Power policy

Myanmar’s National Electrification Plan targets 50% electrification by 2020 and 100% by 2030. The country appears to be on track to meet these goals. Electrification rate crossed 50% in 2019 and was at 57% by 2020. Electricity demand is rising fast as a result, but power plant construction is lagging behind. During the dry season, when hydropower output is low, the grid operator is forced to resort to rolling blackouts.

Myanmar aims to have renewables reach 11% of all new added capacity by 2030. It announced it’s first-ever tender for solar power in May 2020, expecting to kick-start a solar industry in the country. The 2021 coup delayed the tender. The military junta run country has floated a new solar tender for 2021. All utility-scale solar is procured via tenders. There is no countrywide feed-in tariff program.

Previously, the exemptions on solar hardware were available only to imported equipment. The new tax law drops that distinction. No other clean energy technology is addressed in the law. Besides, if the investors are located in the special economic zones (Kyauk Phyu, Dawei, and Thilawa), they are exempted from income tax and custom duties on all imported materials for 5-7 years. Myanmar has no VAT, but it has a 5% commercial tax on all turnover. Electricity exports have a specific 8% rate. Solar panels, solar charger controllers, and solar inverters are exempt from the commercial tax. Companies registered under the Myanmar Foreign Investment Law (MFIL) also enjoy accelerated depreciation.

Power prices and costs

Power prices were low and highly subsidized before 2018, when they were raised to fund new grid investments. Prices for commercial users have almost doubled with rates jumping from $55.31 per megawatt hour in 2017 to $105.07/MWh in 2020. Industrial rates also rose slightly from $82.96/MWh to $97.82/MWh in 2020. Residential rates remained the same for the smallest users (35 kyat per kilowatt hour), but rose sharply for those who use more than 30kWh per month. Even the highest residential rates remain well below those of neighboring Thailand. Residential users in India pay roughly three times more than the tariff in Myanmar.

Power market

Natural gas and large-scale hydro are two dominant sources of energy for Myanmar, accounting for over 90% of the country's installed capacity. Renewable energy is getting traction, with the country's first utility-scale solar plant of 40MW coming online in May 2019, and a tender for 1.06GW of solar completed in July 2020. Generation is open to private participation. Commercial and Industrial (C&I) providers cannot sell power via the grid, but provide only on-site solutions. Private participation in transmission can be allowed with a specific permit. The Department of Electric Power Transmission and System Control is the system operator, in charge of transmission. Electricity Supply Enterprise, Yangon ESC, Mandalay ESC are responsible for distribution within their dedicated geographic areas. Most power capacity is concentrated in the state-owned MEPE, but independent power producers and power rental/lease companies also operate in Myanmar.

Although the country's power market is still dominated by a few state owned players, it is starting to open up power generation to foreign players. Sembcorp Power, a Singaporean utility, became the first foreign independent power producer in Myanmar in 2019. Chinese players are very active in the market. Japan's Marubeni Corporation won a $2 billion tender to build a 1.25GW gas power plant in July 2020. C&I customers can procure rooftop solar energy solutions from developers such as Mandalay Yoma, which has done about eight C&I projects in Myanmar. C&I companies can only provide on-site solutions, and cannot sell via the grid.

Myanmar's clean energy investment has been dominated by overseas concessional finance from the World Bank and the Asian Development Bank. Besides, utilities from China, Europe and Southeast Asian countries are investing and developing renewable energy projects in Myanmar.

Doing business and barriers

Myanmar will need to increase its power capacity four-fold by 2030 from the 2017 level to meet its demand, partly arising from the target of 100% electrification. In addition to developing utility scale gas plants and renewables, the government has ambitious plan to build microgrid and offgrid projects across the country, with funding from multilateral development agencies. Myanmar's 2014 National Electrification Program specifies universal access to electricity for all by 2030 in three phases: 55% access by 2020 - 2021, 75% access by 2025 -2026 and 100% access by 2030. Self-use is an important part of the mix in Myanmar. The government's national electrification plan details where mini-grids would be the cheapest solution. The National Electrification Plan has a timetable for when and where the main grid is going to expand, but no clear regulatory framework is set on the arrival of the grid.

There are no feed-in tariffs to support renewable power. Projects are subject to non-transparent negotiation with the government. Many large-scale hydro projects became ensnared in controversies and were held back by local protests. This might impact future development of large scale wind projects as well. As the market is not yet liberalized, it is not clear if the state owned grid companies are willing to keep to the terms of the power purchase agreements.

The major barrier currently in Myanmar is political volatility. The military junta run country has announced a solar tender that took into account some concerns about the May 2020 tender. However, complaints remain. More time is required to secure land. Environmental and social impact assessments that need to be submitted as part of the bid can take 1.5-2 years to complete. Bidders are required to submit bids inclusive of taxes, which increases risk as it is hard to predict how taxes might change over the PPA period. The country's attempt to kick off solar was delayed. The new government submitted an updated NDC in July 2021, on lines expected before the coup, and has launched a second solar tender. Securing foreign investment is likely to be challenging however.

There have been instances of non-payment of electricity bills by the general population as a form of protest. This is impacting utilities, and could snowball into a larger problem. Though foreign developers are welcome to enter the market, they would be unlikely to do so given the current volatile situation and risk profile.

EV market

Myanmar's NDC has a single EV incentive, in the form of tax exemption on import registration fees.

EV policy

The government has yet to implement any substantive policy support in this sector and the EV market remains at an early stage.

Buildings market

Myanmar 2021 NDC targets improvement of energy efficiency of the residential sector by 7.8%, the industrial sector by 6.63%, the commercial sector by 4%, and other sectors by 1.36% by 2030. The policy target for energy efficiency is a total improvement of 20% by 2030 (2012 as a base year), avoiding a cumulative 0.133 million tCO2e.

Buildings policy

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.