Bridging the Energy Gap:

Transcription

1 Bridging the Energy Gap: Demand Scenarios for Mini-Grids in Myanmar

2 Project initiation and funding The TFE team for the analysis With support from Dr. Tobias Engelmeier Mohit Anand Dr. Sam Duby Nabin Raj Gaihre Managing Director Head of Consulting Head of Africa and Electrification Consultant Corporate Page Profile 2

3 Introduction Project Background 1/3 rd of Myanmar connected to grid 80% of rural population lacks access to grid Analysis focused on Myanmar s Dry Zone Project Objectives 1. Generate a deeper understanding of rural demand 2. Project productive use of electricity Attract ESCOs and other players Advance policy dialogue and government decision-making 5. Encourage business models, interventions and investment Page 3

4 Project Approach Townships spread across Dry Zone Pauk, Salingyi, Mindon, Thazi 44 NGC villages (7 near telco) 6 grid-connected villages 1,263 HH surveyed Research design and village selection provided by Pact Myanmar Page 4

5 Overall breakdown of current energy demand (per month and per person) 25% of all surveyed village households have access to higher load electricity (e.g. for machines) 62% have access to light load electricity (e.g. for lighting) 13% have no electricity Distinction between household demand and productive demand Corporate Page Profile 5

6 Occurrence of electric household appliances (per HH) Lighting is the dominant use of electricity in households 26% of household have a TV Very few have refrigerators Page 6

7 Occurrence of machinery (per village) Villages have various businesses, both seasonal (agricultural based) and nonseasonal Water pumping machinery is used in all villages (in some there are as many as 10) Non-agricultural uses like welding and carpentry are absent in some villages, but others have as many as 3-4 such machines Page 7

8 Categorization of villages (based on correlation) Villages with wetlands and dry land; good road connectivity Villages with only dry lands; good road connectivity Villages with wetlands and dry land; poor road connectivity Villages with only dry lands; poor road connectivity Page 8

9 Demand comparison across village types Notable variation in productive demand within village types A1 villages on average have 61% higher productive demand per capita than A2 villages Household demand remains constant Page 9

10 Breakdown of productive demand per village type A1 villages have most varied uses of productive demand Only A1 and A2 village have carpentry (irrigation access) B2 villages have few and mostly seasonal uses of productive demand Non-seasonal productive demand is at 30-35% in A1, A2 and B1 villages Page 10

11 Breakdown of household demand per village type A1 villages have on average more than 57% of their demand per capita based on the use of TVs, refrigerators and other modern appliances like rice cookers and computers Only A1 and A2 villages have any significant refrigerator use All village types, including B1 and B2 villages, have sizable TV use Page 11

12 Economic attractiveness: Density of energy demand (total demand vs. population size) Density is important, because Distribution infrastructure (cables, poles and transformers) make up over 50% of costs of a mini-grid There are significant variations in energy demand for villages of similar sizes Page 12

13 Economic attractiveness: Matching per capita use and population Page 13

14 Economic attractiveness: Quadrant I villages have the highest productive demand Almost 4x more productive demand in Quadrant I villages than in others Probably only a small number of machines provide most demand Page 14

15 In most villages, telecom towers cannot offer an anchor load Telco towers provide reliable anchor loads to mini-grids through continuous energy demand (1-10kW) and by reducing off-taker risk However, if tower is too far from mini-grid, extra distribution costs outweigh benefits Here, the cut-off point is estimated at 1km Page 15

16 Fuel-based generators currently provide the bulk of productive loads Commercial enterprises spend 96% of their electricity on generators Myanmar has some of the lowest fuel prices in the world Page 16

17 The cost of generator electricity in villages is a competitive benchmark for mini-grid electricity Survey data leads to average quoted price of MMK 510/kWh Unclear whether respondents were able to reliably translate actual electricity costs into a cost per kwh Costs will vary significantly across Myanmar, based on factors, such as the remoteness of location (fuel transport costs) and type, age and condition of generator Page 17

18 Estimated cost of electricity from mini-grid vs. fuel generators Page 18

19 Mini-grid electricity can come down in cost A China factor: supply lines from China into Myanmar are very strong, can lead to cheaper components (batteries, panels) Moving from pilots to scale: deploying multiple mini-grids at a time with a degree of process standardization (e.g. 44 NGC villages analyzed here) Use of (digital) technology: a number of technology options, including earth-observation-based project development remote control and maintenance mobile payment systems Page 19

20 Scenarios of future household electricity demand (3-5 years) Grid connected villages have 24x more household demand today than NGC villages Mini-grid electricity is expected to be much more expensive than (subsidized) residental grid electricity Income effect could lead to 1.6x growth Price effect (with subsidy) could lead to 24x growth Page 20

21 Household demand difference between grid and non-grid connected villages by use type Projected share is based on access to subsidized grid electricity (Scenario 3) Large increases in high power appliances like refrigerators, irons, rice cookers and incandescent light At grid-connected villages the use of incandescent bulbs expands the most Corporate Page Profile 21

22 Scenarios of future productive electricity demand (3-5 years) Grid connected villages have only 1.6x more productive demand today than NGC villages This is due to high cost of grid connection for commercial enterprises (MMK 120, ,000) Without subsidy for current mini-grid cost of electricity, productive demand in NGC villages could rise 1.6x with mini-grids (income effect?) Page 22

23 Productive demand difference between grid and non-grid connected villages by use type Welding could grow by 4x, whereas agricultural loads either drop or have a low growth rate Electricity access appears to drive a shift to higher value-added activities like welding Corporate Page Profile 23

24 Human Centered Design workshops were conducted in four villages Card sort: Activity: Ask participants to sort the cards based on what they spend most money on Outcomes: Insights into products and services, preferences, ambitions, availability of resources, day-to-day expenditures, extra money availability Cash flow: Activity: Participants explain what brings money into and what takes money out of their household Outcome: Insights into earning and spending patterns Page 24

25 Human Centered Design workshops gave us more texture and insights (examples) 1. An additional occupation that did not come up in the survey, but was mentioned frequently in the HCD workshop was weaving (mat production) 2. Migration is an important dynamic in the villages in the Dry Zone (brings money into villages) 3. Another factor which influences adoption of electricity in productive ways is the proximity to a village already connected to electricity Page 25

26 Village prioritization for intervention planning (commercial vs. developmental view) Page 26

27 Village prioritization for intervention planning Developers and investors can use this tool to assess and prioritize other villages in Myanmar beyond those evaluated for this study. A useable, Microsoft Excel version of this tool is shared with this report Page 27

28 Village prioritization (commercial view) Page 28

29 Village prioritization (developmental view) Page 29

30 Village ranking takeaways For mini-grid developers Priority 1 - A very high P/C ratio implies that a few large customers will likely generate most of the revenue for a mini-grid Priority 2 - Access to finance, skills training and improved connectivity with markets could unlock higher productive demand Priority 3 - In their current state, these villages will struggle to become relevant for mini-grids without strong intervention by development institutions For development institutions Priority 1 - Highest education levels compared to other villages, as well as participation of women in village economic life, the ease of getting a loan and the diversity of occupations followed Priority 2 - These villages could benefit from gaining skills training and greater awareness of options Priority 3 - These villages need strong attention from development institutions to holistically raise their socio-economic and, therefore, energy use status. A weak economy and poor access to electricity have left a significant negative impact on some social indicators Page 30

31 Ideas for further research 1. Deeper analysis of the composition of local electricity costs both for generator electricity and for mini-grid electricity 2. Deeper analysis of actual/potential load patterns in villages (seasonal / daily) 3. Assessments of the impact of new technologies, such as earth observation on the mini-grid business case 4. Detailed assessment of the indirect social and economic benefits of building mini-grids at scale in Myanmar (and of associated industries) 5. Assessment of available financing and payment options (from micro-loans to PAYG systems) Page 31

32 The full report can be downloaded here Page 32

33 Thank you Contact us Munich Leopoldstr Munich, Germany Phone Cape Town 5 Watson Road Muizenberg, 7945 Cape Town, South Africa Phone Page 33