Accelerating Rural Electrification in Myanmar
An early-morning fresh market in the middle of Salingyi town in Central Myanmar is bustling with farmers, traders, and entrepreneurs coming from surrounding villages to sell assorted agricultural produce and handicrafts. Piercing noises and acrid fumes from a welding shop, a rice milling machine, and oil pressing equipment fill the air when the diesel generators are switched on.
Villages in Salingyi are among 31,000 villages in Myanmar that are not connected to the main national utility grid but are powered instead by diesel generators, solar home systems, car batteries or other sources of electricity. We must ask: What other businesses could open their doors here and how many more jobs could be created if this village were given access to reliable, productive electricity?
Myanmar has one of the lowest electrification rates in Asia, with more than 60% of the population without access to a modern form of electricity, denying people the ability to work, weakening health and safety, education, and limiting the opportunity to rise out of poverty. Energy poverty constrains socio-economic development. Electricity is not only critical to human well-being, it is the undercurrent of a thriving economy.
In partnership with the World Bank, the Government of Myanmar developed a National Electrification Plan that aims to achieve universal energy access by 2030 through grid extension and decentralized rural electrification via mini-grids and solar home systems. According to World Bank, the government will connect 2 million households from 2015 to 2020 and an additional 5.2 million households from 2021 to 2030. To achieve this goal, the World Bank launched a USD $400 million initiative to provide technical assistance and finance grid extension and off-grid electrification in 2015. Through this initiative, energy service companies are incentivized to participate in building and operating decentralized mini-grids in rural areas.
Despite the fact that a number energy service companies (ESCOs) are building mini-grids with support from the Department for Rural Development (DRD), World Bank, GIZ or privately led efforts, ESCOs encounter several issues in scaling their business. These include: 1) generating demand in villages, 2) finding micro-loans to assist rural customers to procure new electrical appliances and buy power from mini-grids, 3) selecting viable sites for setting up mini-grid systems, 4) accessing different financing options, 5) collecting data and using it to improve performance. ESCOs are also concerned with the arrival of the main grid in villages where their mini-grids are constructed because there is no policy or mechanism to sell power to the main grid or buy power from the grid and distribute it to communities.
To address these challenges and accelerate electrification in Myanmar, The Rockefeller Foundation has selected Pact, the largest international non-governmental organization in Myanmar, to establish the Smart Power Myanmar facility in May 2018. The facility aims to advance public-private partnerships that significantly accelerate universal rural electrification and improve the lives of all people, including women and ethnic nationalities, by enabling access to productive power that will spur economic development.
The founding Members of the facility—The Rockefeller Foundation, World Bank, USAID, and Yoma Strategic Holdings—will seek to align and coordinate existing and potential future investments in decentralized renewable energy mini-grid systems with the services provided by the Smart Power Myanmar facility. Specifically, the facility will focus on three priorities:
- project development support and demand (household and productive loads) facilitation for energy service companies (ESCOs) and developers
- investment facilitation and business modeling for last-mile electrification models; and
- policy support and industry coordination.
Underpinning the three priorities will be a powerful data analytics and knowledge function designed to build policy evidence, strengthen the investment case, and better equip developers with world-class capabilities.
Our work will focus on geographical areas where the private sector, government, and communities have a shared interest in establishing mini-grid projects. It will seek, wherever possible, to advance rural electrification based on integrated plans that identify a clear roadmap for mini-grids and other distribution systems to be rolled out, and in line with the country’s National Electrification Plan.
We decided to undertake this work based on the success we’ve experienced in our Smart Power India effort. In India, we’ve incubated several models with private energy service companies to extend electrification through mini-grids that now power more than 120 villages in some of India’s most energy-starved states. Fueled by a network of partners, Smart Power India has energized 5,000 enterprises and is transforming the lives of more than 60,000 Indians. And it taught us a valuable lesson in India: People are willing to pay for access to productive, reliable power and their ability to pay is often very reliable. With these lessons and a commitment to bring access to reliable power to millions of poor and vulnerable people, we’ve expanded Smart Power not only to Myanmar but to parts of Sub-Saharan Africa as well.
In addition to launching the Smart Power initiative in Myanmar, The Rockefeller Foundation’s support for the people of Myanmar is focused on strengthening civil society organizations and governance and facilitating dialogues to promote inclusive development planning and cultural diversity and awareness.