Amid Myanmar’s political unrest and blackouts, solar energy is a lifeline

August 30, 2022
A single light shines on a remote village in Myanmar where the national electricity grid doesn't reach. Credit: Brian Clark/Pact.

In Myanmar, the idea of having electricity all day, every day is a dream for nearly everyone. As the most energy poor country in Asia, Myanmar has long suffered from an unreliable power grid, and large swathes of the country remain unconnected. However, since a political crisis in 2021, families across the country have experienced increasingly frequent and disruptive power cuts ­— often up to eight hours a day — halting businesses, disrupting homes and putting health at risk.

While blackouts are not a new phenomenon in Myanmar, the high frequency and lengthy durations are. The military government, struggling to import enough gas for power generation, relies increasingly on hydropower, which as of last June, was supplying more than 30% of the country’s energy. However, Myanmar’s already insufficient dams will soon be generating even less as the ongoing rainy season comes to an end. With the national energy shortage worsening and the existing power grid deteriorating, Myanmar is experiencing a humanitarian and economic disaster.

In response to this immense energy shortage, some small businesses and factories cease operation for large parts of the day or rely on costly diesel generators. However, with diesel prices more than tripling in the past 16 months, generators are extremely expensive or entirely unviable, leaving solar energy as one of the few practical solutions. The problem? Myanmar’s solar sector is in its infancy, something that Smart Power Myanmar is striving to change.

Smart Power Myanmar (SPM), an initiative funded by The Rockefeller Foundation and implemented by Pact, is working to end energy poverty and promote economic opportunity in Myanmar by supporting the private sector enabling environment, providing targeted risk mitigation capital, and focusing on entrepreneurship and innovation in the rural energy space. As a catalytic facility, SPM partners with communities, solar project developers and investors to develop solutions that overcome the challenges perpetuating energy poverty in Myanmar.

Since 2018, Smart Power Myanmar has helped to finance over 60,000 electricity connections, impacted more than 300,000 rural lives and unlocked over US$32 million in investment and finance for Myanmar’s electrification.

A solar mini grid in Myanmar. Credit: Pact

Since 2018, SPM has helped to finance over 60,000 electricity connections, impacted more than 300,000 rural lives and unlocked over US$32 million in investment and finance for Myanmar’s electrification. Following Myanmar’s coup, SPM’s work has only become more critical.

“So many people are left in the dark, but Smart Power Myanmar is working to keep house lights on and businesses humming,” says Lin Thant Maung, SPM’s Senior Manager of Energy Access Innovation. “Neighboring communities and businesses are seeing this, and they want solar solutions too.”

One such solution is the development of solar systems for commercial and industrial businesses facing significant losses from power outages and soaring diesel generation costs. With solar power, businesses can decreased costs and boost productivity. Yet most are unable to purchase solar equipment in cash, as the upfront costs can surpass hundreds of thousands of dollars. Often, the only option is to source financing from local banks, but most are unfamiliar with solar finance, and in turn, lend at very high interest rates, if at all.

To overcome this barrier, SPM is bridging the gap between businesses and banks. First, SPM identifies successful, established businesses – typically factories – and develops an ideal solar solution. SPM then works directly with banks so they are comfortable financing projects. After solar installation is complete, businesses repay debts with its increased profit while banks collect from low-risk loans.

By helping banks and businesses gain experience in solar development and financing, SPM hopes to catalyse a broader chain of financing for renewable energy, one that will create jobs, save jobs and stimulate economic growth. By the end of 2022, SPM expects to have facilitated four loans, unlocking more than $740,000 in investment. These solar installations will power a diverse set of businesses, ranging from a rubber factory to an avocado oil distillery. However, while this support is vital to Myanmar’s economic future, the country’s renewable energy transition requires a multi-pronged approach.

SPM is also working to advance the development of solar mini-grids, networks of solar panels and equipment that can support entire communities. In Myanmar, more than 116 villages are too remote for government electricity and depend exclusively on mini-grid power. However, many of these mini-grids are struggling to survive because of a mismatch between energy supply and community needs. Additionally, mini-grid operating costs have increased substantially and unexpectedly since Myanmar’s political crisis and the war in Ukraine. If mini-grid energy providers – which act as the local power company – can’t sell enough electricity, they are unable to cover their costs. Without significant energy use from villages, energy providers cannot maintain existing grids.

Part of SPM’s focus is solving this issue by collaborating with energy providers and communities to build demand for solar mini-grid power. It begins by meeting with energy providers to evaluate the potential energy demand of struggling mini-grid sites. SPM then makes in-person visits to communities. After discussions with village leaders, business owners and households, SPM commonly finds that many potential customers haven’t connected to the mini-grid because they don’t have the right information or support. Some people can’t afford the connection fees, some do not understand how to convert their diesel-powered equipment to electric motors, and others simply never considered the cost savings for their businesses.

“When it comes to improving mini-grid sustainability, there is no silver bullet, which is why SPM is currently testing multiple solutions,” says Min Chan Win, SPM’s Distributed Renewable Energy Director. “However, filling the knowledge and support gap is one of the most crucial.”

An SPM staff member discusses the benefits of solar power with villagers. Credit: Smart Power Myanmar

To overcome these challenges, SPM uncovers what kind of support is needed so people can access and use the available mini-grid electricity. It starts by working closely with the community to provide workshops and financing that enable connections and business growth. SPM also provides expert guidance for conversions of technical equipment. In one instance, with SPM’s technical and financial support, a business owner was able to connect to solar mini-grid power, and because he no longer used an inefficient diesel generator, his energy costs fell by 700% and his emissions dropped to zero. 

From bank boardrooms and factories to thatched huts, SPM believes that the health, safety and economic futures for millions of people in Myanmar depend on the country’s vast solar conversion opportunities.

“If families and businesses across Myanmar had access to solar energy for these kinds of productive uses, the impact would be immense,” Min says. “This is what we are working for.”