Myanmar, one of the least electrified nations in Asia, has a target of providing electricity access to all its residents by 2030. But with demand rising by more than 15% annually and climate concerns driving investment decisions, the country will have to make smart choices in managing its power mix. Find out more.
It is the dawn of a new era for the energy sector in Myanmar. The Ministry of Electricity and Energy (MOEE) has estimated that peak demand will rise from 3500MW in 2018 to 4531MW in 2020. The World Bank estimates that to meet its target of 100% accessibility, the country will have to increase power generation by 440MW annually until 2030.
“Myanmar and Thailand are more or less similar in the size of land and population but Thailand has over 40GW installed capacity with 99% electrification ratio whereas Myanmar around 5GW only with 34%. Myanmar needs to play a lot of catch-up,” says Nicolas Leong, Regional Director, South East Asia, Wärtsilä Energy Business.
Renewables, he believes, can play a big role in shaping the country’s economy. Myanmar targets to have eight percent of its energy supply from renewables by 2021 and 12% by 2025. That’s a big number considering Myanmar has no large scale renewable energy installation even as off-grid solar home panels (SHS) are increasingly being used to electrify rural homes, hospitals and schools in the past few years.
Myanmar’s first large-scale renewable energy installation, a 170MW solar farm in Minbu is expected to start operation, in part (40MW), this year. The MOEE has planned a utility-scale PV project pipeline totalling 1.5GW across five projects and signed memorandums of understanding (MoUs) with several countries for wind energy projects, too.
Despite the renewed investor interest in the country on account of renewables, the energy market remains saddled with poor transmission infrastructure, no international competitive bidding and ‘unbankable’ projects due to lack of sovereign guarantees for Purchasing Power Agreements (PPAs) with the MOEE.
Add to that the fact that even though Myanmar has the world’s 10th largest gas reserves, it exports nearly all of its produce to Thailand & China, leaving it with a big energy demand-supply gap. Myanmar has limited amount of gas for electricity generation and new gas offshore blocks are still under exploration. There are no LNG infrastructures and any new LNG terminals which will be commissioned for future power generation, are still about more than five years away. Several coal-fired and hydro power plants that were to be delivered over the next few years, have also run into problems due to political and environmental concerns.
‘Myanmar currently exports around 44% of the energy it produces, including hydropower, to China. However, without new hydropower projects, it will almost certainly need to rely on a more expensive combination of importing coal and gas and repurchasing exported electricity,’ states a June 2018 report by the Economist Intelligence Unit.
“Myanmar has the unique opportunity to leapfrog other countries in Asia by investing now in the right technology for power generation. It is easy for Myanmar to do this because there is no legacy. It should not build new, inflexible, thermal generation assets such as Combined Cycle Gas Turbines (CCGT) and coal-fired plants but should invest in new, flexible power plants,” explains Leong.
Flexibility is key because Myanmar has a unique load profile. For seven months (between July and January), every year, the country has a wet period and needs to run its thermal plants at around 50% capacity. In the dry period between February and June it has lesser hydropower generation and requires thermal plants to run at almost 100% capacity. Wärtsilä’s smart and superior flexible engines are perfect at efficiently managing this fluctuating load by operating each engine at its most optimal load for full efficiency.
“If MOEE and Myanmar start to invest in flexible generation assets now, they have the unique opportunity to leapfrog other neighbouring countries in preparation of a 100% renewable energy future. Wärtsilä engines can provide the much-needed baseload and fuel flexibility (gas or liquid fuel) that Myanmar requires today and also, enable higher penetration of renewables in the grid in the future,” elaborates Leong.
There is no doubt that renewables will reshape the future of Myanmar’s energy sector. Solar and wind power are much cheaper to install today and storage costs have come down dramatically too. But renewables are known to be intermittent in nature. Therefore, Myanmar needs to take the smarter and flexible way forward in order to provide the necessary backup and balancing of renewables. After all, it still needs to light up many millions of households.