Power policy

Myanmar’s National Electrification Plan targets 55% electrification by 2021 and for 100% of all homes to be connected to a power supply by 2030. The country appears to be on track to meet these goals. The electrification rate stood at 70% by 2020, according to the World Bank. 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 announced its first-ever tender for solar power in May 2020, expecting to kick-start the industry, but the 2021 coup delayed the tender. The military junta running the country has floated a new solar tender for 2022. All utility-scale solar is procured via tenders. There is no countrywide feed-in tariff program.

Previously, 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 value-added tax, 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 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 from 2020-21 dropped slightly as the Lao kip lost value, although consumer rates remained the same, including the subsidy for residential users with consumption up to 150 kilowatt-hours per month. Prices for commercial users fell from a peak of $105 per megawatt-hour (MWh) in 2020 to $87.35/MWh in 2021. Industrial and residential rates also slightly dropped from $97.82/MWh and $25.36/MWh in 2020 to $81.33/MWh and $21.08/MWh in 2021, respectively. 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 the two dominant sources of energy for Myanmar, accounting for over 87% of the country's installed capacity. Renewable energy is getting traction, with the country's first utility-scale solar plant of 40 megawatts coming online in May 2019, and a tender for 1.06 gigawatts (GW) of solar completed in July 2020. Renewables represented 9% of the total installed capacity in 2021.

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 and Mandalay ESC are responsible for distribution within their dedicated geographic areas. Most power capacity is concentrated in the state-owned Myanma Electric Power Enterprise, but independent power producers and power leasing 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. Utilities from China, Europe and Southeast Asian countries are also investing and developing renewable energy projects in Myanmar.

Doing business and barriers

Myanmar will need to increase its power capacity fourfold by 2030 from 2021 levels to meet demand, partly arising from the target of 100% electrification. In addition to developing utility-scale gas plants and renewables, the government has an ambitious plan to build micro-grid and offgrid projects across the country, with funding from multilateral development agencies. 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 strategy also includes a timetable for when and where the main grid is going to expand, but no clear regulatory framework has been set.

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 (PPAs).

The major barrier currently in Myanmar is political volatility with a military junta in power. Myanmar has announced a solar tender that took into account some concerns about the May 2020 offer. However, complaints remain and 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 the lines expected before the coup, and has launched a second solar tender. Securing foreign investment is likely to be challenging.

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 electric vehicle (EV) market remains at an early stage, with a lack of a legal framework and few incentives to encourage consumers to switch to low-carbon alternatives. EVs are exempt from import registration fees.

EV policy

The government has yet to implement any substantive policy support in this sector.

Buildings market

Myanmar’s 2021 NDC targets improving energy efficiency in 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 objective for energy efficiency is a total improvement of 20% by 2030, compared to 2012 levels, avoiding a cumulative 0.133 million tCO2e. However, the government has yet to implement any substantive policy support in this sector and the low-carbon buildings market remains at an early stage.

Buildings policy

There are no specific laws.