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Empowering Rural Electrification in Myanmar: Opportunities and Policies Tungapuri Hotel Nay Pyi Daw , Myanmar

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

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Empowering Rural Electrification in Myanmar: Opportunities and Policies Tungapuri Hotel Nay Pyi Daw , Myanmar

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  1. Empowering Rural Electrification in Myanmar:Opportunities and Policies • Tungapuri Hotel • Nay PyiDaw, Myanmar Dr. Chris Greacen March 9, 2013

  2. Outline • Early indications of ADB/IFC/World Bank strategies • Empowering rural electrification strategy: • Off-grid small power producers • Grid extension • Supporting regulations

  3. Electrification 26%

  4. Early indications of power sector development strategies: ADB / World Bank / IFC

  5. ADB/IFC/World Bank Stated goals 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 • “Inclusive economic growth” • “Reduce poverty and improve quality of life” • “ADB’s vision is an Asia region free of poverty” • “Regional integration”

  6. 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

  7. ADB/IFC/World Bank Stated goals 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” • “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”

  8. Electricity for whom?

  9. Empowering rural electrification strategy: extending the grid and encouraging rural mini-grids Customers Customers Mini-Grid National Grid Small Power Producer Large Plants

  10. Donor funds $ Energy export $ Electrification Fund Regulatory framework allows for fair treatment of both

  11. Mae Kam Pong, Chiang Mai, Thailand • Built by government & community • 40 kW • Used to be off-grid; • Making arrangements to sell electricity to grid

  12. Mawengi village, Njombe, Tanzania • LUMAMA hydropower project • 300 kW – remote mini-grid

  13. 4 MW hydro - Tanzaniaelectricity to 4000 households in >15 villages & sells to the grid

  14. Rice husk gasifier Myanmar – Kayuklot Townshipelectricity to 500 households

  15. Biogas from Pig Farms Reduces air and water pollution Produces fertilizer Produces electricity 8 x 70 kW generator

  16. 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

  17. Electrification • faster if local entrepreneurs are also empowered to build mini-grids

  18. Electrification • faster if local entrepreneurs are also empowered to build mini-grids

  19. Electrification • faster if local entrepreneurs are also empowered to build mini-grids

  20. 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

  21. 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; • Subsidizes SPP business plans and feasibility studies Website of Tanzania REA: http://www.rea.go.tz/

  22. 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

  23. 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

  24. VSPP results in Thailand

  25. 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.

  26. Who owns the minigrids? • Nepal: • rural communities • local private sector • Cambodia: • local private sector • Tanzania: • local private sector • church, • communities, • utility

  27. 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 Low cost financing 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

  28. Tax Incentives • Tax incentives 28

  29. 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.

  30. 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/

  31. Chris Greacen Palang Thai chris@palangthai.org www.palangthai.org

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