditions, strengthen local support for the system, mobilize community contributions in cash and in kind, and increase local spirit of ownership and responsibility-all contributing to operational sustainability (ADB, 2017). Last but not least, individual members of the community should receive equal benefits from the program, particularly for women. Women’s engagement in the solar off-grid and mini-grid should be encouraged from different aspects, ranging from collecting fees to technical knowledge learning (Ibid). However, relatively low level of education might become a challenge in the short term. Participating in technical training and the maintenance of the system require a certain level of education, while limited access to school could be a constraint to implement this policy 9
11.effectively. But in the long term, local communities could have access to better education, which can facilitate to increase the professional human resources in solar off-grid scheme. Conclusion The purpose of this policy brief is to offer feasible and concrete solutions to the problem of the stagnation of promoting the solar off-grid electrification in rural Myanmar. Though decentralized electrification systems in Myanmar, particularly like solar off-grid program have been making great progress in recent years, they are still confronted with many obstacles, including unorganized and weak institutional framework, insufficient financial support, and lack of community participation. The policy recommendations I have presented above are intended to push the existing electrification program forward to a more comprehensive, sustainable level. To increase the access for Myanmar’s people to more sustainable, reliable, and affordable solar off-grid system, the ADB hopes that Minister U Aung Thu will resolutely take necessary actions to overcome the obstacles through building a cooperative relationship between the public and private sectors, creating a robust and coordinated institutional framework, and increasing the role of local community participation. 10
12.Bibliography Asian Development Bank. (2017). Developing Renewable Energy Mini-grid in Myanmar-A Guidebook. Retrieved from Asian Development Bank Websitehttps://www.adb.org/sites/default/files/institutional-document/391606/developingrenewable-mini-grids-myanmar-guidebook.pdfAsian Development Bank. (2016).Myanmar:'>Myanmar: