With decades of international isolation over, Myanmar is today poised for a period of rapid growth. Energy needs to be at the heart of this transformation – creating new jobs, new wealth, attracting foreign investment and fuelling institutions, businesses and homes across the country. Access to sufficient, reliable, affordable and sustainable energy will be critical.
Myanmar’s current energy status quo is crippling to its development – 74% of the population has no access to electricity, and 44 million people are without power daily. For those that do have access to power, a decrepit energy infrastructure and a grid over-reliant on seasonal hydropower leads to high transmission and distribution losses and frequent power cuts. Highly subsidized gas and electricity means that, where it is available, people don’t use it wisely and investors see limited opportunities. A sector with significant potential environmental and social impacts is poorly protected by current safeguards and regulations.
Today, 75% of Myanmar’s energy comes from biomass – mainly fuel woods from natural forests – a reality that has alarmingly accelerated deforestation rates in a country with still over 40% forest cover. The rest is natural gas, crude and refined oil, coal and hydropower. The natural gas conundrum is that while gas is a significant source of government revenues, with over half of supply currently exported to Myanmar’s hungry neighbours, there already is insufficient supply to meet local demand.
For renewables, we are looking at huge unexploited energy potential. Hydropower, which currently accounts for 75% of power generation, could be ramped up while agriculture residue could be used for biomass; considerable geothermal and solar potential has been identified, though currently only piloted.
So, where does Myanmar go from here? The good news is that decades of under-development and under-exploitation means that Myanmar has a relatively clean slate from which to build its new energy architecture. It is in a position to leapfrog the conventional development route by harnessing the technological innovations of the 21st century.
Directly distributed energy generation, including off-grid renewable and small-scale hybrid systems can power up rural populations currently in the dark. Efficient transmission and distribution technologies, efficient and scalable natural gas technologies, and clean coal practices could all become the norm. Learning from the economically, environmentally and socially expensive mistakes or successes from other countries will be paramount.
Energy leaders in Myanmar identify four key barriers to the growth of their businesses: pricing distortions caused by blanket subsidies; a lack of mandatory rules or regulations to promote local businesses; technical skills shortages, particularly in engineering; and a lack of access to finance through local banks. This is what they want their government and international partners to tackle.
The following two key recommendations will help lead the country on a path to inclusive and sustainable growth in the energy sector.
- Development partners and donors should focus efforts on establishing the enabling environment to “do business” in the energy sector. This could include directed support for regulatory reform, institutional and financial system strengthening, transparency, and social and environmental standards. It could also include public-private partnerships to improve the risk-reward profile for local businesses – from price support mechanisms, risk guarantees and payment for performance schemes, to investment of debt or equity.
- International public and private sector partners should focus on technology and skills transfer to help design, implement and deliver the energy transformation. This could include facilitated business-to-business knowledge exchanges and commercially structured arrangements.
Author: Celine Herweijer co-leads PwC’s Climate Change and International Development business. She is a 2013 Young Global Leader
Image: A traditional light bulb REUTERS/Michaela Rehle