Myanmar’s Energy Paradox: Abundant Resources, Growing Poverty

Myanmar, despite its rich energy resources, is facing severe energy poverty due to political instability, outdated infrastructure, and underdeveloped renewable energy projects. A World Bank report highlights the challenges in the energy sector, particularly the decline in hydropower and gas power generation, the slow progress in solar energy, and the struggles of off-grid mini-grids in rural areas. The report calls for substantial investments and policy reforms to address these deep-rooted issues and unlock the country's energy potential.

A Land of Plenty Amid Darkness

In a country rich with untapped energy resources, Myanmar finds itself paradoxically grappling with energy poverty. The "Myanmar Energy Sector Update: Energy Poverty Amid Plenty," a recent World Bank report published in June 2024, paints a concerning picture of a nation struggling to keep the lights on despite being endowed with vast potential.

Myanmar's rivers possess a hydropower potential exceeding 100,000 megawatts (MW), while its hydrocarbon reserves are substantial, with crude oil, natural gas, and coal deposits promising significant energy outputs. Yet, the installed hydropower capacity as of 2023 is a mere 3,262 MW, a fraction of what is possible. Solar energy, too, holds promise, with Myanmar’s location in the “sunbelt” allowing for substantial solar power generation. However, these vast resources remain largely untapped due to a mix of political instability, conflict, and outdated infrastructure.

The Energy Crisis Deepens

The report highlights how the situation has deteriorated sharply since Myanmar’s energy sector hit its peak operational capacity in May 2021. Since then, the country’s electricity production has been on a steep decline, exacerbated by the departure of foreign investors and a drastic reduction in gas supply. Hydropower, once the backbone of the national grid, is increasingly unreliable. Many smaller hydropower plants, especially those in conflict zones, have seen their output dwindle or cease altogether.

The crisis in gas-fired power generation is equally dire. The withdrawal of key foreign investors, like Hong Kong-based VPower, has left the country’s gas power plants operating at a fraction of their capacity. Myanmar’s reliance on gas for electricity, once seen as a stabilizing force, has now become a liability. With the gas supply shrinking, the country has been forced to revert to a hydro-dominated energy model, but with a national grid that is now more fragile than ever.

Renewable Energy: A Flickering Hope

Solar power, which could be a significant player in Myanmar’s energy landscape, remains underdeveloped. The country currently has six grid-connected solar plants, but these contribute only a small amount to the overall energy mix. The military coup in 2021 disrupted ambitious solar energy projects, leaving many planned plants incomplete or abandoned.

Despite efforts to revive solar energy through public tenders and new project proposals, progress has been slow. The report notes that while some solar plants have been able to generate near their peak capacity, the overall contribution of solar energy remains minimal. The potential for wind energy is also being explored, but like solar, it faces significant hurdles in terms of implementation and scaling.

The Struggle for Power in Rural Areas

While the national grid falters, off-grid mini-grids in rural areas have shown remarkable resilience. Developed under the Myanmar National Electrification Plan (NEP), these mini-grids have been crucial in providing electricity to remote communities. However, they too are under strain. The rising costs of fuel, inflation, and a lack of skilled labor are threatening their sustainability.

The report highlights that many mini-grids, particularly those in conflict-affected areas, are now struggling to operate. The financial viability of these mini-grids has been undermined by fixed electricity tariffs that no longer cover the cost of service due to currency depreciation and inflation. Yet, despite these challenges, a significant number of mini-grids continue to provide a more reliable power supply than the national grid, offering a glimmer of hope in an otherwise bleak energy landscape.

A Path Forward

Myanmar's energy sector is at a critical juncture. The report makes it clear that without substantial investments and comprehensive policy reforms, the country will continue to suffer from energy poverty, even as its natural resources remain underutilized. The challenges are structural and deep-rooted, tied to the ongoing political instability and conflict that plague the nation.

The energy crisis is not just about power outages; it’s a reflection of the broader struggles facing Myanmar. To move forward, the country needs a stable and inclusive political environment, coupled with strategic investments in its energy infrastructure. Only then can Myanmar hope to harness its abundant resources and provide reliable electricity to all its citizens.