Naypyidaw, Myanmar -- Myanmar is blessed with an abundance of natural resources and a youthful workforce, but with many of its people living in extreme poverty, the newly opening economy is attracting the interest of investors and aid workers alike. In the middle of the fastest growing region in the world, East Asia, Myanmar holds great promise as the next big market. Growth rates have exceeded 5 percent since 2010 when the country released human rights icon Aung San Suu Kyi and held elections, and 8 percent growth rates are within reach. McKinsey analysts estimate that Myanmar could quadruple its GDP by 2030 to US$200 billion.
Myanmar business representatives are clear about their objective: economic development. “Of course our goal is to be a modern industrialized country,” said Aye Tun, managing director of industrial firm Aung Thein Than Co. and general secretary of the Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). “But we still face challenges especially infrastructure development and power. That will make it difficult for industry to grow.”
Infrastructure, everything from roads to housing to utilities, is decrepit and insufficient, and electricity reaches less than a third of the country. Myanmar uses just 5 percent of Thailand’s energy, just 4.657 billion kWh in 2009, according to the EIA, powering the capital city, Yangon, and Mandalay in the north, but leaving the rest of the country in the dark. Even Yangon sees brownouts at the end of the dry season when there’s little water in reservoirs, and Myanmar’s garment makers are said to resort to burning firewood to power their steam irons and machinery.
Without adequate infrastructure development, particularly power, the country risks disappointing investors as well as its own citizens.
Power supply “is a very critical issue not only for industry but also the society,” said U Htun Naing Aung, chairman of the Energy and Environment Group of the Myanmar Industries Association (MIA). “If people don’t have electricity they will face many other difficulties.”
Off-Grid Opportunities, Difficulties
Much of Myanmar is so far off globalization’s trail that even the internal combustion engine is a rarity and diesel fuel unavailable. All labor is done by hand, transport is by ox-cart and candles provide the only light source for most of the countryside.
But this also means that renewable energies are not just low carbon, sustainable options, but really the only option available. As Min Chan Win, CEO of Myanmar Eco Solutions observed, “If you want lighting in the remote areas, solar is the only practical way to do it.” Other than renewables, “there are no real options,” he said.
Most of Myanmar is in a greenfield condition, with no legacy of fossil power generation — or any power generation — to work against or replace. Also, no one expects the central grid to expand into remote areas for at least a decade, if not longer. Flexible, decentralized community-based renewable energy systems like solar are therefore the best way to power the countryside. Solar lamps and water pumps are part of the equation, as is micro-hydro in the mountains and biomass gasifiers and charcoal makers in the rice belt and even tidal power along the coasts.
Tim Schroeder, project coordinator for German NGO Adventist Development and Relief Agency (ADRA), Myanmar, said in an email, “I believe that all could provide good solutions, especially small-scale hydro power systems and solar energy.”
Foreign NGOs like ADRA are providing a lot of the training guidance and funding for renewable energy in Myanmar. Schroeder explained that ADRA has already installed solar pumps in a couple of villages in the Pakokku District of the Central Dry Zone, as well as solar energy systems to provide electricity and water to two health clinics in remote areas of the Karen State. He said these villages are characterized by extreme poverty and isolation.
Proximity Design is also an NGO providing power to remote areas of Myanmar. Describing themselves as a social enterprise, Proximity Design was founded a decade ago in Myanmar by American Jim Taylor and Debbie Aung Din to provide irrigation systems and agricultural guidance for rural communities. They expanded their reach into renewable energy last year with the introduction of the famed D-Light solar lamps.
D.light Design manufactures cheap, reliable solar energy systems for the 2.3 billion people in the world that still remain without reliable energy sources. Co-founded by Peace Corps veteran Sam Goldman, the solar lamps were inspired in part by Stanford Design School’s Entrepreneurial Design for Extreme Affordability. The lamps are distinct and have proven their worth in years of field trials in the rigors of sub-Saharan Africa and India. Proximity Design offers three different models that range in price from 9000 khat (around US$9) to a 15,000 khat (US$15) version with a separate panel and connectors to charge any kind of cell phone. They only began offering solar lamps last year and have already sold over 14,000 units. The social enterprise has ambitious plans to move 30-50,000 units next year offering two year warranties (as opposed to the current one-year) and 30 percent brighter LED bulbs.
Valentino Soe Myint, project manager for Proximity Designs’ energy division, said that the solar lamps are a hit in part because of their ability to withstand harsh rural environments. “It’s so durable I can run it over with a truck.” He said that when he does sales events in rural villages, he invites an agile member of the community to drop the light from the top of a tall tree — maybe 15 meters — to give vivid testimony to the lamp’s durability. “No one can match the sturdiness of our product,” he says, noting that the lamps are dust, heat and water resistant as well. The lamps can provide light for between four and six hours depending on the setting and model, replacing sooty and dangerous candles typically used in rural villages with a brighter and more constant light. “We have to ensure that our clients get the best product,” said Valentino Soe Myint.
Despite these virtues, the lamps remain a hard sale for many villagers. Myanmar is second only to Afghanistan in poverty rank in Asia, and many live on less than US$1.00 per day.
“Even the lowest priced lamp is often beyond the means of villagers,” Valentino Soe Myint noted. He observed that 25-30 percent of customers can pay cash down, but for the rest, “Unless you provide credit, most will not be able to afford it.”
Myanmar passed a law in 2011 allowing microcredit institutions that provide banking services to the very poor to operate in the country. Microfinance institutions loan out very small sums of money to the world’s poor, most of which would ordinarily not have access to any financial services. These microloans allow the rural poor to invest in technology such as solar lamps and water pumps and then pay them off as they reap the benefits.
According to a report by the International Finance Group, Myanmar’s demand for microcredit is estimated at US$1 billion, compared to its current total of US$283 million in outstanding loans. To fill in this gap many NGOs provide their own microcredit financing. Proximity Design long ago established its own quasi-microcredit institutions through village councils. “We form a (village) committee, and the committee members will guarantee the loan," said Valentino Soe Myint. He added that they charge 2.5 percent interest on the loans and most are paid off within six months.
Proximity Design’s Valentino Soe Myint however supports his firm’s decision to only sell the lamps, rather than give them away. “We don’t give away free because [that] will create more dependency,” he says. “With ownership they retain dignity.”
What's the Next Step?
However, while bringing light to rural darkness will certainly impact the lives of villagers, it does little to advance industrialization in the near term. In fact, U Htun Naing Aung, chairman of the Energy and Environment Group of MIA says that they don’t favor large scale solar installations as energy prices are too low and the government has no plans for feed-in tariffs. Electricity prices in Myanmar currently stand at 75 khat/kWh (US$.07) for industry and 35 khat/kWh (US$.03) for consumers, which U Htun Naing Aung says is in line with overall costs of living. But he also notes that industry is less constrained by price and is willing to pay two or three times the current rates for reliable energy sources. The key is “reliable” and U Htun Naing Aung says that utility-scale solar installations like the 210-MW solar farm already announced for northern Myanmar by Thai-based Green Earth Power do not have the reliability that Myanmar needs and he sees little chance that the US$275 million will recoup its investment.
Myanmar also has excellent geothermal energy resources, but these startup costs are deemed too extravagant and the location of the resources would require huge investments in transmission networks. Wind is another option that has been shelved as, according to U Htun Naing Aung, the country just isn’t windy enough.
Instead, Myanmar is looking to biomass as a ready solution.
Myanmar is one of Asia’s more dominant rice growers, producing 25 million tons annually. Abouit 20 percent of this crop (5-6 million tons) is waste product — rice husks that are typically disposed. Since 2006, though, Myanmar has been transforming these husks via biomass gasifiers into clean burning efficient methane-like fuels. The process powers lots of rice mills, generating electricity to power lights and machinery. However, the process also generates toxic ash and tars that pollute waterways and gum up the machinery.
To ameliorate these problems, Japanese NGO New Energy and Industrial Technology Development Organization (NEDO) created an intermediate fuel between the raw husks and the gasifier; rice husk briquettes and charcoal. NEDO consultant in Myanmar Soon Kao Yu says that this intermediate fuel provides many advantages. First, with higher caloric content, the briquettes provide more energy per volume than raw husks. Cleaner, too, they create fewer residues and the ash, rather than being toxic is actually rich in silica and is valued as a fertilizer for rice farms. The fuel is also flexible as it can be used in a gasifier to create a gas fuel or burned directly like charcoal and can be used in kitchens, replacing firewood as a fuel source.
The rice husk briquette making machinery was originally built by Japanese conglomerate Kansai Industries and sells for US$25,000. However, Soon Kao Yu noted that Myanmar industrialists have reverse-engineered the machinery and are now able to produce the same machinery for just US$10,000. He says “in only one season rice mills can get their return on this investment.”
Rice husk briquette manufacturing started in February and is being used at only a handful of mills. But with 30,000 rice mills across the country and 5-6 million tons of raw rice husks available as fuel, he anticipates strong growth.
Renewable energy in Myanmar has been spearheaded by NGOs and private firms, and the role of the government remains fairly unclear. Myanmar has stated as a policy position that 15-20 percent of their energy be supplied by renewables by 2020, but as 70 percent of electricity is already supplied by renewable hydropower, it implies that the government is going to expand fossil fuels such as natural gas. U Htun Naing Aung says the government is not planning on turning to coal for power, but the nation is richly endowed with natural gas and gas power plants built in the 1980s are being refurbished and plans for added capacity are in the making.
U Htun Naing Aung said that while the government is willing to help, “now they realize the private sector should lead the country in economic development.”
With this in mind, the government has also passed extremely liberal Foreign Direct Investment laws that allow for 100 percent ownership of Myanmar based enterprises. To attract greater interest in the renewable energy development, they are hosting the Renewable Energy Business Forum on June 21-22 in Yangon. U Htun Naing Aung says that while Myanmar Industry Association has hosted the forum since 2009, the uncertain political climate has stifled interest in the sector. But with optimism the order of the day and political climate liberalizing, “maybe now the door is open.”
Lead image: Bagan, Myanmar via Shutterstock