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Home Opinion Guest Column

A Renewable Vision for Myanmar

Lin Tun by Lin Tun
May 8, 2019
in Guest Column
Reading Time: 8 mins read
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Experts fix a solar panel on Saint Martin Island, in Bangladesh, on Nov. 29, 2004. Guest columnist Lin Tun, Quasar Resources LLC, argues that solar ought to play a vital role in meeting Myanmar's increasing energy demands. / Reuters.

Experts fix a solar panel on Saint Martin Island, in Bangladesh, on Nov. 29, 2004. Guest columnist Lin Tun, Quasar Resources LLC, argues that solar ought to play a vital role in meeting Myanmar's increasing energy demands. / Reuters.

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Myanmar continues to experience a rapid increase in economic activity as it transitions into an open market system. With that, power demand continues to increase—for modern amenities like air conditioning and power for industrial factories. This is especially true in the economic hubs of Yangon and Mandalay.

In the last few weeks it has come to light that there is now an insufficient power supply. As temperatures soar past 40 degrees Celsius, depleted water supplies from the country’s major hydropower dams have resulted in insufficient power generation and rotating blackouts across the country.

Myanmar is running out of options for additional power generation. Liquefied natural gas (LNG) solutions are too expensive and the government has so far failed to complete a power purchase agreement. Coal power is opposed by the general public, and rightfully so. Hydropower dams take too long to complete and have too grave an impact on the surrounding population and environment. The country cannot afford to wait for five or 10 more years to remedy this power shortage. It is time for the government to act quickly and decisively.

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One solution that can have an immediate impact is solar power. It perfectly complements hydropower and gas generation. The very conditions that drive the demand and cause water shortages are the conditions that provide the best environment for solar generation.

Other advantages of solar power are that it is a green and renewable resource, requires no water or fuel and emits no pollutants. It can also be built very quickly using local labor, providing much needed employment opportunities. Foreign investors tend to be keen on solar investments, further complementing the need for foreign direct investment (FDI) in Myanmar.

Timing is also such that no additional support or incentive programs are required from the government to compete with other fossil or hydropower generation. Myanmar is much luckier than developed countries to have this chance as solar prices continue to decrease—when the U.S., Canada, and many European and other developed countries began building renewable power facilities, they required heavy subsidies and government incentives. Myanmar does not need this, and can still get all the benefits of green energy.

Vision

Myanmar produces approximately 3,000 megawatts of hydropower at any one time. With the addition of solar, Myanmar can become one of the greenest countries in Southeast Asia, meeting most of its energy needs from renewable power. This doesn’t mean we can ignore other types of power generation, as we still need them for nighttime use, but we can use these resources intelligently. For example, Costa Rica is a darling of renewable energy, with over 98 percent of its energy generated from renewable resources such as hydro, wind, solar and geothermal.

Solar power generation equipment can be added to existing power plants to immediately increase the power supply significantly. As much as 1,000 megawatts of renewable energy can be added without impacting the current system, according to studies by the U.S. Trade and Development Agency (USTDA). The actual limit may be even higher if solar panels are sited strategically near load centers. There is a living example in Longyangxia, China, where facilities to generate 320 megawatts of solar energy was added to a 1,280-megawatt hydropower plant in order to save water. It worked so well, equipment for an additional 530 megawatts of solar was added a few years later. Now, 850 megawatts of solar is generated in conjunction with the 1,280 megawatts of hydropower seamlessly at this site, prolonging the hydropower capabilities late into their peak season.

Since it rarely rains outside monsoon season in Myanmar and the country is dry for six to seven months per year, it has to store water for hydropower production during the remaining hot summer months which is when the demand is highest. Summer is the most challenging time of year for power systems, and we are currently experiencing two to three-hour, rotating load shedding (also called blackouts) per day because of it. Those hot, sunny days when power demand is driven up are the times that solar power really shines, perfectly complementing hydropower generation and leveraging the inherent benefits of hydropower generation.

FDI

Global investment in renewables was over US$300 billion per year in 2017 and 2018. Although most of that investment occurred in developed countries, even developing countries are seeing significant investments in renewables—over $50 billion in 2017. With the need for both power and FDI, it is very conceivable that Myanmar could attract $1 billion to $2 billion per year over the next five to 10 years—a significant sum for a country in urgent need of a boost to its economy.

Why solar?

Solar prices have decreased significantly in the last few years. Now on a leveled basis, the per-unit price for solar is between $0.07 and $0.08 cents per kilowatt-hour for projects in Myanmar. Many solar proposals have been submitted to the Ministry of Electricity and Energy (MOEE). Compared to LNG or gas-fired generation, solar is at least 30 percent cheaper, not to mention the fact that there is no risk of price increases in the future, as it does not use any fuel. Compared to heavy fuel oil (HFO, or bunker oil) or diesel, solar is 50 to 60 percent cheaper and similarly not subject to commodity price risks.

Cleaner coal and hydropower plants can be built, but they take at least four to five years and eight to 10 years construction time respectively. There are also cost implications, as Japanese-designed clean-coal plants are still very expensive and need very specialized equipment and labor—costing much more than solar, even in the long term. The environmental impact of coal plants are widespread, not just in creating air emissions but also in requiring large quantities of water usage for cooling and steam and ash disposal. They should only be considered as a last resort.

Major benefits of solar

  1. Fast implementation—Solar projects can be built in as little as two to three months (five to 10 megawatts). Even projects with 100-megawatt grid-scales can be built within one year. Rooftop projects, such as 100 to 200 kilowatt systems, can be built within two months.
  2. Appropriate technology—The construction of solar plants does not require specialized foreign expertise. Structures and electrical connections can be built by local workers with some supervision. A few projects have already been built in Myeik, Yangon, and Mandalay.
  3. Some power is better than no power—Although solar is not perfect as it is not available at night, it can add supply to the overall system during the day, when the system is most stressed. This will help factories and demand from air conditioning—the two major drivers of peak power demand.
  4. FDI—Foreign investment is readily available for the renewable sector. The World Bank, ADB and OPIC are all looking for renewable investment opportunities in Myanmar. Many private companies are also looking to invest in Myanmar if there is a streamlined process.
  5. Space saving—Rooftop solar doesn’t take additional land, and energy generated there can be used within the factory or within an industrial zone. Additional generation could also provide excess power to other customers that are not allowed to connect or expand due to bottlenecks on distribution transformers serving industrial zones.
  6. Reduced system loss—Rooftop projects will reduce power-system losses and improve power quality by virtue of having less power flowing from central power plants. Power loss will be reduced by a compound effect, by a factor of square, as loss goes down by four times when current flow is cut by half.
  7. Natural cooling—Rooftop solar can also provide significant rooftop cooling. In Yangon, we have observed as much as a 7-degree Celsius reduction of roof temperatures, as solar provides a second layer of roof and shade.
  8. Land use—Grid-scale projects can use scrublands not suitable for grazing or planting in central Myanmar near Mandalay, Sagaing and Meikhtila. They will not impact productive farmlands.
  9. Ability to prolong the hydropower season—These larger grid-scale solar plants can significantly complement the existing hydropower plants by allowing those facilities to save water and generate power for the latter parts of summer.
  10. Finally, the grid-connected solar systems discussed in this article are not small, low-quality panels typically seen in rural areas. These systems include sophisticated controls to work with national grids and backup diesel generators with many smart features. Solar panels used in these projects are from top-tier manufactures with 25-year-production warranties and guarantees to still generate at least 80 percent of capacity at the end of 25 years. Even other bulk power systems, such as gas turbines and engines, cannot match the warranties on solar panels.

However, there are two downsides of solar power, but these impacts can be minimized by combining solar with other resources on the system while optimizing overall system costs.

  1. Solar power cannot be generated at night—Peaking units may be needed to supplement for a few hours at night for evening peaking. However, demand generally decreases as people go to bed. Existing hydropower can also be used for these periods, as more water can be saved by running solar during daytime hours without requiring additional investment. Even if high-fuel-cost units have to operate, they will only be needed for a few hours a day, limiting the cost-impact on overall systems.
  2. Solar output is variable in cloud and rain cover—Although a factor in rainy season, this is not a factor in the cool and hot seasons which are dry and there is little or no cloud cover. Even Yangon has consistently sunny days during the dry season, the exact time when we are experiencing the highest peak of demand. Upper Myanmar has much better solar resources, with few rainy days. In rainy season when solar production is low, there is ample hydropower and demand is lower due to the cooler temperatures. Hydropower generation, with its inherent ability to ramp up, can also be used to provide short-term support for solar, acting much like a shock absorber for the power system. For example, Texas and California have recorded very high wind and solar generation without affecting the grid—sometimes with as much as 60 to 70 percent of power supply coming from renewable resources. They do this by active forecasting and smart controls. With over 50 percent of hydropower capacity, Myanmar is very well equipped to handle the variability of solar and wind.

Action plan

In order to increase the power supply immediately, the government has to implement some or all of the following items through regulatory change.

  1. Implement net-metering for distributed generation, such as for rooftop solar. This will allow some customers to install solar to offset demand, freeing up additional supply for other customers.
  2. Waive import and commercial taxes on all renewable equipment, such as solar panels, wind generators and small hydropower systems. Subsidies are not required. Tax waivers will further encourage the renewable energy developments that will help solve power supply shortages. There is already an import tax waiver for products made in ASEAN countries and China. This covers most of the solar equipment, but some other items made in U.S. and in European countries are not covered.
  3. Implement a Distributed Power Program (DPP) with a buyback scheme for excess power at the price paid by the MOEE, which can then be resold to customers. It will be a program much like the Very Small Power Producer (VSPP) program in Thailand that has very successfully attracted over 3,000 megawatts of additional supply from solar, wind, small hydro, and biomass, from small power plants of less than 10 megawatts
  4. Cancel existing solar Power Purchase Agreements (PPA) that are suspended or in default and call for new solar PPAs, adding at least 500 megawatts per year for the next few years, until the system is saturated. This will provide 30 to 40 percent savings (costing $0.07 to $0.08 compared to over $0.12 per unit) while adding much-needed supply to the system.
  5. Finally, drive reform of the MOEE to make it profitable and more accountable by providing an independent governing body with government oversight. Calling for tariff increases without needed reforms will only provide a partial benefit.

In summary, the power situation will get worse over time with continued load growth and over-dependence on hydropower. It is imperative that the government makes a smart decision to address these immediate needs. Without these changes, future economic activities will be constrained and people will continue to suffer. If this issue is not fixed quickly, the economic development and political transition of Myanmar may never realize their full potential. 

Lin Tun is managing director of Quasar Resources LLC, a development company focused on power sector investments in Myanmar. He has 29 years of experience in the energy sector, working for power system utilities and multinational corporations in the US and Myanmar. Views and opinions expressed in this article are the author’s own and don’t necessarily reflect those of The Irrawaddy.

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Tags: BlackoutsEnergyHydropowerRenewable EnergySolar Power
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