Renewable energy development played a rather limited role in the last five years of NLD government. Plans to build more coal power plants were not implemented but are still on the table. In the meantime, gas power has become the NLD’s preferred short-term solution to address the ongoing energy shortage. The fight for a better energy policy – against fossil fuels, for renewables – needs to go on.
For years, Myanmar has been going through an energy crisis. Myanmar’s installed electrical power-generating capacity was 5,235 MW in 2015; grid connectivity was 32% of all households in the country. Under the NLD government, grid connectivity jumped to 50% by December 2019. During the same period, electricity demand increased by 15% per cent annually - which is a dramatic rise, more than twice the GDP growth rate.
In 2020, Myanmar’s energy mix for electricity generation is 60.3% from hydropower, 35.6% for natural gas and 4.1 % for solar, coal and diesel. Likely still having the public outcry about the Myitsone Dam in mind, the NLD’s 2015 Election Manifesto was critical about the large negative environmental impact of the mega-hydropower dam projects. The NLD promised that its government will only improve the existing hydro-power projects, not create new large dams. NLD’s 2015 election promise was to give priority for renewable energy development with standalone household and small or off-grid systems.
When NLD took power in 2016, the amount of electricity production from Independent Power Producers (IPP) selling to the national grid was up to 48% of the total production, even though there was no national-level regulation for power purchasing agreements (PPA) at the time – and there is none until today. The Ministry of Electrical Energy (MOEE) only reluctantly buys from IPP because it only needs their power in the peak demand season. This implies losses for the Ministry during the rainy season when hydropower dams can produce electricity in their full capacity and electricity demand is low.
Since the hydropower dams are not able to produce electricity efficiently during the dry season, when there is peak demand of electricity, there are frequent system breakdowns on the national grid which is fundamentally fragile even at the best of times. Under the NLD government, there was a major renovation and upgrade of the national grid and distribution system. This was a good move which the preceding government had been unable to pursue. The highly sensitive (and long overdue) tariff rate reform was implemented in 2019 under the NLD government which argued that this reform created more space for energy investment, especially in renewable energy (RE). As a result, energy efficiency and overall energy intensity (measuring the amount of electricity used for each unit of national income) has improved.
Since 2016, existing hydropower dams that had not been operating efficiently were improved. However, there were droughts for 2 years in a row, with much less rainfall in those watershed areas in Myanmar. Therefore, the dams had much lower water levels than regularly, and the hydro-power production was not enough to supply the country.
Both the general public and the NLD government do not favor the large hydropower dam projects for which Memoranda of Understanding (MoU) with China and Thailand had been signed before the NLD took over. 90 percent of the electricity produced by those dams is being sold to Southern China Power Grid and the Electrity Generation Authority (EGAT) of Thailand. Export of power from Myanmar is widely questioned, since the impact of those hydropower dams will primarily be on ethnic communities on the margins of the country, while revenue sharing between the centre and the regions or states is not equitable under the current constitution.
The National Electrification Plan 2015 focuses on the development of more off-grid and household energy production from renewable energy. The Myanmar Energy Master Plan 2015, which is more focused on the government-owned national grid, looked forward to produce 15%-20% of total electricity production from renewable energy in 2020. But this target has not yet been achieved. The MOEE structure and thinking have been transforming slowly under the NLD government, providing more space for renewable energy by forming a Renewable Energy Committee under the ministry. This is a major step forward, but not a stable achievement since a committee like this can be dissolved with any change of government. Concrete achievements of the Renewable Energy Committee have not yet been seen, since it was only formed in 2019. The plan to draft a renewable energy law that will allow private investors to participate in renewable energy development has not been formalised because of the COVID-19 situation.
An MoU for a single solar power project was signed with the President Thein Sein government during the last days of USDP rule in 2015. Installation and operation of this project in Magwe Region was delayed for about three years, due to delays in the expansion of the national grid. The MOEE, again, was reluctant to purchase power from the solar project since the PPA was made with a rate of 200 MMK (ca. 0.16 USD) per unit. That was four times of global market price for solar power in 2015.
In 2020, NLD government announced that the MOEE is making MoUs for more solar power projects at record low tariff rates, i.e. competitive with the global market price. However, the tender process raised many problems because of the very short time frame for submitting tenders and project implementation. The MOEE seems to have rather limited expertise and understanding of the nature of renewable energy operation and installations.
As at today, there is still no nationwide renewable energy policy or law taking care of small hydropower projects and renewable energy investments. The Shan Nationalities League for Democracy (SNLD) party was the first to draft a “Shan State Renewable Energy Policy and Small and Medium RE Investment Policy” and a corresponding law which was approved in Shan State Parliament last year. This law provides avenues for greater participation, in small and medium-size hydropower projects in Shan State, to civil society and investors, while giving power to decide and regulate to local governments.
Coal Power Plants Suspended, but still in the Master Plan
The use of coal in total final energy consumption in Myanmar has increased only a little, from 0.8 % in 2015 to 1.1% in 2018. The NLD government has postponed the construction of large-scale coal power plants during their government term according to their promise made during the 2015 election campaign. There is only one coal power plant operating in Myanmar today, in Tigyit (Shan State). However, plans to construct coal power plants continue to be part of the Myanmar Energy Master Plan (2015-2030) that was approved in December 2015, just before the NLD government took power.
According to this Master Plan, the share of coal in Myanmar’s energy mix is to be increased from 2% in 2015 to 20% in 2030. This would imply an increase of coal use for electricity by 17 times (from less than 500,000 tons per annum to 8,500,000 tons per annum) within 15 years!
Thus, the postponement, in recent years, of plans for more coal power in Myanmar possibly is not yet the final word. There is a risk that the notorious coal energy perspective in the country’s energy Master Plan continues in the future. At the same time, the General Administration Department and the Ministry of Home Affairs are harassing and suing anti-coal power plant activists.
Sustainable Natural Gas?
The NLD government is aware, in principle, of the unsustainability of fossil fuel production and use. But rather than rapidly expanding renewables, it seems to view the use of natural gas as a last resort and main avenue to rapidly increase electricity production while avoiding to build more new coal and large-scale hydropower plants, all the while that droughts in the watershed areas of the dams are becoming more frequent.
Myanmar has been producing oil for export since the late 19th century; natural gas production and export started only in mid-1990s. However, the country has limited petrochemical industrial facilities. The oil and gas production is mostly for export, providing an average of 30 per cent of the GDP in the last three decades until 2015; it still continues to be a major export from Myanmar today. Natural gas revenue from 1 October 2019 to 30 March 2020 was 1.8 billion USD.
Since 2015, Myanmar uses natural gas for domestic energy consumption. Over the last two years, more natural gas power plants for electricity production have been installed or are planned. After long negotiations, the first new natural gas power plant was built in Myingyn in 2019. This is a pilot project with trilateral lateral funding from the International Finance Corporation, the Asian Development Bank and the Asian Infrastructure Investment Bank; the Myanmar government expect this to serve as an example for Chinese-led investments within the framework of the Belt and Road / China-Myanmar Economic Corridor initiative, a model of multilateral development finance. However, civil society organizations were and are concerned about this project, as the social and environmental safeguards are weak and complaints mechanisms are not well defined. They are still monitoring the investments, wondering how to respond and to claim their rights.
All this while, most of the current gas production remains contracted for export, even though the Thein Sein and the NLD governments attempted renegotiation of contracts. Since 2018, at last, the quota available to Myanmar on the gas pipelines is being used fully for domestic electricity generation. Gas available for domestic consumption and energy production remains scarce, despite Myanmar being a major exporter.
Perspective: NLD’s Election Manifesto 2020
Over the last five years of NLD government, renewable energy development and policy formulation played a rather limited role in the MOEE. Coal power plants were not constructed, as the NLD was concerned about its image in the public. But the Ministry never formally canceled coal power plants from its Master Plan. Instead of large hydropower or coal power plants, gas power has become the NLD’s preferred short-term solution to address the ongoing energy shortage in Myanmar.
A look at the NLD elections manifestoes shows some remarkable changes – and not for the better. Whereas the 2015 manifesto focused much on renewable energy, in 2020 we see a U-turn back towards fossil fuels. In 2020, NLD promises more access to electricity, more energy security, and to have an energy reserve. The NLD also promises to explore for more oil and gas reserves, to be able to export the excess. The fight for a better energy policy – against fossil fuels, for renewables – will become harder.