The NEP Workshop on Off-Grid Electrification in Myanmar

1. The NEP Workshop on Off-Grid Electrification in Myanmar ADB’s Energy Sector Program 29th January 2015

2. Current Sector Context • Low electrification ratio (ER) • Cost effective way to extend electricity supply to about 6.4 million unconnected households, ER is around 31% as of 2013. • Electricity shortage in dry season • Yangon required load shedding of 200 MW in summer 2013, while its peak demand growing at 13.7% annually and insufficient gas availability • High technical and non-technical losses in transmission and distribution • 27% in 2011 • Grid extension to rural areas will be expensive and could be delayed • Population of about 60 million with more than 70% in rural areas • Need to explore off-grid applications on a large scale

3. ADB’s Involvement in the Energy Sector • First-ever Sector Assessment Completed – 2012 • New Energy Architecture Report: In collaboration with Accenture – 2013 (released at the World Economic Forum, Nay Pyi Taw) • Facilitated drafting of the Electricity Law – 2013 • First Investment Program Approved – 2013 • Additional Investment Programs are being developed • Ongoing technical assistance programs focussed on power sector reform, capacity development and off-grid renewable energy applications

4. ADB’s Assistance • Enhancing Governance Programs • On-grid Programs • Off-grid Programs

5. Enhancing Power Sector Governance Programs • TA for Enhancing the Power Sector’s Legal and Regulatory Framework (TA 8469) - Upgrading the Myanmar Electricity Law (1984) and the Electricity Rules (1985) • Institutional Strengthening of National Energy Management Committee in Energy Policy and Planning (TA 8356) - Energy Master Plan, Energy Efficiency Policy, Renewable Energy Development Strategy • Capacity Development and Institutional Support (TA 8244) - Power Sector Advisor to the Ministry of Electric Power • Capacity Building for Project Identification Support (TA 8251) - Grid performance standards, Transmission and Distribution Grid Code • Financial Management Assessment of Energy Sector (TA 8216) • Strengthening the Use of Country Safeguard Systems (TA 7566) - Capacity building for implementing environment and social safeguards • Support for Public-Private Partnership Framework Development (TA 8624) - Capacity building and awareness of PPP project process requirements • Environmental Safeguard Institutional Strengthening (TA) - Capacity building for comprehensive environmental quality management

6. On-Grid Programs 2013 • Power Distribution Improvement Project ($60 million) • Five townships in Yangon region; four districts in Mandalay region; five districts in Sagaing region; and two townships in Magway region • Loan agreement was signed on 28 January 2014 • On going bids evaluation for goods, PIC mobilized in Dec. 2014 2015 • Power Transmission Improvement Project ($80 million) • Rehabilitation and expansion of 66kV & 230kV transmission lines and four substations in Yangon 2016 • Power Transmission and Distribution II ($75 million) • Project scope - TBD

7. Off-Grid Program Phase 1 (Q4/2013 – Q3/2015) • Counterpart: Ministry of Industry (MOI) • Pilot Regions: Mandalay Region and Chin State • Outputs • Design and implement off-grid energy solutions for 20 villages • Least cost electrification plan for Mandalay region • International Investor forum in Nay Pyi Taw in March 2014 Phase 2 ( Q2/2014 – Q2/2017) • Counterpart: Ministry of Livestock, Fisheries and Rural Development (MLFRD) • Coverage: Mandalay, Sagaing, and Magway Regions • Outputs • Design and implement off-grid energy solutions for public and community infrastructure in 25 off-grid villages • Least cost electrification plan, and related policy and regulatory support Phase 3 (tentative – Q3/2016) • Combine loan and grant funds (link with other energy access programs)

8. Proposed Pilots under Phase 1

9. Guiding Principles for Phase 1 • Responsive to government’s request for immediate deployment of RE based solutions 2. Adopt sustainable delivery approach • >5km from Grid • capitalize on existing RE resources • Scaled up in phase 2 & 3 • Promote private sector participation • Bring ADB experience in service delivery models. • Leverage ADB’s Energy for all Program • Stock taking in off-grid villages: energy poverty, affordability and willingness to pay, links to government plans, community participation and technology suppliers.

10. Opportunities • Government commitment and government reach at village level • Recent programs by MOI, DRD, MOAI, MOEP and others. Current program by MLFDRD and regional governments. • Community based organizations in place • Community interest and willingness to accept change • SHSs are in use in several villages and help to provide a demonstration effect • Challenges • Low loads and very low affordability to pay • Difficult terrain • Lack of access to financing • Lack of technology awareness among rural communities • Lack of reach of private RE suppliers at village level and after sales support mechanism • Need a road map for rural electrification including clear targets, enabling policies, incentives, models, and concessional funds. Challenges and Opportunities

11. 1. Solar Home Systems • Procurement contract signed on January 2015 • Around 1,000 SHS will be distributed at a subsidized price: • Nay Phi Taw: 2 Villages, Mandalay: 11 villages, Chin: 2 villages • Output Based Aid (OBA) protocol used to promote efficiency of subsidies. Payments after delivery • Large scale-up potential of the project

12. 2. PV Solar Mini-grid component • 2 villages selected in Mandalay Region • Preliminary socioeconomic assessments carried out • Tender documents and tech specs under preparation • Construction aimed to start by April 2015 • Funding Sources:

13. - continued 2. PV Solar Mini-grid component • Approach : • All consumption revenues will be collected by the private operator to cover for their investment and O&M costs • AC supply, 60 HHs for 5Hrs/day, 150 watts/HH • A formal agreement between the village and the private operator is necessary before ADB disbursements • Tariff structure, metering, and payment arrangements will be agreed bilaterally by the community and the operator • Private operator will be selected competitively among local companies

14. 3. Solar Lantern Charging Stations • 3 villages identified for pilot projects in Mandalay Region • Target to Bottom of Pyramid (poorest households) • Support local business in rural off-grid areas • Private company invest in a charging station and recovers investment by renting and/or charging lanterns • Charging fee below cost of alternative uses (e.g. candles) • ADB subsidizes a portion of the total cost to incentivize private sector to invest and train local entrepreneurs to operate the station • Tech Specs and tender documents under preparation • Model: 50 lanterns with 5 junction box, 6hr/day, mobile charging facility, solar lanterns selling point • Expected implementation to start by March 2015

15. TA 8657-MYA: Off-Grid Renewable Energy Demonstration Project (Phase 2)

16. Capacity Development Technical Assistance • ADB approved the TA on 23 May 2014 • Funding: US$2 million (Japan Fund for Poverty Reduction/JFPR) • Executing Agency (EA): Ministry of Livestock, Fisheries and Rural (MLFRD) Development (MLFRD), Implementation Agency (IA): Department of Rural Development (DRD) • Implement an off-grid renewable energy demonstration project that will: • Support the design and install renewable energy systems in 25 villages; targeting the central dry zone (Mandalay, Sagaing, and Magway regions) • Develop a geospatial least-cost energy access and investment plan for select regions and states • Strengthen the capacity of government institutions to design and implement small-scale renewable energy systems • Status of Implementation • Mobilization of consultants: January 2015 Off-Grid RE Project Outline

17. Thank you for your attention! For further inquires Choon-Sik Jung, SEEN/SERD cjung@adb.org