Mega Wind Projects A Potential Tailwind For Myanmar
BMI View : We believe that the decision by China Three Gorges and Gunkul to develop wind energy in Myanmar is a strategically sound move. The country faces a clear deficit in electricity generation, and wind energy could reduce power shortages and help to diversify Myanmar's energy mix. Disruptions to the power supply are one of the biggest hindrances for economic progress and foreign investment to Myanmar, and these wind projects show that the government is keen to address the problem.
On October 6, the Myanmar Times reported that China Three Gorges (CTG) and Thailand's Gunkul Engineering were conducting feasibility studies for wind energy in Myanmar. Both companies had inked agreements with the government in 2011 to launch wind power projects in nine locations in Myanmar, according to the newspaper citing U Khin Maung Win, deputy director general of Electric Power under the Ministry of Electric Power. At present, Three Gorges is conducting surveys in Chin and Rakhine states as well as Ayeyarwady and Yangon regions, while Gunkul Engineering is assessing the feasibility of wind power in Mon, Kayin, Shan and Kayah states and Tanintharyi Region.
According to U Khin Maung Win, Gunkul and CTG are planning to build wind power plants with a total capacity of 2,930MW and 1,102MW respectively. These plans are based on the results from the initial feasibility studies. The studies are expected to last another one to two years so that both companies can accurately determine the amount of wind potential and optimal locations for projects. Gunkul has stated that it hopes to have farms operational by 2015 before reaching maximum capacity by 2018.
We believe that the decision by CTG and Gunkul to develop wind energy in Myanmar is a strategically sound move. The country faces a clear deficit in electricity generation, with only 30% of the population having access to electricity at present (according to the Ministry of Electric Power). In September 2012, the Ministry reported that electricity demand had reached 1,890MW against an actual supply of 1,500MW, and this gap has not been closed since. The government projects that it will need 14,500MW of new capacity by 2022, but has only signed memorandums for just around 6,000MW of thermal and hydropower generation capacity ( see 'Power: Opportunities In All Areas And Timeframes', July 9). As such, we see an attractive opportunity for CTG and Gunkul to develop and operate much-needed capacity to satisfy Myanmar's growing energy demand.
|Low Electrification Rate|
|South East Asia Countries - Electricity Access In 2009, %|
In our opinion, wind energy could reduce power shortages and help to diversify Myanmar's energy mix. The country is heavily reliant on hydropower for electricity generation (70% in 2010), and this reliance has grown in recent years. However, the country experiences several dry periods throughout the year. This resulted in lower utilisation rates for hydropower capacity, exacerbating the existing energy shortage. Meanwhile, the share of gas used in power generation has fallen from 62% to 31%, primarily due to the fact that gas supplies are being targeted for lucrative exports to Thailand and China. By developing wind energy, the government could reduce its reliance on hydropower, as well as free up more natural gas for exports.
|Growing Share Of Hydropower|
|Myanmar's Gas Use In Electricity Generation, TWh (LHC) & Gas Consumption By End-Use (RHC)|
We highlight that disruptions to the power supply is one of the biggest hindrance for economic progress and foreign investment to Myanmar, and the government is keen to address the problem. Since the beginning of the year, manufacturers in Yangon and Mandalay have complained that electricity shortages due to drought were causing operating costs to increase and putting the viability of some industries in the cities at risk ( see 'Power Shortages Hampering Economic Development', May 14). As mentioned above, the government has already signed memorandums for 6,000MW of capacity, and we see potential for the government to sign agreements for up to another 8,000MW of thermal or renewable capacity over the medium-term as it tries to reach its 2022 capacity target.
Besides wind energy, we have also witnessed growth in the solar sector in Myanmar. In January, Thai solar farm developer SPCG announced plans to develop and operate solar farms to serve rural communities in Myanmar. SPCG has said that the project will operate without connection to the main electricity grid, and that each plant will have a capacity of less than 2MW. The technology employed can circumvent the lack of capacity and lack of grid infrastructure ( see 'Myanmar Distributed Solar: More To Come', January 23). We highlight that distributed solar energy generation has the potential to be more cost-effective and robust than other forms of distributed generation, particularly diesel generation. To be sure, SPCG Chairwoman Wandee Khunchornyakong said that 'the cost of an oil generator is twice that of a solar farm'.