Overcoming the outages

How to keep the lights on in Myanmar

With more than four out of ten people in Myanmar without access to electricity, the nation's economic development relies on the government's willingness to pursue alternative energy sources

Jeremy Mullins
June 25, 2018
How to keep the lights on in Myanmar
A night-time view of Yangon, Myanmar's largest city Photo: Paula Bronstein / Getty Images

Poor electricity access is incredibly disruptive and bad for business. Tales abound in Myanmar of surgeries completed using light from cell phones and cars crashing immediately after the lights go out.

About 41% of Myanmar people are without access to electricity at all, according to the International Energy Agency (IEA). This equates to about 22 million people, or a third of Southeast Asia’s total of 65 million people who don’t have access to electricity.

Many of those in Myanmar who do have electricity receive intermittent power from local generators or small solar home systems, rather than 24-hour grid access. The result is that even those who have electricity access make relatively little use of it, with data from the GMS Information Portal showing Myanmar used 256kWh (kilowatt hours) per capita in 2015, against 335kWh for Cambodia and 1,722kWh for Vietnam.

The lack of electricity is hindering broader economic development. The IEA’s Southeast Asia Energy Outlook 2017 shows over 90% of Myanmar firms experience power outages, compared with less than 30% in Vietnam and Indonesia. The only choice for many businesses is to install expensive backup generators or just locate somewhere else.

Despite the poor state of supply, Myanmar electricity is cheap when you can get it. Residential use starts at $0.026 per kWh and commercial use at $0.056.

The problem is electricity is too cheap – cheaper than the cost of generating, transmitting and distributing it – and the government faces losses on the average unit of electricity it sells. During the 2018 fiscal year, government subsidies were projected to total about $275m, and the number is growing.

Basically, the government is spending $275m to pay for richer people’s electricity. This is money that could be connecting the 59% of the population living in the countryside, but instead it goes to the 41% living in towns and cities.

Tales abound in Myanmar of surgeries completed using light from cell phones

One of the main reasons behind the frequent Yangon power outages is weakness in the transmission and distribution network, which could be improved if more money were available, and not going to subsidies.

It’s commonly accepted that tariffs need to be increased to fund improvements, but awareness and action are two different things.

The reluctance to act stems partly from previous government efforts to increase prices, which were met by protests – quite understandably. Ordinary Yangon consumers sweating through another power outage are probably not too enthusiastic about the argument that a fundamental problem is they are not paying enough for electricity.

Mindful of this challenge, the Ministry of Electricity and Energy has pledged to first improve the quality of electricity before raising prices, but a price raise is politically untenable the closer Myanmar gets to the next election in 2020.

Myanmar’s alternatives include hydropower, hydrocarbon and renewables. Hydropower has traditionally been the main source of electricity, but most potential sites are located far from population centres, and large hydro has serious social and environmental implications. Developments have been slow to move forward for a variety of reasons, including the 2011 freezing of the high-profile Myitsone Dam project in Kachin State, which still stings.

The low costs make coal a somewhat attractive alternative. Concern over environmental and social impacts has essentially halted progress of coal-fired plants, though the option hasn’t been entirely ruled out.

Renewables are a promising alternative. Work is underway on the country’s first large solar farm, and there has recently been a push to provide off-grid power through solar. But there’s concern over the price and the ability of the grid to handle fluctuating amounts of electricity.

Natural gas is becoming Myanmar’s go-to “base load” source of generation. Currently, about 30% of Myanmar’s installed capacity is gas-fired. This share has been growing rapidly, and is likely to keep increasing.

One motivation for the turn to natural gas generation is that Myanmar has a lot of it. Much of the country’s gas resources are unexplored, and there are four large offshore areas currently in production, totalling about 2 billion cubic feet per day. Yet most of this gas is exported to Thailand and China. Plus, two of the four offshore areas are nearing the end of their life and new production is likely several years away.

The most recent solution to the lack of gas supply is importing liquefied natural gas (LNG) by tanker. On 30 January, the Ministry of Electricity and Energy announced “Notices to Proceed” for three large LNG-to-power projects, as well as one other combined-cycle plant. The four projects would produce a total of 3,000MW, nearly the same as all the power plants currently operating in Myanmar, but there’s a chance they won’t become a reality.

Myanmar is not out of the woods yet. The amount of people without electricity and the country’s expected rapid economic growth demands even more power in the future, and the goal of 100% access to electricity by 2030 will remain elusive unless a broad range of improvements are made.

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