MYANMAR ENERGY SECTOR IN CONTEXT: CHALLENGES AND OPPORTUNITIES. Chuenchom Sangarasri Greacen Nay Pyi Taw 11 June 2016

Transcription

1 MYANMAR ENERGY SECTOR IN CONTEXT: CHALLENGES AND OPPORTUNITIES Chuenchom Sangarasri Greacen Nay Pyi Taw 11 June 2016

2 What is the vision for Myanmar?

3 WHAT S MYANMAR ENERGY PATH? There are many paths. GUIDING COMPASS: AFFORDABLE, EQUITABLE, SUSTAINABLE ACCESS TO ENERGY FOR ALL 12/06/59

4 LEAPFROGGING.

5 Energy development leapfrogging? Smart, clean, efficient, affordable energy for all dirty polluting impactful sunset technologies

6 LESSONS LEARNED FROM THAILAND AND ELSEWHERE

7 THAILAND S ENERGY PATH: A BRIEF HISTORY Centralized and decentralized model competing for dominance Cold War politics and the World Bank influenced the dominance of the centralized model Changing structure of energy management toward increasing commercialization and privatization From government operation -> state-owned enterprises -> corporatization -> privatization Period of rapid growth after formation of EGAT, MEA, PEA Achieved 99% electrification since early 1990s.

8 A SEEMINGLY GLITZY SUCCESS STORY WITH MANY LESSONS LEARNED

9

10 ท มา Chavalit Pichalai, EPPO, land s Power Development Plan Thailand s Power Development Plan 2015 (PDP 2015)

11 ท มา Chavalit Pichalai, EPPO, land s Power Development Plan Thailand s Power Development Plan 2015 (PDP 2015)

12 INCENTIVE STRUCTURE FOR UTILITIES: THE HIGH THEIR INVESTMENT BUDGET, THE MORE PROFITS Financial criteria for utilities link profits to investments Thailand uses outdated returnbased regulation WB s promoted financial criteria such as self financing ratio (SFR) also have similar effects ROIC (Return on Invested Capital means: the more you invest, the more profits ROIC = Net profit after tax Invested capital EGAT 6.4% MEA 5.8% PEA Result : EGAT favors capital-intensive investments (centralized plants) by its organization or subsidiary companies. Allowing more EE or RE generation hurts EGAT s bottom line

13 THAILAND INDUSTRY STRUCTURE Source: WWF, Thailand Power Sector Vision 2050: Toward 100% Renewable Energy by 2050, May 2016.

14 CONFLICT OF INTEREST CASE OF EGAT AND ITS PRIVATIZED SUBSIDIARY Source:

15 Plenty of Renewable Energy Resources to Meet Growing Demand (WWF 2016 Study) Source: WWF, Figure 66 Thailand Generation Mix (ASES), Thailand Power Sector Vision 2050: Toward 100% Renewable Energy by 2050, May 2016.

16 COGENERATION OR COMBINED HEAT AND POWER CHP พล งงาน

17 Cheapest source of energy = energy not used The benefit of end-use energy saving multiplies 10 folds up-stream.

18 PLANNED CAPACITY TO MEET DEMAND GROWTH IN PACIFIC NORTHWEST, USA (5 TH PLAN) 5000 Cumulative Capacity (MW)* Coal-fired (ICG) (MW) CCGTurbine (MW) SCGTurbine (MW) Wind (MW) Energy Efficiency *Actual future conditions (gas prices, CO2 control, conservation accomplishments) will change resource development schedule and amounts. Source: Northwest Power and Conservation Council

19 No immunity/ High volatility Financial System Office of the National Economic and Social Development Board O F F I C E O F T H E P R I M E M I N I S T E R Macroeconomic Analysis Enabling factors: MACROECONOMIC MANAGEMENT (Low margin/return) Low Value Creation High Import Contents & Sheer size of export to GDP High Energy Intensity & Low Efficiency & Unsustainable structure Lack of Saving Slow Technology Development

20 THAILAND S GDP GROWTH PROJECTION Source:

21 THAILAND S HOUSEHOLD DEBT % OF DISPOSABLE INCOME Source:

22 PAK MUN DAM STORY A World Bank funded project completed in 1994 Run-of-river 126 MW hydroelectric dam on a main tributary of Mekong River Source of on-going conflicts due to impacts on fish migration and livelihood of people Photo:

23

24

25 Pak Mun Dam Electricity production and consumption (GWh) Siam Paragon 123 Impacts of Pak Mun Dam alone 1700 families relocated Loss of livelihood for >6200 families Loss of 116 fish species (44%) Fishery yield down 80% Dams Shopping Malls MBK 81 Central World 75 Mae Hong Song 65 Source: MEA, EGAT, Searin, Graphic: Green World Foundation

26 LESSONS FROM THAILAND S ENERGY PATH Pitfalls Plans and investments driven by vested interests, not the need of the country Expensive, centralized sunset technologies chosen over cleaner, cheaper energy options Over-consumption and overspending are dragging down people and the economy. Outcome Sustainable? Affordable? Equitable? Efficient? Self-sufficient? Democratic? Accountable? Peaceful? 12/06/59

27 IF ENERGY SYSTEM = HUMAN BODY An uncontrolled, malignant growth of a profit-oriented, monopoly, centralized power system? 12/06/59

28 MYANMAR POWER SECTOR

29 Can Myanmar leapfrog similar pitfalls? Smart, clean, efficient, affordable energy for all dirty polluting impactful sunset technologies

30 PERCENTAGE OF ELECTRIFIED VILLAGES (>70% HOUSEHOLD ACCESS TO ELECTRICITY): GRID VS. OFF-GRID/MINI-GRID 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Electrified by off-grid/mini-grid systems Electrified by grid Unelectrified (villages with <70% HH access) Data source: DRD, End of FY 70% Rural Electrification Village, May 2016

31 38,560 Villages Remain to be Electrified Of villages already electrified potential remains for upgrades or hybridization of existing MHP and diesel mini-grids, enhancement for productive loads World Bank estimates by 2021, 5.5M households will remain without access to the national grid, 1.3 million are in the remote areas of Chin, Kachin, Kayin, Shan, Rakhine, Taninthayi and Sagaing Status of Village Electrification National Grid 6,918 Assuming average 200HH/village, 27,500 villages are expected to remain off-grid by 2021 Average rural HH spends US $7/month on fuel and lighting, assume 2021 off-grid residential market totals $462M annually Mini-grid market size will depend on village profiles (number and distribution of HHs, presence of local enterprise) and opportunities for collocation with SHS and national grid Further assessment and coordination with government needed to identify villages larger than 200HHs and appropriate for commercial mini-grids Remaining Villages 38,560 Biomass/Bio Solar gas 2,693 1,232 Generators 13,088 Micro-Hydro 2,426 Data Sources: Department of Rural Development 2015; World Bank NEP PAD 2015; Consultant Analysis Source: Rachel Posner Ross & Sanjay Khazanchi, Smart Power for Rural Development Myanmar Mini-Grid Market Assessment Presentation, May

32 Electrification Context: 2014 Census Data Rural HH Lighting Sources Other 3% Rural HH Communications Technology Water mill 2% Solar 11% Electricity 15% Item # HHs % HHs Radio 3,036, % Generator 11% Battery 21% Candle 26% Kerosene 11% TV 3,071, % Landline phone 238, % Mobile phone 1,644, % Computer 66, % Internet at home 155, % None 2,849, % Source: Rachel Posner Ross & Sanjay Khazanchi, Smart Power for Rural Development Myanmar Mini-Grid Market Assessment Presentation, May

33

34 STATUS OF POWER SECTOR - MYANMAR Installed grid generation capacity ~ 4,900 MW Hydropower ~ 3,100 MW (1,100 MW private) Gas-fired ~ 1,600 MW (900MW operating; 622 MW private) Coal ~ 120 MW Installed off-grid generation capacity ~ 135 MW Peak demand ~ 2,500 MW (February 2016) Source: Myanmar Energy Team, the World Bank, Electricity Sector Financial and Regulatory Issues Presentation at National Electrification Plan Workshop, Nay Pyi Taw, 18 May 2016

35 ELECTRICITY DEMAND GROWING STEADILY Source: Xiaoping Wang, the World Bank, Myanmar: Towards Universal Access to Electricity by 2030 Presentation in Yangon, November 28, 2014

36

37

38 Source:

39 UTILITIES ARE BLEEDING FY2014/15 ESE & MESC ~ 6,333 million kwh (averaged 70 kyats) YESC ~ 4,922 million kwh (averaged 79 kyats) For every kwh sold, utilities suffers a financial loss of 5.3 kyats Preliminary FY 15/16 loss ~ 22 kyats/kwh of final sales or over 240 billion kyats Source: Myanmar Energy Team, the World Bank, Electricity Sector Financial and Regulatory Issues Presentation at National Electrification Plan Workshop, Nay Pyi Taw, 18 May 2016

40 Strong push to commercialize Myanmar power Sector institutions through corporatization and Significant tariff increases Source: Deloitte, Myanmar Power Sector Financial Analysis and Viability Action Plan Presentation at National Electrification Plan Workshop, Nay Pyi Taw, 18 May 2016

41 PROBLEMS COMPOUNDED BY ONE SIZE FITS ALL SOLUTIONS? Lack of understanding of complex relationships in Myanmar power sector institutions Neo-liberal lens used by international financial institutions => biased toward commercialization, corporatization, and privatization. YESC, ESE, MESC As in Thailand and elsewhere Financial distress = pre-text for sweeping reforms towards profit-oriented, centralized control and decision making, with insufficient checks and balances 12/06/59

42 CHANGING ROLE OF ELECTRICITY Public goods Commercial service Commodity in the stock market

43 LEADING TO A MESSY SITUATION? 12/06/59

44 UNDERSTANDING MYANMAR ENERGY PLANS

45 MYANMAR POWER SECTOR PLANS BEING SHAPED BY DONORS Source: JICA, National Electricity Master Plan

46

47 THE WORLD BANK: NATIONAL ELECTRIFICATION PLAN Source: Xiaoping Wang, the World Bank, Myanmar: Towards Universal Access to Electricity by 2030 Presentation at National Electrification Plan Workshop, Nay Pyi Taw, 18 May 2016

48 THE WORLD BANK: NATIONAL ELECTRIFICATION PLAN Source: Xiaoping Wang, the World Bank, Myanmar: Towards Universal Access to Electricity by 2030 Presentation at National Electrification Plan Workshop, Nay Pyi Taw, 18 May 2016

49 Source: Xiaoping Wang, the World Bank, Myanmar: Towards Universal Access to Electricity by 2030 Presentation at National Electrification Plan Workshop, Nay Pyi Taw, 18 May 2016

50 Source: Xiaoping Wang, the World Bank, Myanmar: Towards Universal Access to Electricity by 2030 Presentation at National Electrification Plan Workshop, Nay Pyi Taw, 18 May 2016

51 COMPARISON OF ELECTRIFICATION OPTIONS: INITIAL CAPITAL COST VS. LEVELIZED COST OF ENERGY AT DIFFERENT CONSUMPTION LEVELS Note: The size of the dots corresponds to the levels of consumption in Watt-hours/day. Source: Chris Greacen (2016) Data sources: World Bank, ADB reports.

52 VS

53 POWER GENERATION DEVELOPMENT PLAN Source: JICA, Final Report: The Project for Formulation of the National Electricity Master Plan in the Republic of the Union of Myanmar, December 2014.

54 CONCEPTUAL MAP OF POWER GENERATION DEVELOPMENT PLAN Source: JICA, Final Report: The Project for Formulation of the National Electricity Master Plan in the Republic of the Union of Myanmar, December

55 GAS PRODUCTION & CONSUMPTION IN MYANMAR 100% 90% Zawtika Other Electricity Domestic Use 80% 70% Shwe To China 60% 50% 40% 30% 20% Yetagun Yadana To Thailand Export 10% 0% On shore Production by source Uses of Myanmar gas Data source: Than Min, MyanmaOil and Gas Enterprise, The Long term Energy Supply/Demand Outlook in Myanmar presentation at ASEAN Energy Connectivity 2016, March 2016.

56

57 MYANMAR ENERGY SELF SUFFICIENCY INDEX ( ) (Source: Asia Pacific Energy Portal & IEA, 2015)

58 PLAN OF NEW HYDROPOWER PLANTS (FINAL LIST NATIONAL ELECTRICITY MASTER PLAN) Source: JICA, Final Report: The Project for Formulation of the National Electricity Master Plan in the Republic of the Union of Myanmar, December 2014, page Of total planned capacity 45,680 MW 6,637 MW is for Myanmar

59

60

61 MYANMAR ENERGY BALANCE

62 2030 ENERGY BALANCE: ACCORDING TO MYANMAR ENERGY PLANS 30x increase in coal use (80% to be imported) > 50% gas export increase Hydropower export per MOEP plan Power loss increase (mainly from TPPs) Over six-fold increase of electricity consumption

63 COAL: POLLUTIONS AND DESTRUCTION OF LIVELIHOODS ARE OF GREAT CONCERNS

64 12/06/59

65 COMBINED COST OF ENERGY PLANS Generation: $55.2 billion by 2030 Source: JICA, Final Report: The Project for Formulation of the National Electricity Master Plan in the Republic of the Union of Myanmar, December 2014.

66 CLEANER, MORE AFFORDABLE, MORE EQUITABLE, MORE DEMOCRATIC ENERGY PATHS FOR MYANMAR?

67 THANK YOU chomsgreacen at gmail dot com