The NEP Workshop on Off-Grid Electrification in Myanmar ADB’s Energy Sector Program 29th January 2015

Current Sector Context Low electrification ratio (ER) Cost effective way to extend electricity supply to about 6.4 million unconnected households, ER is around 31% as of 2013. Electricity shortage in dry season Yangon required load shedding of 200 MW in summer 2013, while its peak demand growing at 13.7% annually and insufficient gas availability High technical and non-technical losses in transmission and distribution 27% in 2011 Grid extension to rural areas will be expensive and could be delayed Population of about 60 million with more than 70% in rural areas Need to explore off-grid applications on a large scale

ADB’s Involvement in the Energy Sector First-ever Sector Assessment Completed – 2012 New Energy Architecture Report: In collaboration with Accenture – 2013 (released at the World Economic Forum, Nay Pyi Taw) Facilitated drafting of the Electricity Law – 2013 First Investment Program Approved – 2013 Additional Investment Programs are being developed Ongoing technical assistance programs focussed on power sector reform, capacity development and off-grid renewable energy applications

ADB’s Assistance Enhancing Governance Programs On-grid Programs Off-grid Programs

Enhancing Power Sector Governance Programs TA for Enhancing the Power Sector’s Legal and Regulatory Framework (TA 8469) - Upgrading the Myanmar Electricity Law (1984) and the Electricity Rules (1985) Institutional Strengthening of National Energy Management Committee in Energy Policy and Planning (TA 8356) - Energy Master Plan, Energy Efficiency Policy, Renewable Energy Development Strategy Capacity Development and Institutional Support (TA 8244) - Power Sector Advisor to the Ministry of Electric Power Capacity Building for Project Identification Support (TA 8251) - Grid performance standards, Transmission and Distribution Grid Code Financial Management Assessment of Energy Sector (TA 8216) Strengthening the Use of Country Safeguard Systems (TA 7566) - Capacity building for implementing environment and social safeguards Support for Public-Private Partnership Framework Development (TA 8624) - Capacity building and awareness of PPP project process requirements Environmental Safeguard Institutional Strengthening (TA) - Capacity building for comprehensive environmental quality management

On-Grid Programs 2013 Power Distribution Improvement Project ($60 million) Five townships in Yangon region; four districts in Mandalay region; five districts in Sagaing region; and two townships in Magway region Loan agreement was signed on 28 January 2014 On going bids evaluation for goods, PIC mobilized in Dec. 2014 2015 Power Transmission Improvement Project ($80 million) Rehabilitation and expansion of 66kV & 230kV transmission lines and four substations in Yangon 2016 Power Transmission and Distribution II ($75 million) Project scope - TBD

Off-Grid Program Phase 1 (Q4/2013 – Q3/2015) Counterpart: Ministry of Industry (MOI) Pilot Regions: Mandalay Region and Chin State Outputs Design and implement off-grid energy solutions for 20 villages Least cost electrification plan for Mandalay region International Investor forum in Nay Pyi Taw in March 2014 Phase 2 ( Q2/2014 – Q2/2017) Counterpart: Ministry of Livestock, Fisheries and Rural Development (MLFRD) Coverage: Mandalay, Sagaing, and Magway Regions Design and implement off-grid energy solutions for public and community infrastructure in 25 off-grid villages Least cost electrification plan, and related policy and regulatory support Phase 3 (tentative – Q3/2016) Combine loan and grant funds (link with other energy access programs)

Proposed Pilots under Phase 1

Guiding Principles for Phase 1 Responsive to government’s request for immediate deployment of RE based solutions 2. Adopt sustainable delivery approach >5km from Grid capitalize on existing RE resources Scaled up in phase 2 & 3 Promote private sector participation Bring ADB experience in service delivery models. Leverage ADB’s Energy for all Program Stock taking in off-grid villages: energy poverty, affordability and willingness to pay, links to government plans, community participation and technology suppliers.

Challenges and Opportunities Government commitment and government reach at village level Recent programs by MOI, DRD, MOAI, MOEP and others. Current program by MLFDRD and regional governments. Community based organizations in place Community interest and willingness to accept change SHSs are in use in several villages and help to provide a demonstration effect Challenges Low loads and very low affordability to pay Difficult terrain Lack of access to financing Lack of technology awareness among rural communities Lack of reach of private RE suppliers at village level and after sales support mechanism Need a road map for rural electrification including clear targets, enabling policies, incentives, models, and concessional funds. Pictures of street lights, solar lantern shs etc

1. Solar Home Systems Procurement contract signed on January 2015 Around 1,000 SHS will be distributed at a subsidized price: Nay Phi Taw: 2 Villages, Mandalay: 11 villages, Chin: 2 villages Output Based Aid (OBA) protocol used to promote efficiency of subsidies. Payments after delivery Large scale-up potential of the project Size Sale Price (US$) Subsidy (%) 30 Wp 87 41 70 Wp 203 31 110 Wp 329 27

2. PV Solar Mini-grid component 2 villages selected in Mandalay Region Preliminary socioeconomic assessments carried out Tender documents and tech specs under preparation Construction aimed to start by April 2015 Funding Sources: Source Concept Portion ADB Distribution network 90% of cost Government 10% of cost Beneficiaries HH connection Token contribution Private operator Generation assets 100%

2. PV Solar Mini-grid component - continued 2. PV Solar Mini-grid component Approach : All consumption revenues will be collected by the private operator to cover for their investment and O&M costs AC supply, 60 HHs for 5Hrs/day, 150 watts/HH A formal agreement between the village and the private operator is necessary before ADB disbursements Tariff structure, metering, and payment arrangements will be agreed bilaterally by the community and the operator Private operator will be selected competitively among local companies

3. Solar Lantern Charging Stations 3 villages identified for pilot projects in Mandalay Region Target to Bottom of Pyramid (poorest households) Support local business in rural off-grid areas Private company invest in a charging station and recovers investment by renting and/or charging lanterns Charging fee below cost of alternative uses (e.g. candles) ADB subsidizes a portion of the total cost to incentivize private sector to invest and train local entrepreneurs to operate the station Tech Specs and tender documents under preparation Model: 50 lanterns with 5 junction box, 6hr/day, mobile charging facility, solar lanterns selling point Expected implementation to start by March 2015

TA 8657-MYA: Off-Grid Renewable Energy Demonstration Project (Phase 2)

Off-Grid RE Project Outline Capacity Development Technical Assistance ADB approved the TA on 23 May 2014 Funding: US$2 million (Japan Fund for Poverty Reduction/JFPR) Executing Agency (EA): Ministry of Livestock, Fisheries and Rural (MLFRD) Development (MLFRD), Implementation Agency (IA): Department of Rural Development (DRD) Implement an off-grid renewable energy demonstration project that will: Support the design and install renewable energy systems in 25 villages; targeting the central dry zone (Mandalay, Sagaing, and Magway regions) Develop a geospatial least-cost energy access and investment plan for select regions and states Strengthen the capacity of government institutions to design and implement small-scale renewable energy systems Status of Implementation Mobilization of consultants: January 2015 Pictures of street lights, solar lantern shs etc

Choon-Sik Jung, SEEN/SERD Thank you for your attention! For further inquires Choon-Sik Jung, SEEN/SERD cjung@adb.org