Kin Cho has been selling bottled petrol to passing motorists in central Myanmar for over a decade. Each liter costs roughly $1, and she sells about four on a good day. Now that her village is hooked up to reliable electricity, she bought an electric fuel dispenser. She now makes $20 a day from petrol sales, with more time to tend to the rest of her business, and is thinking about expanding her teashop.
Kin Cho is one of 22 million people in Myanmar who, through energy access, are now connected to the modern economy. Her village, Than Pyar Chaung, was connected to a grid for the very first time in October 2018. It is solar-powered. But about 58% of the population still rely on diesel generators, car batteries, kerosene and even candles for lighting. Even in the commercial capital of Yangon, blackouts are not only common as the city rations its limited energy supply, but they have also been getting longer with up to four hours of power cuts per day.
We can’t end poverty without ending energy poverty.
Myanmar faces an uphill battle to achieve universal electrification. And with the lowest GDP per capita in the region, the need to unleash the transformative power of reliable and sufficient energy for all becomes all the more urgent. In the context of the 21st century, we can’t end poverty without ending energy poverty.
In 2015, the Government of Myanmar launched a plan to power every household and business by 2030. To achieve this target, the country would need to electrify the 30 million people who currently lack access within the next 11 years. Compare that to the 20 years or so it took for the governments of Brazil, China, and Thailand to connect the last 10% to 20% of unelectrified households. This is because of remoteness, cost, and internal conflicts. In Myanmar, these challenges are compounded. Smart Power Myanmar (SPM), supported by The Rockefeller Foundation, projects one scenario in which only 62% of the country can be electrified by 2030, based on an analysis of 15 countries’ electrification over a 12-year period.
There is another way. Mini-grids could possibly hold the answer to the speedy and cost-effective expansion of electricity access. According to SPM’s research, a mini-grid similar to the one in Kin Cho’s village could be built in as many as 16,000 other villages by 2030, providing electricity to 9.4 million people, pushing the electrification rate up to 80%. These mini-grids could generate 672 GWH in a year and reduce CO2 emissions by 1.6 million tons. Here is how we can bend the electrification curve to an 80% scenario:
First, let’s rethink the grid. The government could integrate a decentralized mini-grid solution powered by renewable sources, backed by policy and regulation. Mini-grids support a “future grid” vision that integrates the mainline and decentralized utilities, ultimately enabling us to reach remote villages faster while the government continues to add installation capacity, improve network infrastructures, and expand the main grids to reach rural areas. This means it can be more effective to build the grid from the outside in.
This would require concessional financing, an extension of the current subsidy scheme and introduction of results-based financing to incentivize private mini-grid developers to improve efficiency, ensuring that they continue to deliver high-quality and reliable electricity to rural communities for decades to come. By our approximation, the roll-out of 2,300 mini-grids will require $537 million of investment and $1.8 billion to finance 16,000. The market could be further incentivized by pooling the procurement processes and aggregation of projects to drive down CAPEX, and increase return on investment.
Second, we must bring consumers to the center of our efforts. Government and funders need to channel investment behind electricity-based enterprises in rural areas that could fuel the village GDP by focusing on productive loads through technical assistance and micro-financing electric machinery. This is something SPM is beginning to do. Greater collaboration and planning between rural livelihood development and electrification programs will not only add firepower to the village economy but also increase profitability at a plant level, and reduce off-taker risks. In India, this strategy has enabled Smart Power to increase plant utilization by 70% and operating margins by 50%.
Third, we need to unleash the power of data. The technologies exist to equip local and large-scale developers as well as the government with state-of-the-art capabilities to more accurately assess demand. This investment will, in turn, help companies select economically viable sites for mini-grids, right-size installation capacity, and plan for business growth. This week, the University of Massachusetts Amherst, Columbia University, Carnegie Mellon University and the Colorado School of Mines, together with The Rockefeller Foundation launched E-GUIDE, which will apply new machine learning techniques to geospatial data from satellites in conjunction with real electricity billing and consumption data, to forecast latent electricity demand in energy-poor emerging economies like Myanmar.
Rural electrification is solvable. Today Myanmar has more than 46 new solar mini-grids plus about 1,300 micro-hydro and biomass mini-grids in rural areas. We know we can extend their reach to thousands more villages, quickly and relatively inexpensively, to energize the lives and livelihoods of 80% of Myanmar’s population by 2030. If donors, investors, government and the private sector come together and apply these principles in a coordinated way, we can be well on our way to accelerating electrification for all Myanmar’s people, opening vibrant, new markets and powering the dreams of people like Kin Cho.
This piece originally appeared on Forbes on June 19, 2019, and reposted with permission.