Myanmar's renewable energy vision 2021

MYANMAR’S RENEWABLE ENERGY VISION 2021

© Hkun Lat / WWF-Myanmar

Contributors Editor-in-Chief: Shoon So Oo Technical Editor: Pyae Phyo Aung For their review and contributions, special thanks go to: David Allan, Gill Pattison, Nick Cox, Richard Harrison, Than Htay, Rafel Guevara Senga, Jean Philippe Denruyter, Jenny Calder, Sakda Thankornsakul, Kyaw San Hla, Devi Thant Cin, David Reid, Kyi Phyo, Nyein Tun, Min Chan Win, Ye Thu Win, May Thida Maung, Frank Van Der Valk, Christopher Bonzi, Ye Min Thwin, Heron Holloway, Yadanar Ei, Sai Tun Nyi, Ko Htway, Bertie Alexander Lawson, Imogen Lepere, Ugan Manandhar IES Project Team: Stuart Thorncraft, Patrick Wang, Jennifer Abedin

PARTNER ORGANIZATION BRIEF SPECTRUM (Sustainable Development Knowledge Network) is a local initiative working towards establishing mechanisms to enhance frameworks for national development in Myanmar. We aim to do this through sustainable development, better management of natural resources and by encouraging people to understand and engage with environment issues. We are passionate about the inclusion, involvement and empowerment of local people, as well as transparency and accountability.

SPECTRUM operates as an information-sharing network that connects government with businesses and communities to inform, empower and educate.

We provide resource materials and training and share relevant research and case studies in order to promote positive engagement across these three sectors.

REAM Renewable Energy Association Myanmar was established as an environmental NGO in Myanmar in 1995 and successfully registered in 2003. Since then, REAM has conducted a series of rural development activities throughout Myanmar that have aligned with public educational functions and brought food, water and energy to poor communities. Since 2012, REAM has also been involved in the national policy making process in the Energy and Environmental Resources sectors, helping promote developmental reform across the country.

The New Zealand government contributes to climate and economic resilience, inclusive development, good governance and peace in Myanmar. In the renewable energy sector New Zealand has supported increased and equitable access to affordable and reliable energy through the support of off-grid production, the development of environmental and social impact assessments to inform resource development, and through the provision of technical advice to build Myanmar’s local capacity and capability.

Smart Power Myanmar was established to accelerate the spread of decentralized renewable energy solutions in Myanmar and transform the long-term economic potential of millions of people currently without access to electricity.

Supported by The Rockefeller Foundation and managed by Pact, Smart Power Myanmar connects economically viable and reliable energy solutions (such as renewable energy mini-grids) to demand from rural families, entrepreneurs, farms and enterprises. Results include boosted incomes, thriving businesses and general economic growth.

Smart Power Myanmar lays the pathway for a sustainable, integrated approach to electrification.

IES Intelligent Energy Systems is an Australian consulting firm established in 1983 to provide advisory services and software solutions to organizations working in the energy industry.

IES specialize in taking systematic approaches to solving problems in energy markets that require consideration of energy policy, legislation, economics, finance and engineering. IES has a proven track record in advising government departments, regulators, system and market operators, transmission companies, generators and retailers in the Asia Pacific region, including Australia, the Greater Mekong Subregion, Philippines, Singapore and elsewhere.

WWF (World Wide Fund for Nature) is one of the world’s largest and most experienced independent conservation organizations, with over 5 million supporters and a global network active in more than 100 countries. WWF’s mission is to stop the degradation of the planet’s natural environment and to build a future in which humans live in harmony with nature. We aim to achieve this by conserving the world’s biological diversity, ensuring that the use of renewable natural resources is sustainable and promoting the reduction of pollution and wasteful consumption.

This project was made possible with the generous support of the Danish International Development Agency (DANIDA) and Swiss Development Cooperation (SDC).

CONTENTS PART A Foreword................................................................................... 2 First modeling in 2016..............................................................5 Searching for a green world..................................................... 6 Ethnic areas and lack of access to electricity........................... 8 Why Myanmar must conserve the value of free-flowing rivers?............................................... 9 Looking for energy democracy as a people-powered alternative solution.................................... 11 Myanmar’s electricity plan in its NDC....................................13 Myth of renewable energy: solar and wind............................. 15 Planning, policy and regulations are the key..........................16 Energy efficiency will play a critical role in demand management (Cool and Solar)..............................18 The modeling scenarios in a nutshell..................................... 20 What can Myanmar learn from Cambodia and Vietnam’s experiences?...................................21

PART B (Technical Report) Introduction............................................................................ 38 Background............................................................................. 29 Assumptions............................................................................31 Base case results......................................................................41 Increased and advanced renewable scenarios....................... 45 Main findings and conclusions................................................55 Appendix A..............................................................................57

© Shutterstock

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FOREWORD Published in 2016, Myanmar’s Electricity Vision report provided a strong case for the technical and economic feasibility of Myanmar achieving 100 per cent electrification through renewable energy by 2050. Indeed, according to statistics from the Ministry of Electricity and Energy, since publication of the report more than 50 per cent of Myanmar’s households are electrified. But there is much still to be done: Myanmar continues to face an energy deficit as communities across the country lack reliable and sustainable access to electricity.

A lot has changed over the past five years: a larger population requires more electricity, the economics and technology of renewable energy have changed massively, and also the public’s attitude towards renewable energy has changed. The objective of the revised Myanmar’s Electricity Vision (Myanmar’s Renewable Energy Vision) is, however, unchanged.

Updated with new data and new scenarios, and in collaboration with more partners than in 2016, the new report once again outlines how Myanmar can diversify its generation mix and sustainably meet its energy needs.

Within the last five years, Myanmar has developed more than 120 operational distributed renewable energy mini-grids which are transforming livelihoods in the rural off-grid space. These projects provide real and practical sustainable solutions while also offering a major investment opportunity with enormous development impact. In addition, a significant number of renewable energy projects (principally solar) have been initiated through the private sector – this is despite the concerns regarding future connectivity between the extended national grid and off-grid projects.

When delivering such projects, stakeholders still need to be convinced of the technological and economic feasibility of projects so that they are sustainable in the long run: good examples of success stories and clear communication of the facts are required for successful delivery. In 2020, a total of 1,060MW of solar project tenders were initiated in five different regions by the Ministry of Electricity and Energy. Although these projects later had to be halted, this was a bold and encouraging development.

The Increased Renewable Scenario (IRS) and Advanced Renewable Scenario (ARS) in this report are based on discussions with partners at the state and region level. It is also important to note that the Renewable Energy Vision findings indicate and contribute to Myanmar’s Nationally Determined Contribution (NDC) targets and are consistent with its baseline to 2030 and subsequently extrapolated to 2050.

The report published in 2016 laid out a roadmap for Myanmar and expanded the debate around how the country produces, manages, and consumes energy. The revised Myanmar’s Electricity Vision similarly acts as a guide towards 100 per cent renewable energy usage in Myanmar and the sustainable and inclusive development of the sector.

Gill Pattison

Nick Cox

Richard Harrison

Than Htay

David Allan

Programme Manager New Zealand MFATRenewable Energy Programme

Country Director WWF-Myanmar

CEO Smart Power Myanmar

Chairman REAM

Executive Director Spectrum

2 | MYANMAR’S RENEWABLE ENERGY VISION 2021

SPECIAL GRATITUDE GOES TO THE UNNAMED CIVIL SOCIETY ORGANIZATIONS THAT CONTRIBUTED TO THIS REPORT.

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PART A

4 | MYANMAR’S RENEWABLE ENERGY VISION 2021

FIRST MODELLING IN 2016 To initiate a broad national discussion on Myanmar’s energy future, REAM, SPECTRUM and WWF published a comprehensive study on the country’s electricity sector development plan, known as Myanmar’s Electricity Vision. This study made the case that a sector dominated by renewable energy (RE) was not only technically feasible but also as economically profitable as one made up of conventional energy sources such as coal, gas and large hydro. The study also found that the development of Myanmar’s power sector would require multi-billion dollar investments and support from development partners over the next 30 years.

Our analysis answered the following key questions: zz

How can Myanmar overcome a massive energy deficit which demands to be fixed to ensure the country’s continual development?

zz

Will Myanmar avoid the energy mistakes of neighbouring countries and bypass polluting fossil fuels, unsustainable hydro and risky nuclear power?

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Will Myanmar harness its rich renewable resources for sustainable, inclusive energy supporting sustainable, inclusive development?

Please visit www.wwf.org.mm/en/renewable_energy_vision/ for the full report and modelling.

Disclaimer The views expressed in the following articles are those of the authors and may not necessarily reflect those of the partner organizations involved in the report.

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SEARCHING FOR A GREEN WORLD

The topic of climate change and global warming has been gaining attention around the world. Scientists stress the need for a solution, warning that through delayed action we are inadvertently choosing the long-term future socio-economic conditions of all nations. At the same time, a new generation, personified in 18-year-old Greta Thunberg, urges people to speak out against global warming and pressures governments towards stronger policies. The World Health Organization (WHO) has warned that air pollution has become more severe; oceanic experts tell us that water pollution is rising and coral reefs are decaying.

6 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Finally, some of the large societies only is taking notice. On Earth Day and at the Rio+20 Earth Summit, leaders and relevant stakeholders from around the world discussed how to preserve the environment. The annual World Environment Day is still celebrated on 5 June every year, and the COP (Conference of the Parties) established in 1995 continues in its 26th iteration this year.

that air pollution weakened our bodies prior to the onset of the pandemic. This letter – endorsed by the Global Climate and Health Alliance – outlined a “healthy recovery” that necessitated the acceleration of the renewable energy sector and the elimination of hundreds of billions of dollars spent on oil, gas and coal.

The COVID-19 pandemic could be a warning of what is to come. There is plenty of global research suggesting that if climate change is not managed we could see a resurgence of historic diseases as well as the appearance of new ones.

This has prompted 200 medical organizations, representing 40 million people worldwide, to demand on 26 March 2020 that G7 leaders recognize that the world needs a more environmentally-friendly approach to health. As argued by Miguel Jorge, president of the World Medical Association, healthy living depends on a healthy planet. We urgently need a comprehensive approach and a restoration of a healthy and green environment. The 20-member body, which represents 90 per cent of global GDP, should prioritize investment in public health, clean air and water, as well as stable climate issues so to build resilience in the face of future health crises.

COVID-19 has demonstrated what years of research and development have suggested: as human activity reduced around the world, clear snow-caps were found in the Himalayas and those living in polluted countries finally breathed fresh air again; rivers in Myanmar such as the Chindwin are as clear and cool as before; once again we can smell the scent of natural forests, mountains, water, air and land – all gifts from nature. We hope decisions will be made to standardize laws and regulations that protect the environment and to build a future that utilizes modern technology to protect our planet – our home. © Shutterstock

However, no definitive results have been achieved and longstanding arguments between committed parties and nonsignatories are still raging. Meanwhile, the weather is getting worse.

The COVID-19 pandemic is not a crisis that should be separated from that of climate change. According to health experts from WHO, a letter written by the International Council of Nurses, World Council of Medical Nurses, World Medical Association and 200 other organizations, stated

Finally, we need to truly understand the meaning of the phrase ‘zero setting’. Although scientists understand it, ordinary people have many views, not all of them good. Zero setting doesn’t mean ‘give up’– far from it. It is possible to live in harmony with nature and this should be considered in society’s rehabilitation. All countries need to work together to come up with the right solutions for economic development and social issues. We can collaborate in an honest, conscious way to create a green world for future generations – even if that means we need to start all over again.

Devi Thant Cin, Myanmar Green Network

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ETHNIC AREAS AND LACK OF ACCESS TO ELECTRICITY Despite the different sources, there are still many villages (both those close to towns and those in remote rural areas) that do not have access to electricity or have to source it themselves. In Kayin and Mon states and Tanintharyi Region, some people living in more remote villages are compelled to use a combination of kerosene and diesel lamps, candles, dynamo engines, solar and batteries. It should be noted that the presence of telecommunication towers in these remoter areas should not be regarded as a sign of broad electrification, as many of these towers are powered by solar panels and batteries.

Solar and batteries are the primary source of energy/electricity in the majority of villages however, as the solar PV (photovoltaics) cannot produce as much power during the rainy season.

Many people also use kerosene lamps and charger lights. Micro-hydropower systems have been found in a few villages where there are streams nearby, however the number of users is small.

© Hkun Lat / WWF-Myanmar

Myanmar is a developing country which underwent a transition to democratic governance only a decade ago. There are several sectors that need to be improved in the country: energy is a major one that requires reform as there is currently not enough electricity to meet demand.

At present, electricity is produced from different sources and technologies, as shown in the table below.

Table 1. Myanmar Electricity Generation and Tariffs1,2 Source

Percentage

Electricity Production (MW)

Electricity Tariff Rate (MMK/kWh)

Hydro

54%

3,262

12 MMK (MOEE) 75 MMK (Private Company)

Natural Gas

41%

2,496

150-190 MMK

Coal

2%

120

150-190 MMK

Diesel

2%

116

150-190 MMK

Solar

1%

40

195 MMK

In Tanintharyi, the electricity tariff rate is higher than in other regions as electricity is produced and supplied by private companies. In villages where people have very low incomes, NGOs have had to donate solar power systems and batteries. This is a problem found nationwide: while the electricity requirement is not met in rural regions where the majority of ethnic groups live, it is also lacking in the densely populated central areas.

Recently the government has been calling for investment from international companies in order to electrify nationwide. But this goal is still a long way off, particularly for villagers in ethnic areas. It will take time for ethnic people to have access to the electricity they need.

Sakda Thankornsakul & Kyaw Zan Hla, ethnic people of Myanmar

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2.

http://moee.gov.mm/mm/ignite/page/593, accessed on 15 July 2020 https://www.mmtimes.com/news/myanmars-electricity-losses-shrink-more-investments-spending-needed-meet-demand.html

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WHY MYANMAR MUST PRESERVE FREE-FLOWING RIVERS Free-flowing rivers are the freshwater equivalent of wilderness areas. They provide a crucial habitat for a host of animals and support the survival of both people and nature.

Rivers also underpin the country’s landscapes and contribute to economic growth, food security and human well-being.

Because new hydropower dams have severe impacts on the benefits that free-flowing rivers provide, the IRS and ARS propose that no dams are built within today’s free-flowing river stretches.

What makes undammed rivers so special?

A river that has retained its connectivity from its source to its outlet is considered ‘free-flowing’. In free-flowing rivers, ecosystem functions and services are largely unaffected by changes to connectivity, allowing for unobstructed movement and exchange of water, energy and material like sediment within the river and to the surrounding area. Animals, such as river dolphins and fish, can swim up and downstream and into tributaries at will, while the river itself is able to swell and shrink naturally over the year and replenish groundwater sources.

Free-flowing rivers are among the most diverse and productive ecosystems on the planet, underpinning entire landscapes and contributing to economic growth, food security and human wellbeing. But free-flowing rivers are disappearing globally – only

about a third of the world’s longest rivers (>1,000km) are still free-flowing, with dams being the primary driver of this decline.3 The lifeblood of Myanmar While very long free-flowing rivers have become a rarity globally, Myanmar is home to three of them: the Ayeyarwady, its tributary the Chindwin, and the Salween. These are incidentally also the only remaining very long free-flowing rivers in mainland Southeast Asia.

For many people in Myanmar4, healthy, free-flowing rivers such as these, are an important part of their livelihoods, culture and spiritual life5. For example, fisheries play a crucial role in food security, providing approximately two thirds of animal protein in a typical diet. Additionally, more than six per cent of the population is directly employed in the fishery and aquaculture sectors.

Rivers also deliver sediment to deltas and coastal areas which in turn ensures coastal stability, fertile agriculture and productive coastal fisheries. For the Ayeyarwady River alone, ecosystem services were quantified to be worth US$2-7 billion a year (this makes up between 5 and 16 per cent of the GDP per capita)6. Furthermore, Myanmar’s rivers are home to species seen nowhere else on earth, making them unique.

© Shutterstock

3.

4.

5.

6.

Grill et al. 2016. Mapping the world’s free-flowing rivers.

WWF-Myanmar. 2018. The Ayeyarwady River and the Economy of Myanmar.

Binney et al. 2017. Economic Valuation of Ecosystem Services in the Ayeyarwady Basin. Ayeyarwady State of the Basin Assessment (SOBA) Report 5.1.

HIC. 2017. Ayeyarwady State of the Basin Assessment (SOBA); Synthesis report, Volume 1.

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Building large dams on free-flowing rivers is not sustainable However, these rivers – and the benefits they deliver – are increasingly threatened because of large hydropower dams currently planned all over Myanmar. These dams would severely impact connectivity. A recent study showed that, while very long rivers in Myanmar are still free-flowing, approximately every fourth medium to long river (between 100 and 1000km in length) has been affected by dams, especially within the Sittaung River basin. But the study also shows that if current plans for large dams go ahead, all rivers longer than 500km would cease to be free-flowing7.

The impacts of large dams on livelihoods and biodiversity cannot be underestimated when thinking about sustainable development scenarios. Therefore, the IRS and ARS propose that no new large dam projects are implemented within the timeframe of the scenario and that projects which have already started do not go ahead if they are to be built within a free-flowing river. To implement this assumption into modelling, we referred to a recent study on the connectivity of Myanmar rivers: projects that would impact entire rivers of high connectivity or impact river-stretches of 100km still flowing-free (being a tributary to an entirely free flowing river) were disregarded.

The value of free-flowing rivers is fundamental to regional biodiversity, the economy of the country and the health and well-being of Myanmar’s people. Sustainable development demands their preservation.

Christopher Bonzi, WWF

© Shutterstock

7.

WWF-Myanmar. 2020. Mapping Myanmar’s Free-flowing Rivers. Assessment of Current and Future Impacts of Dam-Infrastructure Development on River Connectivity.

10 | MYANMAR’S RENEWABLE ENERGY VISION 2021

LOOKING FOR ENERGY DEMOCRACY AS A PEOPLE-POWERED ALTERNATIVE SOLUTION

© Kyi Phyo

Ethnic conflict and political instability are just two of the many challenges that Myanmar is facing. The energy sector itself – dominated by centralized planning with mismanagement and corruption due to a lack of transparency – is another.

alongside communities to develop decentralized energy systems in many rural areas throughout the country.

The off-grid generation capacity is a huge opportunity – especially in Shan State where development has progressed further than in other states and regions.

Without support from government and international organizations, off-grid energy projects in places like the Danu Self-Administrative Zone in Shan State are being developed by local communities themselves, just like other off-grid projects in more remote areas of Shan State. As union and state governments have little to no control over energy policies, plans or budgets, local developers have worked

When implementing off-grid projects such as mini-hydro systems, it is of utmost importance that the community in question initiates the project and that community members participate throughout the entire development period. It is necessary to discuss and decide on a feasible management system of watersheds so to ensure that the distribution of energy and resources considers the impact on users from

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other communities and to ensure there are technicians who can operate and maintain the system. Villagers should also invest in the mini-hydro equipment themselves to avoid it becoming a top-down engineer project.

Furthermore, it is clear that thorough community-approached research can integrate local communities and better prepare for common resource governance issues. Basin-wide issues can be addressed through participatory research approval and bottom-up approaches.

© Kyi Phyo

A ram pump system which is used for agriculture and providing electricity for households in a village in Pindaya, Danu, a self-administrative region of southern Shan State.

Despite ongoing conflicts, Myanmar has a history of locally developed, small-scale renewable energy systems that have proven their efficacy over the past 30 years. There are more than 6,000 small hydro systems and 10,000 biomass gasifiers that have been implemented by local developers without foreign technology and enabling policy. Solar power systems have also emerged in more recent years, supporting agriculture end uses and bringing significant benefits to rural farmers across the country. These clean, low-cost energy solutions are attributed to a thriving community of grassroot entrepreneurs whose resourcefulness has brought transformative impacts to thousands of rural communities.

Kyi Phyo, Foundation for Renewable Energy and Ecology (FREE)

© Kyi Phyo

U Kyaw Lwin, in Tat-gone village, showing self-developed mini-hydro systems that have been running for many years. Hundreds of different small-scale mini-hydro systems in Shan State play a very important role in rural electrification development.

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MYANMAR’S ELECTRICITY PLANS IN ITS NDC With the business-as-usual plans of 23.594GW by 2030, based on the National Electricity Master Plan (2014), Myanmar has made slight changes to its energy-mix plans in its Nationally Determined Contributions (NDC) and as a part of its commitments to the Paris Agreement.

Under the unconditional targets Myanmar will decrease the share of coal by 54.4% (4.32GW) by 2030. However with international support, Myanmar intends to decrease the share of coal by 73.29% (5.82GW) by 2030 compared to business-as-usual targets.

Table 2: Business-as-usual Energy-Mix Plan by 2030

The share of new renewables under the unconditional targets will remain the same as business-as usual, but under conditional targets, the share of renewables will increase by 53.5% (1.07GW). With the socio-environmental issues related to hydropower and also given the intermittent characteristics of the new renewable technologies, Myanmar intends to: substantially decrease the share of hydropower by 42.04% (3.74GW) under unconditional targets and by 36.19% (3.22GW) under conditional targets; limitedly scale up renewable energy technologies; and increase the share of natural gas and LNG by 27.42% (1.305GW) under both unconditional and conditional target scenarios.

Generation Technology

MW

Capacity Factor

MW (%)

RE: (Hydro)

8,896

RE: Other (Solar & Wind)

2,000

Coal / Thermal

7,940

0.8

4,758

0.8

Gas Total

Efficiency

38% 9%

23,594

33%

45%

20%

60%

100%

Based on current energy supply and demand scenarios, Myanmar now aspires to achieve over 18GW by 2030 in the new energy-mix targets, compared to the business-as-usual plans of 23.594GW. In the new target the share of coal in the energy-mix substantially decreases and has the potential to decrease still further based on the availability of international support. Myanmar therefore has set two targets in its NDC for the energy sector – unconditional targets and conditional targets.

Table 3: Unconditional Energy-Mix Targets by 2030 2020 Generation Technology RE: Hydro

MW

2025 %

MW

2030 %

MW

%

2,771

46.5%

3,388

31%

5,156

28%

RE: Other (Solar & Wind)

40

0.7%

1,440

13.%

2,000

11%

Natural Gas / LNG

3,031

50.8%

5,031

46%

6,063

33%

120

2%

720

6.5%

3,620

20%

-

-

400

3.5%

1,400

8%

5,962

100%

10,979

100%

18,239

100%

Coal Intl. Interconnection Total

Table 4: Conditional Energy-Mix Targets by 2030 2020 Generation Technology RE: Hydro RE: Other (Solar & Wind) Natural Gas / LNG Coal Intl. Interconnection Total

MW

2025 %

MW

MW

%

46.5%

3,388

32%

5,676

31%

40

0.7%

1,680

15.83%

3,070

17%

3,031 50.8%

6,962

The NDC also outlines the need for nearly US$1.2 billion to address policy, technical analysis, capacity building, improving energy efficiency and blending finance to de-risk investments in renewables. Thus, with these investments coming in, Myanmar will be able to avoid 105.25 million tCO2e by 2030 under unconditional targets and 144.04 million tCO2e by 2030 under conditional targets based on the business-as-usual emissions of 297.01 million tCO2e by 2030.

2030 %

2,771

120

Storage or Battery Energy Storage Systems (BESS) offer solutions to overcome the intermittent quality of the new renewable energy technologies. With renewable energies and storage also becoming cheaper, the deployment and demonstration of the combination of such technologies together will be key to ensure the rapid phasing out of fossil fuel based technologies, which will in turn help avoid or reduce GHG emissions. To make this a reality, Myanmar will need international technical and financial support as soon as possible, including support to overcome policy barriers to create the right environment for the deployment of new renewables.

5,031

47.37%

6,063

33%

2%

120

1.1%

2,120

11%

-

400

3.7%

1,400

8%

100% 10,619

100%

18,329

100%

Under the unconditional targets (18.239GW), Myanmar intends to mobilize domestic resources. Under conditional targets (18.329GW), Myanmar expects international assistance to meet energy targets set to avoid CO2 emissions.

Moreover, despite existing renewable energy targets in the NDC, Myanmar has also identified potential renewable energy projects (solar and wind) including hydro (though it must be executed in a socio-environmentally sensitive way) for the further scaling-up of clean energy. However, pre-feasibility and feasibility assessments are pending and currently not addressed in the NDC as part of the targets.

This is also complemented by the fact that Myanmar intends to peak its share of coal targets by 2030 and will proceed to slowly phase out coal by 2050, which means the identified projects need to progress as soon as possible to understand this goal`s feasibility, economy and deployment.

Ugan Manandhar, WWF

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MYTH OF RENEWABLE ENERGY: SOLAR AND WIND In Myanmar, myths about solar energy abound. One example is that solar is expensive. Another is that solar will destroy the stability of the national grid infrastructure. The widespread belief in these myths hinders the successful development of solar power plants, especially on the commercial to utility scale.

In the early 2000s, these myths were true to some extent. However with the current innovation and evolution of technology, they have become legends of the past.

Based on the 2020 Incoterms8 that EAM has sought for CIF Yangon’s offer, the cost of solar panel modules is plummeting to US$0.22 per Wp for large scale projects – an astounding drop compared to a decade ago. Moreover, the efficiency of the module has steadily improved by more than 20 per cent, providing better annual yield. If we combine bifacial modules9 with solar tracking systems, efficiency can easily improve within the range of 22-28 per cent.

With greater yield and less space requirement, the Levelized Cost of Energy (LCOE) from a solar power plant is now more cost effective than other generation technologies, including fos sil-fuel-based generation. The average LCOE generated by large solar plants has fallen to US$50/MWh since October 2019, according to the Bloomberg NEF study10.

Based on 2019 MOEE data and the EuroCham Myanmar Guidebook11, Myanmar has a capacity of 5504MW and a generation capacity of over 20,000GWh. Hydropower contributes to the largest share of electricity generation accounting for 55 per cent, followed by natural gas at 42 per cent and coal at 2 per cent. Generation from diesel is negligible. This mix of technologies presents a major opportunity for Myanmar to integrate variable renewable energy. Natural gas plants have a high ramp up and ramp down rate, which could compensate for solar’s variable qualities.

Moreover, the availability of hydro and solar energies is a perfect match for each other. During rainy season, when there is less sunshine available, a greater share of the energy demand can come from hydro. During summer, when there are less water resources, solar can produce relatively stable energy during the daytime.

In turn, this contributes to the energy mix, lowering the cost during the summer months and actually improving the overall reliability of the energy system. In addition, due to improvements in power electronics and control, it’s relatively easy to manage the variability of solar output. As such, the second myth of solar energy – that it affects grid stability – does not hold up as long as solar power plants are designed and installed according to existing grid infrastructure capacity.

EAM believes that due to the downward trend of the costs of energy storage technology, in the near future we will reach a point with 100 per cent stability and constant generation from renewable energy at a cheaper cost than other generation technologies to integrate into the existing grid. With the recent announcement of 1GW solar tender

by MOEE and considering the above two factors, we could expect to see such utility scale solar power plants with cheaper tariff rates (possibly below US$0.06 per unit) without negatively affecting the stability of the grid in Myanmar within the coming year.

Min Chan Win and Ye Thu Win, EAM 8.

9. © Shutterstock

10.

11.

“Incoterms®” is an acronym standing for international commercial terms and a trademark of the International Chamber of Commerce, registered in several countries. The ICC developed Incoterms in 1936 and updates them periodically to conform to changing trade practices.

Bifacial modules produce energy from the rear side of the module as well as the front, working like two solar panels attached together. They also harness the additional reflected energy from the ground. https://www.pv-magazine.com/2020/04/30/lcoe-from-large-scale-pv-fell-4-to-50-per-megawatt-hour-in-sixmonths/ https://eurocham-myanmar.org/library/

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PLANNING, POLICY AND REGULATIONS ARE THE KEY Energy policy and regulation are such diverse topics that many definitions have been used to try and frame them. A host of descriptions exist and a number will be drawn on here as relevant for Myanmar. As defined by Renn in The Role of Public Participation in Energy Transitions, energy policy can be considered a subset of “economic policy, foreign policy, and national and international security policy”12. Further, Renn envisions policies as embedded in a socio-technical system formed through the interactions of technical, economic, political and social factors13. The subject matter energy policy deals with are the perspectives and factors related to energy growth and usage, including energy production, distribution and consumption14. Zhenya Liu describes energy policy as the regulator and controller of energy development, as the driver of innovation in energy technology, and as a tool for guidance at the macro level and for management at the micro level15. This encompasses and allows for the adjustment of relationships between the private and public sectors and their surrounding systems, as well as the people who are the critical end users.

Energy is one of the most fundamental resources in modern society16 – yet one which has a global impact due to climate change effects. Energy supply accounts for around 60 per cent of global greenhouse emissions, with renewables currently only providing 17 per cent of energy supply; IPCC warns that 85 per cent needs to come from renewables by 205017 to avoid the worst impacts of climate change. It’s clear that climate change avoidance must be a key policy driver and that roadmaps and targets for meeting SDG 7 by 203018 should be foremost in policy makers’ minds.

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Foran et al19 undertook a policy analysis specific to the hydropower sector in Myanmar. This highlighted how important the World Commission on Dams 200020 strategies prioritizing “gaining public acceptance” were, and that most policies being used in Myanmar were failing. They observed that earlier policy failures had opened the way for more legitimate policy regimes and approaches. The extensive consultations in the Strategic Environmental Assessment of Hydropower Sector in Myanmar21 have already provided much of the information necessary to guide what future hydropower projects should look like for successful policy acceptance.

Spectrum’s experience shows that Myanmar policy perspectives must include: zz

zz zz zz zz zz zz zz

Gender aspects, due to women’s higher risks of energy poverty and due to women bearing a larger burden of work both as a result of inadequate energy access and their time not being appropriately valued22,23 Equity and access issues for rural / urban developments Context factors and particularly the energy resource availability Massive global changes in renewable markets and Levelized Cost of Energy (LCOE) pricing Status, expected operating life and limitations of existing infrastructure Externalities and environmental impacts on river basins of hydropower Anti-corruption, transparency and accountability Integration of responsible business practice

Kohl, W.L. 2004. National Security and Energy. In: Encyclopedia of Energy.

Renn, O. 2020, Introduction. In Renn,O., Ulmer,F. and A. Deckert. The Role of Public Participation in Energy Transitions, Academic Press, 2020.

Islam,M.M and Hasanuzzaman, M. 2020. Introduction to energy and sustainable development. In: Energy for Sustainable Development.

Zhenya Liu. 2015. Global Energy Interconnection.

The role of the electric grid in Switzerland’s energy future, blog, https://www.mckinsey.com/industries/electric-power-and-natural-gas/our-insights/the-power-and-gas-blog/therole-of-the-electric-grid-in-switzerlands-energy-future. Tamara Grünewald, Diego Hernandez Diaz. https://www.cdp.net/en/policy-and-public-affairs/sustainable-development-goals https://www.unescap.org/resources/energy-transition-pathways-2030-agenda-sdg7-roadmap-indonesia# Foran, T., Kiik, L., Hatt, S., Fullbrook, D., Dawkins, A., Walker, S., and Y. Chen. 2017. Large hydropower and legitimacy: A policy regime analysis, applied to Myanmar. Energy Policy (Volume 110, November 2017) pp 619-630.

World Commission on Dams 2000. 2000. Dams and development. A new framework for decision-making. In: The Report of the World Commission on Dams, Earthscan, London.

Strategic Environmental Assessment of Hydropower Sector in Myanmar, https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/ hydro+advisory/resources/sea+of+the+hydropower+sector+in+myanmar+resources+page, updated December 2020.

Sunikka-Blank, M. 2020. In: Inequality and Energy.

Spectrum. 2019. Gender Analysis for the Promotion of Rural Electrification in Myanmar, Report for GIZ Promotion of Rural Electrification (RELEC) Project, Myanmar.

16 | MYANMAR’S RENEWABLE ENERGY VISION 2021

How such complexity can be included in the planning and policy process also needs careful consideration. A range of planning types are needed for such complexity and it is suggested that a blend of four types will function best – no single process can cover all of the needs. Each type offers benefits and this publication can contribute significantly with critical modelling information to help the integration of every one of these planning approaches. zz zz zz zz

Comprehensive Rationalism24 – a more traditional centralized planning approach Disjointed Incrementalism25 – an approach that deals better with uncertainty / risk Mixed Scanning26 – an intentional system for including multiple approaches Communicative Planning27 – a blended approach recognizing critical social aspects

They conclude that while there is evidence to support bundling different policy instruments, at the end of the day “applying policy depends on an accurate understanding of the problem, the behaviour of stakeholders, underlying motives, and a host of social, technological, economic, environmental and political factors that evolve over time and largely frame the eventual effectiveness of any given policy mix”. Further, they suggest drawing “on consumer behaviour and routes by which consumption processes can be modified: studies of innovation, of science and technology, sociology and psychology, and also consideration of the barriers that inhibit change”.

Valentine et al28 examine policy rationales, theory and logic, and the rationale for governments to intervene in policy.

They argue that because of the imperfections of energy markets, governments should get involved in altering market and consumer behaviour. Seven market force imperfections described are: “Imperfect and asymmetric information, high transaction costs, limited cognitive abilities, imperfect competition, external costs and benefits, excludability and limits to monetization”. These forces can inhibit investment in clean energy technologies and retard the market development of cheaper technologies and money-saving ideas.

Valentine et al employ the well-used policy tool framework NATO (Nodality, Authority, Treasure, Organization) to describe the types of policies that have been utilized to influence behaviour in the energy sector and also describe various policy instruments that governments can use to change market dynamics. Yet policy instruments are not designed as stand-alone tools and they suggest that adopting a portfolio approach to policy planning – which combines multiple policy instruments – has much merit to help fit complex contexts.

Figure 1: Examples of different types of energy policy instruments (Source: 28. Valentine et al., 2019) Taking into account the complexity of factors, it is apparent that a holistic systems approach drawing on the wide range of factors and a combination of planning techniques are what will be most beneficial for policy formulation in Myanmar.

The scenario and modelling presented in this publication makes an enormous and timely input into the process.

David Allan, Spectrum Sustainable Development Knowledge Network

24.

25.

26.

27.

28.

Olugbenga, E.O. 2017. Applicability and Adaptability of Some Public Policy Models to African Countries. International Journal of African and Asian Studies www.iiste.org ISSN 2409-6938 An International Peer-reviewed Journal (Vol.30) pp 55-62.

Lindblom, C.E. 1959. The Science of “Muddling Through”. Public Administration Review (Vol. 19, No. 2) Spring 1959, pp 79-88.

Etzioni, A. 1967. Mixed-Scanning: A “Third” Approach to Decision-Making. Public Administration Review, (Vol. 27, No. 5) December 1967), pp 385-392.

Bolton, R. 2005. “Habermas’s Theory of Communicative Action and the Theory of Social Capital”. Paper read at meeting of Association of American Geographers. (Original Habermas papers in German.)

Valentine, S.V., Brown, M.A. and B.K. Sovacool. 2019. Empowering the Great Energy Transition, Policy for a Low-Carbon Future, Columbia University Press, New York, with figure 6.1 from p 152 and quotes from pp 176 and 178.

17

ENERGY EFFICIENCY WILL PLAY A CRITICAL ROLE IN DEMAND MANAGEMENT (COOL AND SOLAR)

© Shutterstock

© SE4All

To cut greenhouse gas emissions and tackle the climate crisis, we need to rapidly change how we produce and consume energy. Using energy more efficiently and sourcing energy through renewables (rather than fossil fuels) can play a massive role in reducing global emissions.

thereby exacerbating the sector’s impact on the climate.

The people of Myanmar show a strong preference for air conditioning in major cities. Whether going to a shopping mall or a small grocery shop, air conditioning is perceived as representative of a certain standard of living.

But as the world warms, cooling services will also be needed more and more. And with that, the demand for energyintensive technologies such as air conditioners will grow,

Rooftop solar energy is a versatile solution for buildings and cities, and is probably the sustainable local energy source with the largest global potential. In cities with a warm

18 | MYANMAR’S RENEWABLE ENERGY VISION 2021

climate, energy efficient and passive cooling solutions are one of the major sources of ‘negawatts’– energy that we don’t have to produce or use. While cooling is essential to meet sustainable development goals, it also presents a very significant threat to the climate. Nearly 20 per cent of the total electricity used in buildings across the globe is spent on cooling technology like air conditioners and electric fans. Over the next three decades, the demand for cooling is expected to become one of the top drivers of increased energy demand. Especially in tropical cities like Yangon and Mandalay, air conditioning is usually estimated to account for 40-50 per cent of a city’s electricity consumption.

It doesn’t need to be like this – cooling can be much more efficient and demand less energy. This can be done by reducing our need for cooling through improved ‘passive’ cooling solutions (such as better building insulation, optimized shading solutions and cool roofs), implementing robust standards for cooling appliances and installing more rooftop solar to meet the growing electricity demand. Especially in Yangon, many rooftops become high-end restaurants and bars which can easily utilize rooftop power.

Both solutions create the perfect pairing. The hotter the sun, the higher the solar production and the greater the need for cooling. Solar energy can directly provide energy to cooling systems, thereby reducing the need for electricity from large power stations far away and alleviating pressure on power lines.

Energy efficiency measures can be done in every household or building. Here are three steps we recommend: Step 1: Understand your electricity consumption Step 2: Reduce consumption by focusing on cooling Step 3: Install solar Contrary to local myths, most of the time rooftop solar does not lead to grid issues. On the contrary, by reducing the electricity load of buildings when electricity demand is peaking, solar and efficient cooling actually alleviate pressure on the grids.

Jean-Philippe Denruyter and Jenny Calder, WWF

© Shutterstock

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THE MODELLING SCENARIOS IN A NUTSHELL Three scenarios – Base Case, Increased Renewable Scenario and Advanced Renewable Scenario – were developed for the period 2021-2050. To compare the ambition with Myanmar’s national plans (including NDC), the results at 2030 are highlighted.

Base Case refers to the mostly business-as-usual scenario of the NDC. With a higher percentage of coal, gas and hydropower (33%, 21% and 30% respectively), it projects limited inclusion of new renewables (9%) in the national mix by 2030. The Base Case will also serve as the baseline for analyses on LCOE, emissions and energy security.

Increased Renewable Scenario (IRS) aims to remove coalfired power from the generation mix and reduce reliance on

gas and hydropower (12% and 9% respectively). IRS also increased solar, wind and other forms of Variable Renewable Energy sources (VRE) (14%, 8% and 23%) while introducing green hydrogen (33%) by 2050.

Advanced Renewable Scenario (ARS) is developed with the assumption that renewable energy technologies develop faster than IRS. ARS is inspired by the development of the Electric Vehicles (EV) sector which is developing more rapidly than experts projected a decade ago. ARS expects faster and cheaper improvements in green hydrogen (43%) while wind, solar and VRE occupy 12%, 13% and 23% respectively. ARS proves that Myanmar can develop with 100% renewable energy by 2050.

© Shutterstock

20 | MYANMAR’S RENEWABLE ENERGY VISION 2021

WHAT CAN MYANMAR LEARN FROM CAMBODIA AND VIET NAM’S EXPERIENCES? The outlook is bright for solar power in Myanmar and the experience of solar power developments in Viet Nam and Cambodia may help Myanmar to navigate its own path to an even brighter solar future.

Myanmar’s rapidly developing economy and increasing rural electrification is ramping up power demand while supply is hampered by the long development time frames for new hydro and thermal generation plants. Stopgap measures to install thermal peaking plants are not a sustainable solution because of their higher power costs and associated greenhouse gas emissions.

This challenge has highlighted the importance of diversifying Myanmar’s generation mix and in particular developing solar power, which has become a commercially viable generation option for grid supply. Importantly it is relatively fast to develop and is suited to a distributed generation strategy that can mitigate grid bottlenecks.

The government of Myanmar has recognised this opportunity and is now fast tracking its grid solar power programme. This is therefore a good time to reflect on the experiences of other Southeast Asian countries that have already started on their grid solar roll outs, in particular Viet Nam and Cambodia.

Both Viet Nam and Cambodia have established grid solar programmes over the last three years under a private sector development model and have already achieved significant scale with this approach. This rapid development has been driven by the relatively high levels of solar irradiation in the region, reducing equipment costs and encouraging private sector investors and clear government plans. Viet Nam now has around 5,500MW of approved projects in operation or under construction and Cambodia has around 400MW. The recent competitive solar tender in Cambodia has highlighted just how cheap solar power in the region could become. In Cambodia’s case, their pilot solar auction resulted in an announced tariff of US3.877 cents/kWh. It should be noted that this headline rate is not what it seems, as the tariff does not include the cost of the land or transmission connection assets, and the project received concessionary finance. Investor friendly PPA provisions may have also helped to keep the tariff low. Notwithstanding these circumstances, it is clear that solar power costs are continuing to decrease and the success of Cambodia’s pilot demonstrates the benefits of well-designed and managed competitive auction systems.

Viet Nam has taken a different approach which is also proving to be effective but was perhaps a costlier way of kick-starting their solar power sector. In 2017, Viet Nam introduced an attractive solar feed-in-tariff (FIT) for projects

meeting defined efficiency standards and commissioning timetables. The initial FIT was US9.35 cents/kWh, linked to the US dollar, but not inflation adjusted and offered with a standardized Solar Power Purchase Agreement (PPA) terms.

This resulted in a very good private sector response with around 4,500MW capacity already installed and a further 1,000MW expected to be commissioned by the end of 2020.

The FIT rate in Viet Nam was recently reduced to US7.09 cents/kWh and the Vietnamese government has signalled their intention to replace the FIT regime with competitive auctions.

Despite their success, Viet Nam’s approach to date has not taken full advantage of competitive market forces to minimize tariffs. Higher FIT rates were probably also needed to offset concerns over the PPA terms: there was no take or pay provision meaning that developers were shouldering the curtailment risk. Other commercial terms deterred international investors and lenders, who largely chose not to participate.

So what can Myanmar learn from these two different approaches? While the underlying economics of solar power in Myanmar – such as the levels of solar irradiation and the equipment costs – are very similar to those in Viet Nam and Cambodia, there are other important factors that will influence solar power costs for Myanmar.

Firstly, it is now clear that a well-designed and managed competitive auction for private sector investment in solar power projects is very effective in securing competitive prices under the single buyer market model. This should be the approach for Myanmar.

Secondly, it is also clear that creating an attractive opportunity for private sector investment is equally important. Investor expectations for their return on investment is closely linked to the risks they are required to bear: in particular the country’s sovereign risk, tariff currency and inflation risks, as well as project specific risks to be taken by the developer under the PPA terms. Myanmar will need to find the right balance between PPA terms that encourage sufficient competitively priced private sector investment and terms that are more favourable to the government. The level of response and offered prices for Myanmar’s recent pilot solar tender round should indicate if Myanmar currently has this balance right.

21

22 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Another important input to the tariff is the cost of land. This can be a significant part of the development cost for solar projects. Options to minimize these costs need to be well considered in planning future auctions.

Underlying these considerations is the importance of having a sound regulatory framework and clear country road map for the sector. As part of this, Myanmar should also consider encouraging smaller scale distributed solar power installations which can make an important local contribution to electricity supply without the need for expanding transmission and distribution capacities. While FITs are not well suited for grid connected solar projects, they do have their place for incentivizing small-scale solar projects ‘behind the meter’, such as for domestic rooftop installations. In this application FIT rates that are economically cost neutral, along with a clear regulatory framework, could result in a significant additional contribution from distributed solar power.

Looking to the future, Myanmar has the opportunity to substantially increase the generation contribution from solar power, provided that the national power system is able to accommodate the intermittent nature of the solar output without destabilizing the system operation or overloading transmission links. To avoid these problems, Myanmar will need to strengthen its power system planning and operation, including the provision of ancillary services, to suit the planned level of solar power injection into the grid.

David Reid, Independent Advisor for New Zealand’s Official Development Assistance Programme in Southeast Asia

© Shutterstock

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PART B: TECHNICAL REPORT (SCENARIOS)

DISCLAIMER This report has been prepared by Intelligent Energy Systems in relation to the provision of consulting services for this project.

This report is supplied in good faith and reflects the knowledge, expertise and experience of the consultants involved. In conducting the research and analysis for this report, Intelligent Energy Systems has endeavoured to use what it considers is the best information available at the date of publication. Intelligent Energy Systems makes no representations or warranties as to the accuracy of the assumptions or estimates on which the forecasts and calculations are based.

Intelligent Energy Systems makes no representation or warranty that any calculation, projection, assumption or estimate contained in this report should or will be achieved or is or will prove to be accurate. The reliance that the Recipient places upon the calculations and projections in this report is a matter for the Recipient’s own commercial judgement and Intelligent Energy Systems accepts no responsibility whatsoever for any loss occasioned by any person acting or refraining from action as a result of reliance on this report.

© Copyright Intelligent Energy Systems. No part of this document may be used or reproduced.

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TABLE OF CONTENTS 1

2

3

4

5

6

Introduction.................................................................................................... 28 1.1

Structure of the Report....................................................................... 28

1.2

Notes.................................................................................................... 28

Background..................................................................................................... 29 2.1

Myanmar Nationally Determined Contributions............................... 29

2.2

Power Sector Vision Scenarios........................................................... 29

Assumptions....................................................................................................31 3.1

Modelling tool......................................................................................31

3.2

Network Model and Transmission......................................................31

3.3

Demand (Grid and Off-grid)............................................................... 32

3.4

PDP Outlook........................................................................................ 35

3.5

Technology Options............................................................................ 35

3.6

Hydro Projects..................................................................................... 37

3.7

Capital and Fuel Costs......................................................................... 37

3.8

Solar and Wind Resource Potential.................................................... 38

Base Case Results.............................................................................................41 4.1

Capacity and Generation Outlook.......................................................41

4.2

Regional Supply Mix and Flows......................................................... 43

4.3

Dispatch Profiles................................................................................. 43

4.4

Emission Levels................................................................................... 43

4.5

Technology and System Costs............................................................. 43

Increased and Advanced Renewable Scenarios............................................. 45 5.1

Capacity and Generation Outlook...................................................... 45

5.2

Regional Energy Flows........................................................................ 47

5.3

Dispatch Profiles................................................................................. 50

5.4

Technology and System Costs............................................................. 52

5.5

Emissions Levels................................................................................. 54

Main Findings and Conclusions..................................................................... 55

Appendix A A.1

Prophet Market Simulation Tool.........................................................57 Prophet Modelling Flows.....................................................................57

26 | MYANMAR’S RENEWABLE ENERGY VISION 2021

GLOSSARY Acronym

Definition

ARS

Advanced Renewable Scenario

BAU

Business-as-usual BASE case

BESS

Battery energy storage system

CCGT

Combined cycle gas turbine

CO2e

Carbon emissions

CSP

Concentrated solar power

EV

Electric Vehicles

FOM

Fixed Operations and Maintenance costs

GHG

Greenhouse gas

ICE

Internal combustion engine

IES

Intelligent Energy Systems

IFC

International Finance Corporation

IRS

Increased Renewable Scenario

LCOE

Levelised cost of electricity

LNG

Liquefied natural gas

MOEE

Ministry of Electricity and Energy

NDC

Nationally Determined Contributions

OCGT

Open cycle gas turbine

RE

Renewables

USDTA

US Trade and Development Agency

VOM

Variable Operations and Maintenance costs

VRE

Variable renewable energy

WWF

World Wide Fund for Nature

27

1 INTRODUCTION In 2016, World Wide Fund for Nature (WWF) and a host of partners in all five Greater Mekong countries developed a vision for renewable energy in the Greater Mekong Region that laid out a renewable energy roadmap to 2050. Through a regional plan and then five specific country level plans, the vision set out sensible, cost-effective solutions to some of the region’s most taxing energy problems. The goal was to spur a regional and global debate, as well as concrete actions, leading to an achievable, affordable renewable energy future in the Greater Mekong.

The 2016 vision found that it was technically and economically feasible to achieve 100% renewable energy in Myanmar by 2050.

The benefits of renewable energy also extended to increased energy security, stability in cost outcomes, additional job creation, environmental and social benefits, and strengthened cooperation with neighbouring countries. Since the publication of the initial roadmap, the global cost of solar has decreased faster than expected while the rate of increase of energy demand in some of the countries has outpaced expectations.

WWF-Myanmar, as part of its active portfolio of work which includes promoting a high level of solar and other sustainable renewable energy sources, has commissioned Intelligent Energy Systems (IES) to update the modelling work of 2016. The objective is to explore several updated scenarios up to a 100% renewable energy vision and roadmap for Myanmar using minimal hydropower.

1.1 STRUCTURE OF THE REPORT The structure of the report is as follows: zz

Section 2 provides a brief background to Myanmar power development plans and the NDC;

zz

Section 3 discusses the scenarios and assumptions;

zz

Section 4 presents the Base case results;

zz

Section 5 compares the Increased and Advanced Renewable Energy Scenarios against the Base case;

zz

Section 6 summarizes the modelling findings.

1.2 NOTES The basis of figures quoted in this report, unless otherwise stated, are based on the information listed in Table 1 below.

Table 1. Reporting basis Type

Basis

Years

Calendar year basis starting Jan

Capacity and generation

As generated

Dollars

Real 2020 US dollars

Average prices

Time-weighted average

Demand (grid and off-grid)

As generated

28 | MYANMAR’S RENEWABLE ENERGY VISION 2021

2 BACKGROUND Since the publication of Myanmar’s Electricity Vision in 2016, the global cost of solar has decreased faster than expected.

The development outlook for Myanmar has also changed and requires updating. The modelling work covered in this report is intended to promote a high level of solar and other sustainable renewable energy sources to highlight ambitious, but possible, cost-effective solutions to meet the growing electricity needs of Myanmar towards an affordable renewable energy future.

2.1 MYANMAR NATIONALLY DETERMINED CONTRIBUTIONS Myanmar in 2020 prepared its draft Nationally Determined Contributions (NDC) report which sets out greenhouse gas mitigation targets for the country based on conditional and unconditional targets relative to a baseline. The conditional target is based on obtaining more international support for implementation by way of finance, technology and capacity building. The unconditional target is based on leveraging only domestic resources and limited national capacities of Myanmar. zz zz zz zz zz

zz

zz zz

A summary of the NDC background and baseline and conditional and unconditional targets are summarized below.

Although the coverage of the NDC is economy-wide, the focus here is on the electricity sector: Myanmar is rich in natural resources with a population of 55 million people; it is also one of the world’s most vulnerable countries to climate change; Myanmar has a relatively low greenhouse gas emissions level of 0.61 tons of CO2e/person; Myanmar’s baseline emissions target for the electricity generation sector is 297 million tons CO2e for the baseline and 192 and 153 million t-CO2e over the period from 2021 to 2030 for the conditional and unconditional targets respectively; To achieve its emissions reduction goals in the energy sector, the total share of renewable energy (solar and wind) needs to increase from 2,000MW to 3,070MW by 2030, and the share of coal needs to decrease from 7,940MW to 2,120MW by 2030; Under the national programme for rural electrification, mini-grid development and additional renewable energy will increase access to 2.7 million and 3.6 million people in the unconditional and conditional scenarios respectively, significantly higher than the 1.8 million under the baseline scenario; Myanmar also recognizes the importance of promoting energy efficiency and has set 2030 targets of 7.8% for the residential sector, 6.63% for the industrial sector, 4% for the commercial sector and 1.36% for all other sectors; Myanmar plans to phase out coal by 2050 and not increase its capacity after 2030.

2.2 ELECTRICITY VISION SCENARIOS The updated report explores several scenarios up to a 100% renewable energy roadmap for Myanmar using minimal hydropower. The scenarios modelled as part of this work include a base scenario (Base), Increased Renewable Scenario (IRS) and Advanced Renewable Scenario (ARS). IRS and ARS are more ambitious than the unconditional and conditional 2030 NDC targets and are intended to show that high RE outlooks can be just as feasible and cost-effective. A summary of the scenario components modelled is provided in Table 2 below. zz

Base scenario:

Based on current NDC (December 2020 draft) baseline, period to 2050 is extrapolated from the NDC 2030 targets.

Propose for no more coal developments after 2030, with any Internal Combustion Engines (ICE) and Combined Cycle Gas Turbines (CCGT) older than 30 years lifetime on domestic gas to be replaced by LNG over time.

zz

Increased Renewable Scenario:

Increased development of Myanmar’s RE potential.

Restrained development of hydro (to what is committed).

zz

Advanced Renewable Scenario:

Takes a more ambitious view on RE adoption with a 100% generation target by 2050.

Considers new emerging technologies (and includes demand side initiatives).

29

Table 2. Scenario Summary Base (traditional mix) Description

Increased Renewable Scenario

Advanced Renewable Scenario

Represents the baseline outlook for Myanmar, reflecting current energy planning policy consistent with the NDC baseline scenario. Outlook based on traditional generation mix comprising of thermal, coal and gas.

Represents a transition from present traditional energy mix towards a mix that has undergone a significant transition towards RE. The scenario minimizes hydro development, ceases coal development beyond committed projects and maximises Myanmar’s VRE potential. Gas is developed with its use kept minimal and just to what is necessary to complement the operation of hydro and VRE projects. Hydrogen is introduced as a new technology from 2040.

Purpose is to provide a transition to 100% RE by the year 2050 through wider use of hydrogen technology, demand side management / smart grid / energy efficiency measures.

Coal

MOEE stated policy (as per NDC) for no more coal from 2030. Coal plants retired once they reach 25 years.

No new coal beyond what we understand to be committed (there are no committed coal plants, so this results in no coal).

As per IRS

Gas – Domestic

Old CCGTs on domestic gas are refurbished and run on LNG once they reach 30 years of life from commissioning dates. Any ICEs on domestic gas are converted to run on LNG over time (as required). Onshore gas networks have LNG fed into them.

As per Base

Old CCGTs are replaced with ICEs, if required, that act as a source of flexible generation and/or backup generation once the CCGTs reach end of useful life.

Gas – LNG

As per government plans for next 1-3 years. Expanded as needed (given coal & hydro developments).

As per government plans for next 1-3 years. Expanded as needed up to 2035 only.

As per government plan for next 1-3 years but to reduce gas to zero by 2050.

This will be substituted with RE and new technologies instead.

Hydro plants

Expanded as per government plans.

Only committed hydros. Expansions of existing large hydros are allowed (assumed up to 20% increase in storage).

Only committed hydros. Expansions of existing large hydros are allowed (assumed up to 20% increase in storage).

Solar

Expanded at a slow rate based on solar zone potential.

Expanded at a faster rate than Base and capped on generation share based on demand.

Allowed to be built as required

Wind

Not developed

Developed, subject to zonal capacity limits and capped based on demand.

Allowed to be built as required

VRE in general (Solar + Wind)

Rate of development capped to 15% generation share by 2050.

Within a zone, all renewables including solar + wind capped to 0.8 of peak demand. BESS contributes to dispatchable capacity.

Within a zone, all renewables including solar + wind capped to 0.9 of peak demand. BESS contributes to dispatchable capacity.

New Technologies – Supply Side

Not considered

CSP, geothermal, hydrogen, ocean, etc. assumed to be available from 2040. Hydrogen generation used as a representative low-emissions baseload emerging technology.

CSP, geothermal, hydrogen, ocean, etc. available from 2030 (and should enter given tighter constraints on further gas and coal development). Hydrogen generation used as a representative lowemissions baseload emerging technology.

New Technologies – Demand Side

Take MOEE demand forecasts which we assume have NDC energy efficiency embedded (20% by 2030). Electric vehicle electricity demand not included.

Additional energy efficiency of 10% by 2040. Assumes 25% of all vehicles are EV by 2050.

Additional energy efficiency of 20% by 2040, policies enacted to enable daily load shifting. Assumes 35% of all vehicles are EV by 2050.

Imports

No imports to reflect NDC Base

Include the 1400 MW imports from neighbouring countries

As per IRS

Off Grid

Follow the National Electrification Strategy for grid connection which includes smaller amount of off-grid demand in the Base.

Energy Access programmes provide offgrid access as per Smart Power Myanmar report.

Lower grid electrification than in IRS but increased off-grid access to maintain the same level of overall electricity access as the other cases

30 | MYANMAR’S RENEWABLE ENERGY VISION 2021

This scenario will seek to have fully transformed Myanmar’s energy sector towards 100% RE (glide path) and can provide the basis for a 30-year plan for implementing the transition in a rapid manner.

3 ASSUMPTIONS The following sections detail the critical assumptions used in underpinning the modelling work. The assumptions draw from a wide variety of sources including the outlook detailed in the Ministry of Electricity & Energy’s Energy Policy (B) presentation (July 2018) as well as hourly demand data as received from the Ministry of Electricity and Energy (MOEE)1.

3.1 MODELLING TOOL The modelling work has been carried out using PROPHET, a system developed by IES that simulates the operation of electricity markets and produces least cost planning outlooks subject to user-defined constraints such as renewable energy targets. Further information is provided in Appendix A.

3.2 NETWORK MODEL AND TRANSMISSION Myanmar is modelled as five (5) zones consistent with the modelling work undertaken by the USTDA in the Renewables Grid Impacts Assessment Presentation of Draft Findings. The region split is based on distinguishing the important transmission points and aggregation of renewable energy resource locations. Yangon and Mandalay, the larger populations and load centres, are located in the southeast and central regions respectively.

The MVA limits are based on the 2020 transfer limits and are converted to MW on an N-1 basis. Only thermal limits are modelled. Transmission augmentations are included to facilitate energy flows as required.

Figure 1. Network Map of Regions

Source: Renewables Grid Impacts Assessment Presentation of Draft Findings, USTDA

1.

MOEE was consulted till the end of 2020.

31

3.3 DEMAND (GRID AND OFF-GRID) Grid demand for the Base case was based on the MOEE energy outlook policy B2 document to 2030. The demand forecast was updated with subsequent provincial demand forecasts provided by MOEE. Components and characteristics of the electricity demand forecasts are summarized in Table 3 below. zz

Regional demand: the major demand nodes are located in the southeast (Yangon) and the central region (Mandalay) with the mapping of the areas in the relation to states and regions provided in Table 4. The region share is provided in Figure 1 showing the relative importance of the various load centres. Hourly demand profiles were based on the system shape or region level where data was made available.

zz

Off-grid demand: 6TWh is based on the NDC off-grid outlook, whereas the IRS and ARS have lower electrification targets and higher off-grid demand maintaining the same electricity access3. The off-grid demands are assumed to not connect back to the main grid. For comparison, the IRS and ARS off-grid outlook is compared to the detailed work carried out by Smart Power Myanmar4 and presented in Figure 2 below.

zz

Energy efficiency: We have assumed the baseline demand outlook provided to IES includes a 20% energy efficiency target consistent with the NDC report5. The IRS and ARS apply additional energy efficiency measures (10% and 20% respectively) which result in a reduction in energy demand.

zz

Demand-side management: This is seen as a low-cost approach to avoiding generation and transmission investments, mainly deployed to service peak demand requirements and therefore only required a few hours each year.

Demand side solutions, such as this and load shifting, generally need policy and tariff incentives to induce behavioural changes to electricity consumption throughout the day. The ARS is the only scenario where we assume up to 20% of peak demand can be dynamically shifted to other periods of the day – this effectively moves evening peaks to other periods where there may be surplus generation.

zz

Electric vehicles: This is an important pillar of reducing greenhouse gas emissions of the NDC although it has not been explicitly taken into account. IES have separately carried out high level analysis to determine the energy demand based on a 25% and 33% EV uptake rate by 2050. This work is based on:

Carrying out linear regression of vehicle numbers (by type) against population in Yangon and outside Yangon6;

Using population projections7 to project the total number of light and heavy vehicles and motorbikes to 2050;

Deriving the energy requirements using assumed energy consumption per vehicle figures and the EV adoption rate over time. The profiling of this is based on a combination of charging profiles8.

The demands are plotted in Figure 3, Figure 4, Figure 5 and Figure 6.

Table 3. Demand components Base

IRS

ARS

Grid demand (no EV)

23,699GWh in 2020 growing to 89,522GWh by 2030 and 234,467GWh by 2050

83,851GWh and 202,942GWh by 2030 and 2050 respectively

79,605GWh and 175,605GWh by 2030 and 2050 respectively

Off-grid demand

5,984GWh by 2050

8,976GWh by 2050

14,960GWh by 2050

Energy efficiency

20% energy efficiency embedded in the Base case demand outlook by 2030

Additional 10% energy efficiency over Base case

Additional 20% energy efficiency over Base case

Demand side management or load shifting

None

None

Up to 20% of peak demand

Electric vehicles

None

25% penetration by 2050

35% penetration by 2050

Final grid demand (GWh)

234,467 GWh by 2050

240,226 GWh by 2050

227,803 GWh by 2050

2.

3.

4.

5.

6.

7.

8.

Energy Policy (B), Presented by the Ministry of Electricity and Energy, The Republic of the Union of Myanmar, 2 July 2018, https://eneken.ieej.or.jp/data/8018.pdf Up to 15% and 25% of total residential electricity demand in the Base case is assumed to be met with off-grid technologies.

Decentralised Energy Market Assessment in Myanmar, May 2019.

Basis of the 20% is against the 2012 baseline year, corresponding to 0.13 million t-CO2e.

2018 Myanmar Statistical Yearbook, CENTRAL STATISTICAL ORGANIZATION. World Population Prospects 2019, actuals + estimate to 2020, and Energy Policy (B) population forecasts thereafter. https://arena.gov.au/assets/2018/06/australian-ev-market-study-report.pdf, Figure 57.

32 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Table 4. Regional Mapping Region/State

Type

Zone

Ayeyarwady

Region

Delta

Bago

Region

Central

Bago

Region

Southeast

Chin

State

North

Kachin

State

North

Kayah

State

Central

Kayin

State

Southeast

Magway

Region

Central

Mandalay

Region

Central

Mon

State

Southeast

Naypyitaw

Region

Central

Rakhine

State

West

Sagaing

Region

North

Shan

State

North

Shan

State

Central

Tanintharyi

Region

Southeast

Yangon

Region

Southeast

Figure 2. Region Share of System Load (2019)

Source: MoEE

Figure 3. Grid demand with EV

33

Figure 4. EV Demands

Figure 5. Grid demand without EV

Figure 6. Off-grid Energy Outlook

34 | MYANMAR’S RENEWABLE ENERGY VISION 2021

3.4 PDP OUTLOOK The generation outlook used in the Base case is based on the NDC generation outlook and plotted in Figure 7 below. The Base case is characterized by significant hydro and gas generation projects in the short-term followed by coal developments through to 2030. Although there are reports of importing arrangements with neighbouring countries, this is not included in the NDC baseline and the Base case modelled here. The Base case modelled here takes the NDC baseline and projects it out to 2050.

Figure 7. NDC Capacity Outlook

Source: Draft NDC (December 2020)

3.5 TECHNOLOGY OPTIONS The technology options available for development across each of the zones is summarized in Table 5 below. It reflects the significant resources available to Myanmar, either domestic and / or imported. Some of the key points are discussed below: zz

Coal: Myanmar has limited coal reserves but would have the ability to import coal like many other countries in the region. Coal-fired power stations based on imported coal is assumed to be limited to the southeast and delta zones.

zz

Gas: CCGTs/onshore gas pipeline network mainly in the central, southwest and delta zones with all future gas plants assumed to be based on imported LNG.

zz

Hydro: See Section 3.6.

zz

Solar and wind: The assumed build limits are based on potential resource and is discussed in Section 3.8 separately.

zz

BESS: These are assumed to be able to be developed at all locations. The optimal sizing over time is selected by PROPHET.

zz

Hydrogen: Hydrogen generation represents new emerging low-emissions baseload generation reflective of what may be possible in the future. Hydrogen itself, has over the past few years, been a significant area of research and development with the promise of no GHG emissions and technologies already in place able to produce and transport the fuel. Hydrogen energy is seen as a significant export industry in Australia, with various levels of government providing funding into feasibility and pilot projects (production, transport, generation). Several important points are provided below:

The longer-term aim is to be producing green hydrogen i.e., hydrogen produced from renewable energy resources. Hydrogen can be used to produce energy in existing gas turbines and transported via existing gas networks.

The private sector in Australia has also been active. Early this year a US$1 billion hydrogen generation project (up to 1,000MW) was announced as a non-coal baseload generation solution to the coal retirements across eastern Australia. The project is expected by 2025 and has been labelled a critical infrastructure project by the Australian government.

The modelling here assumes all hydrogen is produced using renewable resources.

Generic generator parameters are assumed and summarised in Table 6 for the main technology supply options. Hydrogen plants are assumed to be based on CCGTs with a slight 15% increase in capex.

35

Table 5. Generation Options and Estimated Technical Potential Technology

Comment

North

West

Central

South East

Delta

Domestic coal

Very limited domestic reserves – coal share is not expected to be more than 7,000MW by 2030

Up to 600MW

n/a

Up to 600MW

n/a

n/a

Imported coal

Restricted to shorelines

n/a

n/a

n/a

Unlimited, in blocks of 1,200MW (imported coal)

Unlimited, in blocks of 1,200MW (imported coal)

CCGTs

Onshore gas pipeline network mainly in the central, southwest and delta zones

n/a

n/a

Unlimited

Unlimited

Unlimited

Hydro new projects

Limit to only committed in IRS / ARS. The Base has 8-9GW of hydro by 2030

3,746MW

100MW

161MW

416MW

n/a

Hydro expansion projects

Consideration is given to older hydro plants for upgrade and by size and zone. Only large hydro plants, greater than 200MW, preferably part of a cascaded hydro system, assumed to be feasible for upgrade

Solar

Based on solar potential across zones

Very low

Medium

High

Low

Medium

Wind

Wind potential is limited to a build of 8,000MW

Medium

High

High

Medium

Very low

CSP

Needs very high Very low irradiance levels – consistent with zones of solar build

Medium

High

Low

Medium

BESS

Can be developed anywhere

Unlimited

Unlimited

Unlimited

Unlimited

Unlimited

Hydrogen

Limited to zones previously reliant on gas generators

n/a

n/a

Unlimited

Unlimited

Unlimited

Ocean

Limit to coastlines

0

~400MW

0

~400MW

~400MW

Biomass

Build assumed across Up to 9,000MW of capacity in total all zones

Geothermal

Low uptake assumed across all zones.

70MW

70MW

70MW

70MW

70MW

Table 6. Generator Parameters Type

Subtype

Hydro

Life

Heat rate (GJ/ MWh, gross)

Variable O&M costs ($/MWh)

Fixed O&M costs ($/MW/ yr)

Capex ($m’s)

Emissions Intensity (t-CO2e/MWh)

50

0

0.65

37,700

1.50

0.0

30

9.82

0.12

41,200

1.38

0.9

CCGT

25

6.92

0.45

29,350

0.77

0.4

GT

25

10.00

1.00

25,000

0.50

1.0

Diesel

25

10.00

1.00

25,000

0.50

1.0

Utility PV

25

0

0.00

11,000

Curve

0.0

27

0

4.24

40,500

Curve

0.0

Coal

Wind

Supercritical

Onshore

Source: Vietnam Technology Catalogue (May 2019), capex costs obtained from variety of sources.

36 | MYANMAR’S RENEWABLE ENERGY VISION 2021

3.6 HYDRO PROJECTS Hydro projects are based on a list of hydro projects from the World Bank Group and IFC which covers all the identified hydro resources available in Myanmar for potential development. This was further filtered down for feasibility by WWF and then staggered in the short-term due to the significant number of committed projects to 2025.

The Base case reflects the level of hydro development in the NDC baseline (see Figure 8), whereas only the committed hydro projects are included in the IRS and ARS. The IRS has the additional consideration of storage upgrades – only large hydro plants, greater than 200MW, preferably part of a cascaded hydro system, are assumed to be feasible for upgrade. The upgrade impact results in an expanded reservoir size of 20%.

The hydro list only includes hydro projects greater than 10MW in size with most projects greater than 100MW. We have assumed all of the hydros have storage capability and can be dispatched irrespective of any operational water constraints.

Figure 8. Hydro Projects Categorised by Size (Base case)

Source: WB/IFC adjusted for WWF feedback

3.7 CAPITAL AND FUEL COSTS Capital costs for the various technologies were sourced from a variety of sources which covered a broad range of technologies and had outlooks stretching out beyond 2030. The PROPHET modelling itself is based on the average of the capital cost ranges.

However, the final cost estimates are based on the high and low ranges to provide a useful range for the potential variance in cost outlook. Outlooks used in formulating the cost outlook include the IEA World Energy Outlook 2020, Viet Nam Technology Catalogue (2019), AEMO Electricity Statement of Opportunities 2020, and EIA’s Alternative Renewables Cost Assumptions in AEO2020. zz

Fuel costs are based on a similar approach to capital costs, with ranges based on IEA’s World Energy Outlook 2020, World Bank Group’s Commodity Outlook (October 2020), and historical low and high 10% and 90% percentile ranges.

zz

LCOE figures for the various technologies by snapshot year is plotted in Figure 9 below. We can make the following observations:

zz

CCGT and GAS-ICE have large ranges due to the historical range of imported LNG prices which has fluctuated to US$17/ GJ.

zz

Solar PV is expected to decline in the future down to the US$24-$32/MWh range by 2050. Onshore wind does not drop nearly as much in comparison.

zz

Hydrogen generation is assumed to be competitive with CCGTs from 2040. Capital costs are based on an assumed 15% uplift over CCGT capex, and fuel prices are based on starting cost of US$2.5/kg, dropping down to US$1.85/kg and US$1.25/kg for the high and low ranges respectively.

zz

CSP and ocean energy remain relatively expensive in the future.

zz

BESS costs drop rapidly and when paired with PV is competitive and can contribute to the amount of dispatchable resources over time.

37

Figure 9. Approximate generation LCOE by Technology and Snapshot Year

Note: the y-axis is truncated at $200/MWh and therefore some bars aren’t visible.

Technology costs are based on the detailed work by Smart Power Myanmar which covers the different types of mini-grid options available for various load compositions. We have simply leveraged the work carried out there and assumed off-grid loads to be based on a mix of residential and productive loads. Although the grid generation LCOE (above) does not include transmission and distribution costs, at a very high level, it can be seen that the cost of providing off-grid generation is significantly more expensive than grid generation (Figure 10).

Figure 10. Off-grid LCOE (Unsubsidised)

Source Decentralised Energy Market Assessment in Myanmar, May 2019.

3.8 SOLAR AND WIND RESOURCE POTENTIAL Myanmar has significant solar and wind resources as shown in Figure 11 and Figure 12 respectively. The resource maps on the left show the level of resource across the country, whereas the map on the right is based on high-level filtering of only the highest resource amounts we have deemed feasible. Although the filtering removes a lot of potential areas of development, there is still substantial potential in the remaining areas. For solar, this is concentrated in the central, west and delta zones, whereas wind is more spread out but concentrated in the central and west zones. Table 7 summarises the zone share.

Figure 13 and Figure 14 plot the average seasonal and daily profiles for solar and wind. Wind profiles would suggest it would be able to contribute across all hours of the day, whereas solar is restricted to the middle of the day. Both solar and wind peak in energy production in the middle of the year. Given the non-dispatchable and intermittent nature of solar and wind, significant amounts of it would have to be supported by flexible and fast-start generation such as hydro or battery energy storage.

38 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Figure 11. Analysis of Solar Resource

Source: IES analysis

Figure 12. Analysis of Wind Resource

Source: IES analysis

39

Table 7. Solar and wind regional share of resource North

Central

Southeast

West

Delta

Wind

11%

35%

14%

40%

0%

Solar

0%

67%

6%

15%

12%

Source: IES analysis

Figure 13. Seasonal Profiles for Solar and Wind

Source: PVGIS

Figure 14. Daily Profiles for Solar and Wind

Source: USDTA

40 | MYANMAR’S RENEWABLE ENERGY VISION 2021

4 BASE CASE RESULTS The following results discuss the Base case outlook and the various baseline metrics from which to evaluate the IRS and ARS results. The important baseline measures include the capacity mix over time, renewable energy generation and emission levels, capital cost requirements and overall levelized cost of energy, and level of hydro development.

4.1 CAPACITY AND GENERATION OUTLOOK The capacity and generation outlook (Figure 15, Figure 16, Figure 17 and Figure 18) can be split into two periods of time: the period to 2030 and 2031 through to 2050. zz

Period to 2030: This period is characterized by committed CCGT and hydro developments in the earlier years followed by coal-fired capacity to meet increasing demands from 2025 to 2030. Solar development is limited to the known solar project pipeline. By 2030 there is a total of 8.8GW of hydro.

zz

The Base case has been modelled strictly in line with the NDC baseline to 2030 as shown in Figure 19.

From 2030: No further coal-fired power stations are developed and a mixture of domestic and LNG-based CCGTs and peaking gas units (25GW in total) are developed to meet most of the increasing demands to 2050. The peaking gas capacity developments help support up to 8GW of solar developed by 2050. Gas generation contributes 55% of system generation by 2050, solar at 15%, coal at 15% and the remainder met by hydro generation.

Figure 15. System-wide Capacity Outlook

Figure 16. System-wide Capacity Share (Snapshot Years)

41

Figure 17. System-wide Generation Outlook

Figure 18. System-wide Generation Share (Snapshot Years)

Figure 19. Capacity Outlook Compared to the NDC Scenarios

Note: RE (Others) refers to solar.

The Base case modelled is consistent with the NDC BAU modelling outlook. The build outlook is similar for coal and hydro with minor differences in renewables and gas build.

42 | MYANMAR’S RENEWABLE ENERGY VISION 2021

4.2 REGIONAL SUPPLY MIX AND FLOWS Discussed in Section 5.2.

4.3 DISPATCH PROFILES Discussed in Section 5.3.

4.4 EMISSION LEVELS Total emissions and the system intensity are plotted in Figure 20 below. Total emissions increase from 2024 with the introduction of newly developed coal projects which has significantly higher emissions than existing gas and hydro generation.

By 2030, the level of emissions continues to increase notably due to demand growth, but the intensity reduces as gas and solar generation share increases to 2050.

Figure 20. Total Emissions and Emissions Intensity (Grid)

4.5 TECHNOLOGY AND SYSTEM COSTS The following charts, Figure 21, Figure 22 and Figure 23, plot the cumulative capital requirements, annual system costs and corresponding levelized cost of energy. The charts also break down the costs by component. The following observations can be made: zz

Approximately US$40 billion in capital cost is required to the period to 2030, mainly driven by the coal and hydro build over this time frame. The following period to 2050 only requires US$50 billion. Generation followed by distribution costs comprise the two largest system cost segments.

zz

Annual system cost linearly increases to US$23 billion per annum corresponding to increasing demands and is driven by increasing fuel costs over time. On a levelized basis, the system cost reduces over time with shrinking generator capex, off-grid and network costs. Although there is an increasing solar share, the increase in gas generation costs more than offset this. By 2035, the LCOE reduces below US$100/MWh.

43

Figure 21. Cumulative Capital Costs

Figure 22. Annual System Costs

Note: VOM = Variable Operations and Maintenance costs, FOM = Fixed Operations and Maintenance costs

Figure 23. Levelised Cost of Energy by Component

44 | MYANMAR’S RENEWABLE ENERGY VISION 2021

5 INCREASED AND ADVANCED RENEWABLE SCENARIOS 5.1 CAPACITY AND GENERATION OUTLOOK Figure 24 and Figure 25 present the capacity and generation share snapshots across the scenarios in 2050. zz

Capacity: The IRS and ARS show significant changes to the capacity mix by 2050. There is no coal in IRS and ARS, it having been replaced with other baseload generation technologies. The ARS leverages 23GW of hydrogen generation from 2030 and 4GW battery energy storage which avoids the need to build gas generation. The IRS relies on less hydrogen capacity but requires 8GW of gas capacity by 2050 and 8GW of storage capacity.

The high variable renewable generation (non-dispatchable) displacing traditional coal, gas and hydro generation is supported by battery energy storage and hydrogen generation.

Hydrogen generation type represents new emerging low-emissions baseload generation and is assumed to be 100% green hydrogen.

Figure 24. Capacity Outlook in 2050

zz

Generation: Outlook is consistent with the capacity mix in 2050. The IRS and ARS have significantly less coal and gas generation which is instead replaced with significant wind, other RE including biomass, ocean energy and offshore wind.

The IRS and ARS reaches 88% and 100% renewable energy generation (including hydro) compared to 15% in the Base case.

Solar penetration in IRS and ARS is limited due to keeping a minimum level of dispatchable generation (10 to 20%).

45

Figure 25. Generation Outlook in 2050

Note: Battery energy storage generation is not reflected as it charges from existing grid generation.

Figure 26 and Figure 27 plot the renewable energy share across the scenarios with and without hydro generation. The ARS renewable energy share rapidly increases from 2025 following new solar and wind generation developments replacing coal and gas projects in the Base case, and to a lesser extent in the IRS. By 2030, the ARS has more than 75% RE share and reaches 95% by 2040 (including hydro). The IRS fluctuates between 50 to 60 percent through to 2040, before climbing towards 90% by 2050. The Base case RE share declines over time as increasing demands are exceedingly met by coal and gas generation.

Figure 26. Renewable Energy Share (Excluding Hydro)

Figure 27. Renewable Energy Share (Including Hydro)

46 | MYANMAR’S RENEWABLE ENERGY VISION 2021

5.2 REGIONAL ENERGY FLOWS Figure 28 and Figure 29 provide a snapshot of the regional supply mix and net flows across the five zones for 2030 and 2050, respectively. Main observations to note across the three scenarios for year 2030 include: zz

Renewable build is strong in the central and southeast zones for the IRS and ARS cases with a VRE share of 28% and 37% at the system level respectively compared to 5% in the Base case.

zz

More VRE in the IRS and ARS case replacing gas build in the southeast zone in the Base case results and the reversal of flows from the delta zone into the southeast to meet demand.

zz

With a reduced hydro outlook in the north zone, flows into the central zone from the north is reduced while flows from the central zone to the southeast continue across all scenarios to meet demand.

Other observations to note across the three scenarios for year 2050 include: zz

Significant renewable build in the west, central and southeast zone for the IRS and ARS case with the VRE share increasing to 41% and 45% at the system level respectively compared to 15% in the Base case.

zz

Flows change direction from the central zone to the north zone across all scenarios due to higher demand projections with comparatively limited resources by 2050 in the north zone.

zz

Due to large solar penetration in the central zone by 2050, flows reverse from the southeast zone to the central zone to meet demand while they continue from the central zone to the high-demand southeast zone for the IRS and ARS cases.

These zones have a more balanced supply mix in the IRS and ARS cases.

47

48 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Note: D = Demand, G = Generation. Figures in the boxes are in GWh terms.

Figure 28. Regional Supply and Flows in 2030

Note: D = Demand, G = Generation. Figures in the boxes are in GWh terms.

Figure 29. Regional Supply and Flows in 2050

49

5.3 DISPATCH PROFILES The dispatch profiles for all scenarios during the dry and wet season (typical day), for 2030 and 2050 is provided in Figure 30 and Figure 31 below. Hydro dispatch, as noted earlier, assumes no constraints to operations and inflows can be diverted as required to meet electricity peak demands. There are several notable features to the dispatch profiles: zz

The dry season has significantly less hydro generation due to lower inflows. The reduced hydro generation is instead covered by gas generation – this is more evident in the Base case which has close to 9GW of hydro, whereas the IRS and ARS are less impacted by the wet and dry season hydro generation imbalance.

zz

The IRS and ARS have similar amounts of solar generation as the Base case but significantly less dispatchable generation (coal, gas and hydro). The IRS and ARS have hydrogen generation which accommodates the middle-of-the-day solar shape and also storage to effectively allow solar generation to meet peak demands during the evening.

Solar assists with conserving hydro generation during the dry season, however, significant levels of solar penetration can lead to unit decommitments.

Figure 30. Dispatch Profiles 2030 (Wet and Dry Season)

Base, Wet

Base, Dry

IRS, Wet

IRS, Dry

ARS, Wet

ARS, Dry

50 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Figure 31. Dispatch Profiles 2050 (Wet and Dry Season)

Base, Wet

Base, Dry

IRS, Wet

IRS, Dry

ARS, Wet

ARS, Dry

51

5.4 TECHNOLOGY AND SYSTEM COSTS Figure 32 presents the cumulative capital requirements for snapshot years to 2050 by scenario. The investment requirements are progressively higher in the IRS and ARS cases compared to the Base scenario due to higher reliance on renewable energy technologies. By 2050, the IRS and ARS require over US$20 billion more than in the Base case. The increase in capex is driven by a higher off-grid and generation component, which is slightly offset by higher network capex in the Base case.

Figure 32. Cumulative Investment Requirements by Scenario and Snapshot Year

Figure 33. Annual System Costs

Figure 33 looks at annual costs, factoring in fuel costs. Although the Base case has lower costs in 2040 than the IRS and ARS, by 2050 these costs are only slightly lower. Generation costs are lower in the IRS and ARS than the Base case due to lower fuel costs.

Costs are provided on an LCOE basis, across a range of low and high ranges (Figure 34) and the mid-point (Figure 35). The high and low ranges as discussed in Section 3.7 are based on a range of fuel and capex values over the horizon. The ranges for the scenarios are driven by potentially high fuel price fluctuations mainly impacting the Base case and a wide range of cost outlooks for renewable energy technologies impacting the IRS and ARS. The LCOE ranges in 2040 are slightly higher in the IRS and ARS as those scenarios require more storage and leverages hydrogen and newer technology resulting in higher costs. By 2050, the reduction in new technology costs and continued decline in solar and wind drives the ARS to a LCOE range that is competitive to the Base case. Although the mid-range of the LCOE ranges remains high for the IRS and ARS it would be reasonable to assume renewable energy costs taking the lower range in IRS and ARS cases due to economies of scale and improved efficiencies over time.

52 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Figure 34. Range of Levelised Cost of Energy by Scenario (Snapshot Year)

Figure 35. Levelised Cost of Energy by Scenario (Mid-point)

53

5.5 EMISSIONS LEVELS Total emission levels and intensity by scenario is plotted in Figure 36 and Figure 37 respectively. Emissions are based on grid emissions only. The trajectories are consistent with the generation outlooks discussed previously. The IRS emissions and intensity drops after 2040 once hydrogen generation enters the system, whereas hydrogen is allowed from 2030 in the ARS and keeps emission levels below 20 Mt-CO2e.

Figure 36. Annual Emissions Levels by Scenario

Figure 37. Annual Emissions Intensity by Scenario

Table 8. Emission Factors by technology Fuel Type

Emission Factor (kg/MWh)

CCGT

453.9

COAL

821.12

DIESEL

716.37

GAS_ICE

716.37

GT

716.37

OCGT

716.37

54 | MYANMAR’S RENEWABLE ENERGY VISION 2021

6 MAIN FINDINGS AND CONCLUSIONS Myanmar’s Renewable Energy Vision modelling update covers the capacity and generation and associated cost outlook for the Base case which corresponds to the NDC baseline to 2030 and is extrapolated to 2050. The IRS and ARS are ambitious renewable energy roadmaps over and above the conditional and unconditional targets set out in the NDC. The IRS and ARS represent generation sector development that is feasible in terms of maintaining a minimum representative level of dispatchable resources in the system, presenting competitive costs all the while achieving much higher renewable energy generation. The IRS and ARS also incorporate minimal hydro development and 100% electricity access facilitated by mini-grid technologies. Other main findings include: zz

IRS relies on solar, biomass and BESS, with some gas generation in the mid-term before bringing on hydrogen longterm to meet growing demands. ARS leverages hydrogen generation earlier to achieve 100% RE by 2050. Hydrogen is a fast-emerging technology that can replace current baseload generation technologies. It should be thought of as a representative technology for this category of generation (low emissions, flexible and capable of running baseload).

zz

Storage is required to support high levels of solar penetration and to provide dispatchable capacity.

zz

Solar is cheap but intermittent; other RE generation types are considerably more expensive. This leads to higher direct costs. However, the Base case has significant fuel price risks due to exposure to global fuel price dynamics (significant LCOE range). In other words, higher renewable energy generation reduces Myanmar’s reliance on imported fuels and exposure to global fluctuations in fuel prices.

zz

There are significantly more emissions in the Base compared to the IRS and ARS. Grid intensity in the Base reaches 0.4 t-CO2e/MWh in 2050 compared to 0.1 t-CO2e/MWh in the IRS.

zz

The Base case has the lowest grid and off-grid LCOE based on the mid-point estimate. However, the IRS and ARS are much more compelling if the cost outlook for capex becomes more favourable (taking the lower range of the LCOE ranges provided).

A summary of the key results outlined above is reported in Table 9 below.

55

Table 9. Results Summary BAU

BAU

IRS

IRS

ARS

ARS

2030

2050

2030

2050

2030

2050

Grid demand

89,522GWh, 14,730MW, 14.2% pa

234,467GWh, 38,578MW, 7.9% pa

83,851GWh, 13,796MW, 13.5% pa

202,942GWh, 33,391MW, 7.4% pa

79,605GWh, 13,098MW, 12.9% pa

175,605GWh, 28,893MW, 6.9% pa

Off-grid demand

2,640GWh

5,984GWh

3,960GWh

8,976GWh

6,600GWh

14,960GWh

Energy efficiency and DSM

As per MOEE provided outlook (assume 20% by 2030). No DSM

Up to 10% by 2040 (in addition to BAU)

Up to 20% by 2040 (in addition to BAU).

DSM of up to 10%

Coal / gas

13,095MW (57%)

33,401MW (69%)

11,971MW (43%)

8,496MW (12%)

3,316MW (23%)

0,000MW (0%)

Hydro

8,804MW (38%)

8,804MW (16%)

4,296MW (18%)

4,296MW (9%)

4,296MW (20%)

4,296MW (9%)

Solar and wind

2,231MW (5%)

20,241MW (15%)

11,502MW (22%)

20,317MW (22%)

10,670MW (25%)

25,180MW (25%)

Other technologies

0,000MW (0%)

0,000MW (0%)

3,210MW (6%)

8,424MW (52%)

3,860MW (21%)

4,562MW (62%)

RE gen share (includes Hydro)

5% (43%)

15% (31%)

33% (53%)

78% (87%)

53% (75%)

90% (100%)

Grid emissions intensity

0.44 t/CO2e

0.40 t/CO2e

0.29 t/CO2e

0.09 t/CO2e

0.18 t/CO2e

0.03 t/CO2e

Grid + off-grid capex

42-47 (US$ bn)

91-99 (US$ bn)

42-50 (US$ bn)

112-136 (US$ bn)

45-54 (US$ billions)

111-132 (US$ bn)

LCOE

US$97-119/MWh

US$80-120/MWh

US$99-124/MWh

US$87-120 /MWh

US$101-123 /MWh

US$88-113 /MWh

56 | MYANMAR’S RENEWABLE ENERGY VISION 2021

Appendix A - PROPHET MARKET SIMULATION TOOL PROPHET, commercially available software, is an advanced software application developed by IES which is a full and comprehensive market simulation platform that can simulate the operation of electricity markets and competitive electricity market behaviour. The application tool can be used to model various complex scenarios and detailed market simulations and is used by a variety of stakeholders such as market operators, generators, network companies and trading desks. It has been under continual development for over 20 years including development priorities arising from customer requirements.

PROPHET has been designed to be generic in many aspects and can be adapted to any market that has a spot market based on generators making offers and a market clearing mechanism that can be reasonably approximated by a linear programming model. As such, it is capable of simulating various electricity markets with different arrangements, such as the NEM’s gross pool and co-optimized energy and ancillary services markets. Other arrangements include but are not limited to: zz

Nodal or zonal pricing, transmission constraints (dynamically determined based on power system conditions if required) and losses;

zz

Simulation of full security-constrained dispatch optimization;

zz

Simulation of ancillary service markets;

zz

Modelling transmission networks including AC lines, HVDC links and also the associated power importer/exporter arrangements.

A.1 PROPHET MODELLING FLOWS Figure 38 provides a summary of the two main PROPHET modules, its inputs, modelling flows and example outputs: zz

[Planning]: This is designed to solve intertemporal constraints and decisions including, but not limited to, new entrant capacity, optimal dispatch for an energy limited plant such as reservoir-based hydro, and carbon prices for emissions limits. This information is fed into the simulation module for detailed market simulations.

zz

[Simulation]: This replicates the various dispatch engines of competitive electricity markets around the world (under different market structures and arrangements) on a least-cost basis respecting physical and operating constraints and any network constraints applied. In addition, the simulation module is capable of simulating competitive generator behaviours such as portfolio bidding, market power gaming and bidding based on contracted positions.

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Figure 38. Prophet Market Simulation Tool Modelling Flows

Other key features of the PROPHET modelling algorithm include: zz

Modelling of physical network and generation supply, from transmission network information to generator operating constraints, hydro reservoirs, intermittent generation (renewable energy) and costs associated with production and constraints: PROPHET can also be used to model both energy and ancillary services markets;

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Optimized dispatch based on generator price and volume offers (which can be dynamic) and the ability to model market behaviour as influenced by the number of independent generator portfolios and bilateral contract positions (various forms of contracts from PPA’s, vesting contracts, swaps, caps, etc.);

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Detailed hydro reservoir systems including cascading networks and all relevant parameters such as hydro turbine efficiencies, potential energy as a function of storage height, inflow patterns, waterways, pumping and multiple reservoir/storage connections;

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The ability to set up electricity markets with different rules to understand how they perform and potential shifts in generation behaviour: calculation of prices, dispatch and settlement payments so that the outcomes of the market can be understood prior to the market being implemented;

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Determination of cash flows for different entities to determine whether any individual market participants will experience any financial ‘shocks’ in the market and/or to determine the implications on electricity prices and commercial viability in general;

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A fully scriptable interface to the model objects allowing the user to define additional rules in the simulation or postsimulation as required.

58 | MYANMAR’S RENEWABLE ENERGY VISION 2021

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