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Scoping Off-Grid Renewable Energy Opportunities in Myanmar
Asian Development Bank
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The views expressed in this publication are those of the authors and do not necessarily reflect the views and
policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent.
ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility
for any consequence of their use.
By making any designation of or reference to a particular territory or geographic area, or by using the term
country in this document, ADB does not intend to make any judgments as to the legal or other status of any
territory or area.
ADB encourages printing or copying information exclusively for personal and noncommercial use with proper
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Table of Contents
ABBREVIATIONS ........................................................................................................................................ v
ACKNOWLEDGMENTS .............................................................................................................................. vi
1. Introduction and Background ................................................................................................................ 1
2. Study Method and Data Sources .......................................................................................................... 4
3. Socio-Economic Characteristics of Households ................................................................................... 7
3.1 Mandalay Region.......................................................................................................................... 7
3.2 Chin State ..................................................................................................................................... 8
4. Demand and Supply for Electricity and Lighting ................................................................................. 10
4.1 Mandalay Region........................................................................................................................ 10
4.2 Chin State ................................................................................................................................... 12
5. Household Ability to Pay, Manage, and Maintain Electricity Services ................................................ 15
6. Proposed Solutions to Improve Electricity Access for Mandalay Region and Chin State ................... 18
6.1 Component 1: Promoting Solar PV Home Systems in Mandalay Region and Chin State using
an Output-Based Aid Subsidy .................................................................................................... 18
6.1.1 Output-Based Aid (OBA) Subsidy to Promote Solar PV Home Systems ......................... 19
6.1.2 Business Model ................................................................................................................ 21
6.2 Component 2: Proposed Pilot Projects in Mandalay Region ...................................................... 22
6.2.1 Component 2.1: Solar Lantern Charging and Rental Station in Ywar Taw Village .......... 22
6.2.2 Component 2.2: Solar Lantern Charging and Rental Station in Than Taw Village .......... 23
6.2.3 Component 2.3: Solar Lantern Charging and Rental Station in Zawin Village ................. 26
6.2.4 Component 2.4: Solar PV Mini-Grid in Young Kyin Village .............................................. 29
6.2.5 Component 2.5: Solar PV Mini-Grid in Ye Ngan Village .................................................. 32
6.3 Timeline Moving Forward ........................................................................................................... 37
7. Conclusions and Next Steps ............................................................................................................... 38
APPENDIX A: Detailed Descriptions of Surveyed Villages in Mandalay Region and Naypyitaw Territory 40
APPENDIX B: Detailed Descriptions of Surveyed Villages in Chin State .................................................. 95
APPENDIX C: Summary of Surveyed Villages and Proposed Solutions by Villagers in Chin State ........ 104
APPENDIX D: Summary of Surveyed Village and ADB Proposed Renewable Technologies in Mandalay
Region ...................................................................................................................................................... 107APPENDIX E: Summary of Surveyed Villages and Proposed Renewable Technologies in Chin State .. 110
APPENDIX F: Operational Guidelines of the Output Aid-Based Program to promote Solar PV Home
Systems .................................................................................................................................................... 111
APPENDIX G: Technical Specifications for proposed SHS (30 Wp) ....................................................... 113
APPENDIX H: Technical Specifications for proposed SHS (70 Wp) ........................................................ 117
APPENDIX I: Technical Specifications for proposed SHS (110 Wp) ....................................................... 121
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List of Tables
Table 1: Range of Household Monthly Spending on Electricity and Energy for Lighting with Household
Wealth Classification .......................................................................................................................... 16
Table 2: Budget for Subsidy Requirements for Solar PV Home Systems (SHS) (USD) ............................ 21
Table 3: Financial Analysis for Solar Lantern Charging & Rental Station in Ywar Taw Village .................. 23
Table 4: Financial Analysis for Solar Lantern Charging & Rental Station in Than Taw Village .................. 25
Table 5: Financial analysis for 26% subsidy on upfront costs in Than Taw Village ................................... 25
Table 6: Financial Analysis for Solar Lantern Charging and Rental Station in Zawin village ..................... 27
Table 7: Financial analysis for 63% subsidy on upfront costs in Zawin Village.......................................... 28
Table 8: Financial Analysis for 40% subsidy on upfront costs in Zawin Village ......................................... 28
Table 9: Affordability for Electricity/Lighting Energy Classification (Zawin Village) .................................... 29
Table 10: Financial Analysis for Solar PV Mini-Grid in Young Kyin Village................................................ 30
Table 11: Financial Analysis for 79% subsidy on upfront costs in Young Kyin Village (US$) .................... 31
Table 12: Financial Analysis for 60% subsidy on upfront costs - Young Kyin village (US$) ...................... 32
Table 13: Financial Analysis for 70% subsidy on upfront costs - Young Kyin Village (US$) ...................... 32
Table 14: Financial Analysis for Solar PV Mini-Grid in Yengan Village...................................................... 34
Table 15: Financial Analysis for 88% subsidy on upfront costs in Yengan Village (USD) ......................... 35
Table 16: Financial Analysis for 70% subsidy on upfront costs - Yengan Village (US$) ............................ 36
Table 17: Financial Analysis for 60% subsidy on upfront costs - Yengan village (US$) ............................ 36
Table 18: Summary of Proposed Projects and Project Cost by Village/Location ....................................... 39
List of Figures
Figure 1: Map of Myanmar indicating the focus areas of Mandalay Region and Chin State ........................ 2
Figure 2: Map of villages surveyed in Mandalay Region .............................................................................. 5
Figure 3: Map of villages surveyed in Chin State ......................................................................................... 6
Figure 4: Sources of Electricity and Energy for Lighting in Mandalay Region............................................ 10
Figure 5: Flow Chart Describing the Proposed OBA Program ................................................................... 19
Figure 6: Schedule for current activities under Energy For All energy access projects in Myanmar ....... 37
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ABBREVIATIONS
AC - alternating current
ADB - Asian Development Bank
CFL - compact fluorescent lamp
DC - direct current
EUEI - European Union Energy Initiative
hh - household
kW - kilowatt
kWh - kilowatt-hour
LED - light-emitting diode
NPV - net present value
OBA - Output-Based AidO&M - operations and maintenance
SHS - Solar Photovoltaic (PV) Home Systems
UNDP - United Nations Development Programme
Wp - watt-peak
Currency: 900 Kyats = $1 USD
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ACKNOWLEDGMENTS
This report was developed by a team of consultants under the Asian Development Banks
Regional Technical Assistance (RETA) Grant, Technical Assistance for Energy for All Initiative(TA 6443-REG, TA-7512). The work presented in this report was conducted from September to
November 2013 in Myanmar. The team was led by Pradeep Tharakan (Senior Climate Change
Specialist, ADB) and Jiwan S. Acharya (Senior Climate Change Specialist, ADB). The study
was carried out by a team of ADB consultants consisting of Hussain Haider (Team Leader),
Voravate Tuntivate, U Kyaw Seynn, and U Kan Sein. This report was written by Voravate
Tuntivate and edited by Maura Lillis (Consultant, ADB).
This study has been conducted for the Government of Myanmar through financing from the
ADB. The study team wishes to thank the Ministry of Industry of Myanmar for its kind
collaboration.
Photo credits: Cover was designed by Charmaine Caparas with photo by Claude LeTien.
Photographs in the report were provided by the field team.
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Introduction and Background
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1. Introduction and Background
Myanmars new era of political and economic openness has initiated a wave of
development with the potential to have rapid benefits on a national scale. The government now
has the task of balancing the needs of its transitioning economy with the widespread poverty
which characterizes most of its population, particularly in the form of severely limited access to
clean sources of energy. The Asian Development Bank (ADB) has committed resources to
scaling up renewable energy access in rural Myanmar, where abundant natural resources
intersect with low local capacity across vast stretches of challenging terrain.
Myanmar has abundant energy resources, particularly hydropower and natural gas.
Unfortunately its power sector is considered to be one of the least developed in Southeast Asia.
With apopulation of about 60 million, Myanmars per capita electricity consumption is only 100
kWh per year, the lowest among ASEANs 10 countries. This low national average is due to the
countrys low electrification rate, low overall industrial development and lack of investment to
date. Although the countrys average electrification rate grew from about 16% in 2006 to 26% in
2011, it still lags far behind the countrys neighbors. Moreover, electrification in Myanmar tends
to be concentrated only in large cities: Yangon City has the highest electrification ratio (67%),
followed by Naypyitaw (54%), Kayar (37%), and Mandalay (31%). Beyond these city centers,
rural areas in Myanmar are still poorly electrified, averaging a rate of about 16%.1These areas
are also quite poor and often very difficult to physically access, posing a challenge to both the
economic acceptability and technical viability of energy technologies to poor communities
throughout the country.
Prior reports released by the United Nations Development Programme (UNDP), 2
European Union Energy Initiative (EUEI),3and Mercy Corps4,5have done much to advance our
understanding of the practices, resources and challenges of rural energy users in Myanmar, as
well as describe the current institutional makeup of the energy sector in Myanmars new political
landscape. The World Bank has estimated that it would take an investment of $444 million every
year until 2030 to achieve universal access to electricity in Myanmar6, and with needs this great,
it will take many years before the benefits of any national economic development can be seen
by the countrys full spectrum of citizens. At the same time, in the face of severe economic and
technical difficulty, these prior studies have documented both burgeoning demand and self-
starting enterprise in local energy markets. Channeling these strengths towards the productive
utilization of Myanmars abundant natural resources could do much to alleviate national
conditions of severe energy poverty.
1Asian Development Bank (ADB). 2012. Myanmar Initial Energy Assessment.October 2012. Manila, Philippines.
2UNDP.Accelerating Energy Access for All in Myanmar. United Nations Development Programme, Myanmar. 2013.
3European Union Energy Initiative. Mission Report: Energy Scoping Myanmar.April & Mary 2012.
4Mercy Corps. Myanmar Energy Poverty Survey. January 2011.
5Mercy Corps. Myanmar Household Energy Market Assessment. August 2012.
6World Bank and Australian Government. One Goal, Two Paths Achieving Universal Access to Modern Energy in
East Asia and the Pacific. Washington, DC: World Bank Group, 2011.
Scoping Off-Grid Renewable Energy Opportunities in Myanmar:
Mandalay Region and Chin State
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Introduction and Background
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The Asian Development Bank (ADB) has implemented the Energy For All Initiative to
explore new approaches and methodologies for helping poor households gain access to reliable
and affordable modern energy services, and to scale up these efforts to levels that can later be
supported by investment through ADB operations. Under the Energy for All Initiative, the ADB
has launched an in-depth study of select villages in two focus areas of Myanmar, Mandalay
region and Chin State,7
to contribute to the Government of Myanmars plans to expand energyaccess nationally. The study, described in this report, investigated the energy poverty situation
in Myanmar by using conditions from the villages observed over the course of this study to
serve as illustrative case studies of current household practices and needs. The ADB will be
using this analysis to implement renewable energy-based pilot installations in Mandalay Region
and Chin state, also under the Energy for All Initiative.
The main objective of these pilot projects will be to
provide poor communities living in rural villages (more
than five miles away from the electricity grid) with
sustainable access to household energy systems,
community energy systems, and key public services
through clean off-grid solutions.
With this report, the ADB hopes to contribute
to the existing body of knowledge on energy poverty
in Myanmar, and assist the government of Myanmar
with its priority for developing sustainable off-grid
energy solutions. Data collection methods are
introduced in the first section, followed by an
overview and discussion of the socio-economic
characteristics of households in each region. The
report then examines the supply and demand ofelectricity as well as demand for lighting energy, and
follows by characterizing current total household
expenditures for electricity and lighting energy. This
section will describe and equate current expenditure
levels with users ability to pay, which is based on
household budget reallocation. Finally, the report will
present specific project proposals and their
associated proposed delivery models for piloting
renewable energy solutions to these households and
communities. The pilot projects described in this
report will be carried out in 2014 to test new businessmodels and funding mechanisms.
Figure 1: Map of Myanmarindicating the focus areas of
Mandalay Region and Chin State
7Since 20 August 2010, Myanmar has been divided into seven states, seven regions, and the Naypyidaw Union
Territory. The areas focused on in this study are: (i) twenty-two selected villages in Mandalay Region and neighboringNaypyitaw Union Territory, and (ii) eight selected villages in Chin State.
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This report will be the first of two released as part of these overall activities. Later in
2014, a second follow-up report will provide a geospatial least cost electrification plan for the
two focus areas, and outline the investment costs of providing energy access to the two regions
population. It is hoped that the process and outcome of these case studies will assist the
government with the critical planning needed to harness energy from the countrys rich
indigenous resources to benefit its large rural population.
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Study Method and Data Sources
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2. Study Method and Data Sources
Surveys were carried out in thirty villages in this study. The regions and villages were
selected in consultation with the government and determined according to its priorities. In
Mandalay Region, a total of 20 villages were studied representing about 3,867 households.Eighteen villages in this grouping are located in the Mandalay Region itself and two are located
in Naypyitaw Territory, which were included in the study based on their neighboring proximity to
Mandalay and recommendations from the government for their specific assessment. The
villages in Mandalay Region are spread out in seven of the regions districts (Meikhtila,
Kyaukse, Thazi, Kyauk Da Daung, Mying Yan, and Madaya), and the two Naypyitaw villages
are located in Tauk Gone Township, Daltaya Thi District, Naypyitaw Region. For the teams
study of conditions in Chin State, eight villages were selected representing about 1,091
households, all located Hakha District. These villages are Chun Cung, Lok Lung, Tipul, and
Tinam Village in Hakha Township, and Sopum, Thluanlan, Thlangrua A and B Village in
Thantalan Township. Detailed maps of the villages surveyed in Mandalay and Chin State are
included as figures on the following pages.
The team carried out a field visit to these villages from September to November 2013.
The main objectives of the field visit were to: (1) collect information regarding the overall socio-
economic characteristics of the villages and their households; (2) assess current electricity
demand and supply as well as demand for lighting of the village households; (3) collect current
household expenditure for electricity and lighting; (4) assess the history of communities abilities
to organize themselves; (5) identify other electricity needs in the village; and (6) develop pilot
projects to test appropriate delivery models for off-grid renewable energy technology.
Rapid appraisal methods were used to quickly assess the socio-economic
characteristics of the selected villages and their households, evaluate electricity supply anddemand for lighting and other energy needs, and determine current household expenditure
levels for electricity and other lighting energy. Data and information were collected through: (i)
interviews with village chair-persons and/or village officials of every village; (ii) interviews with
the head of the households and/or spouses; (iii) focus group interviews; (iv) group discussions;
and (v) interviews with solar PV and electric appliances shop owners in the District and
Township. Other sources of information include secondary data from the respective townships
and interviews with Township officials.
Pilot projects were developed by the team based on these findings. These proposed
solutions have been based not only on the needs and readiness of the households and the
communities to operate and maintain electricity services, but also on the prospect of sustaining
the provided electricity services by developing a permanent market for energy services. It is
hoped that the new business models and mechanisms tested through these projects will be able
to stimulate a growing market for private energy services in rural Myanmar.
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Figure 2: Map of villages surveyed in Mandalay Region
Shwe daung - Village Name634 - Number of households
Ywa daw -Village Name
84 -Number of households
Than daw -Village Name225 -Number of households
Zawin -Village Name
101 -Number of households
Yon gyin -Village Name
57 -Number of households
Ye ngan -Village Name40 -Number of households
Dwe hla -Village Name194 -Number of households
Nga Zu -Village Name
65 -Number of householdsKyi eik -Village Name270 -Number of households
As she nge do -Village Name35 -Number of households
Ale kan -Village Name
278 -Number of households
Seik Tein -Village Name227 -Number of households
Khar Pat -Village Name284 -Number of households
Wun tin gon -Village Name
145 -Number of households Tha bye eik -Village Name170 -Number of households
Te gon -Village name
60 -Number of households
Nga bu kyin -Village Name131 -Number of households
Lewe
Tatkon
Thazi
Singu
Thabeikkin
Yamethin
Pyinmana
Pyinoolwin
Mogok
Pyawbwe
Meiktila
Wundwin
Natogyi
Taungtha
Nyaung_U
Kyaukpadaung
Myittha
Ngazun
Myingyan
Madaya
Patheingyi
KYAUKSE
Tada-U
Mahlaing
970'0" E
97 0'0" E
960'0" E
96 0'0" E
950'0" E
95 0'0" E
230'
0"N
23
0'
0"N
220'
0"N
22
0'
0"N
210'
0"N
21
0'
0"N
200'
0"N
20
0'
0"N
Location Map of MANDALAY REGION area
Scale 1 : 1,800,000
0 10 20 30 40 50 60 70 80 90 1005
Kilometers
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Figure 3: Map of villages surveyed in Chin State
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3. Socio-Economic Characteristics of Households
Accurate data and information about energy poverty and access levels across Myanmar
is limited to a few prior studies by international organizations. Aside from these studies, the
countrys current national energy habits, demand and electrification levels remain poorly
understood. A report published by the United Nations Development Program (UNDP),Accelerating Energy Access for All in Myanmar, characterizes Myanmar as an agrarian and
predominantly poor country. The report cites household survey results conducted in the 1990s
by the Central Statistics Organization which estimated the countrys poverty rate (i.e., the
percentage of both urban and rural households living on less than US$1 per day) to be 22.9
percent. The report also cites the UNDPs household living conditions survey conducted in 2004
and 2005 which concluded that about 32 percent of the population of Myanmar lives in poverty,
with 10 percent in extreme poverty, or unable to cover their basic needs.
Through this study, the ADB hopes to continue filling in major knowledge gaps about
rural energy use in Myanmar. This studys socio-economic assessment carried out in 22
selected rural villages in Mandalay, two villages in Naypyitaw Region, and eight villages in Chin
State confirms that, in parallel with national trends, significant numbers of households in the
selected villages were found to be very poor, many of whom having few means of supporting
their own livelihoods. This section will present an overview of the teams findings regarding the
socio-economic characteristics of these villages, first in Mandalay Region and then in Chin
State. For more detail beyond this overview, please refer to Appendices A and B for in-depth
descriptions of each observed village in the two areas.
3.1 Mandalay Region
This field survey has revealed that virtually all households in Mandalay Region engage
in some type of agricultural activity. The agricultural practices of almost all farmers in Mandalay
are considered to be subsistence farming. Although the region is considered to have among the
most fertile land in the country, a very small portion (less than one percent) of arable land in the
focus villages in Mandalay were found to have access to irrigation. Virtually all farmers in these
selected villages are only able to grow crops during the monsoon season. Typical crops grown
in Mandalay Region are rice, jute, sugar cane, and other dry zone crops such as maize, millet,
chili, sesame, ground nut, and pigeon pea. Since all agricultural activity relies almost exclusively
on rain water, drought during the past few years has had significant impact on the well-being of
many households. Despite having small arable land holdings averaging just one to three
hectares per farmer farmers plant several crops during each monsoon or growing season. The
main reasons for this practice are to reduce the risk of crop failure, ensure sufficient food cropsfor their own consumption, and protect against price fluctuation. Only a handful of well-to-do
households with relatively large arable land holdings can afford to use agricultural machineries,
which were found to include small ride-on, 3- or 4-wheel tractors, walk-behind tractors, and
diesel pump sets for irrigation.
The findings from this study confirm that a significant portion of rural households are
quite poor, many of whom are living in conditions of extreme poverty. With respect to arable
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land holdings in Mandalay, a crucial component of sustainable agricultural activity, interviews
with village chairpersons and village officials revealed that approximately 23 percent of
households in all 22 surveyed villages in the region are landless. 8The proportion of landless
households in these villages mirrors national trends wherein it is estimated that about one-
quarter of total rural households in Myanmar are landless.9The vast majority of these landless
households are quite poor, making modern energy access not only difficult a difficult task, butan urgent one. Findings from the field survey reveal that most landless farmers tend to earn
their living as farm laborers in their own village or villages nearby. The average wage for farm
labor is 2,000 Kyats (USD$2) per day for men and 1,500 Kyats (USD$1.50) per day for women.
Unfortunately the employment window as farm labor in the village (farming community) is very
limited. Most laborers can gain employment during the three months before and after monsoon
season, meaning that income-earning opportunities for landless adults is limited to just six
months out of the year. In a few villages, namely Tha Pyae Eait and Phae Pon Village in
Madaya, Than Taw Village in Thazi Township, and Yengan Village in Kyauk Da Daung
Township, landless households have additional opportunities to earn income by collecting
firewood, making charcoal for sale, and/or collecting forest products for sale. Although these
additional income earning opportunities may generate better income than farm labor, they are
also very difficult to carry out during the monsoon season, meaning that it is difficult for landless
persons in these selected villages to achieve year-round employment.
Other employment opportunities in the village include tending cows for large dairy
farmers, as practiced by landless households in Nasu and Dwehla Village in Kyaukse Township,
or renting palm trees to collect sap for making palm sugar or palm juice, as observed in Seint
Tain and Young Kyin Village in Kyauk Da Daung Township and Nga Bu Kyin Village in
Myingyan Township. Employment opportunities outside the farming sector are very limited. The
study only identified two villages (Pyaw Ywa and Pe Tauk Gone villages in Tauk Gone
Township) in which, due to their location near quarry industrial sites and close proximity toNaypyitaw (one hour), farmers and especially landless farmers could seek employment outside
the agricultural sector. More than a third of the households in these two villages are part-time
residents in the village over the course of a year, since many of them work as a migrant labor in
Naypyitaw.
3.2 Chin State
Chin State is located in the remote mountainous regions of Western Myanmar, sharing
borders with India and Bangladesh. Administratively, the State is divided into nine townships:
Tonzang, Tiddim, Hakha, Falam, Htantlang in the North and Kanpetlet, Mindat, Madupi and
Paletwa in the South. The data collection team only concentrated on eight select villages in twoNorthern townships (Hakha and Htantlang). Populations across the townships of Chin State are
generally considered poor relative to populations in other states or regions of Myanmar. The
livelihood activities of households in Chin State center on agriculture and shifting cultivation,
8Twenty surveyed villages are located in Mandalay Region and two villages are located Nay Pyi Taw Region. The
latter are located on the border between the Nay Pyi Taw and Mandalay regions.9United Nations Development Program (UNDP).Accelerating Energy Access for all in Myanmar. May 2013,
Myanmar United Nations Development Program. Myanmar.
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with most farmers practicing slash and burn to clear land for cultivation. Major crops include
maize, rice, and millet. Rice paddies are mainly grown on farmlands at lower altitudes, while
millet is the primary crop of areas at higher altitudes. Other crops and plants grown include
beans and pulses, potatoes, sunflower, cotton, sugarcane, tobacco, coffee, mulberry, various
kinds of vegetables, banana and fruits such as orange, apple, and avocado. Other livelihood
activities include raising livestock, weaving, small trade and seasonal labor. Since allhouseholds in the surveyed villages were found to be subsistence farmers, rice, maize, and
millet are usually planted for the households own consumption. Cash income is usually
generated from seasonal labor, or alternatively from the sale of livestock and agricultural and
forest products. Since the surveyed area is located in a very remote region, access among
villages and from villages to the Township capital is difficult. Employment opportunities in the
Township are thus very low, and villagers frequently trek across the border to seek seasonal
employment in India.
Access to land is not an issue in Chin State as households tend have access to large
plots of land through the shifting cultivation system. However, low yields are common due to the
key problems of poor soil quality, lack of labor, lack of seeds and capital, lack of livestock andequipment to plough or tilt land, and lack of access to irrigation and fertilizer. As a result, cash
income from agricultural activities tends to be limited, and in some years the food crops
produced are not sufficient to support a households basic consumption. Making a living is
becoming much harder economically due to rapid population increase and the unsustainable
agricultural practices of shifting cultivation, since the number of years between land rotation
have become shorter and shorter to allow soil properties to recover.
Since Chin State is located in a remote and mountainous range, access to the market is
a challenge for villagers. For example, although the villages of Chun Cung, Lok Lung, and
Tinam are located on the main road and thus should be accessible year round, difficult
mountainous terrain and poor road conditions still make it difficult to transport agricultural
products to the main market in the Townships.10Market accessibility in the other five villages
visited by the team is limited to the dry season using a four-wheel drive vehicle. Access to the
market for these villages is thus very challenging year-round. Although villages located along
the main road are in a better position to sell their agricultural products, as found in the three
villages mentioned above, such villages tend to have more limited land and natural resources
than villages located in more remote areas in the mountains. This can be attributed to rapid
population increase leaving newcomers and younger families in the village with fewer resources
with which to make a living.
10As an example, a trip from Hakha Township to Tinam Village took about 3 hours for a distance of 36 miles.
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Demand and Supply for Electricity and Lighting
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4. Demand and Supply for Electricity and Lighting
4.1 Mandalay Region
Based on interviews with village chairpersons and/or village officials, the field survey
team concluded that dry cell batteries and candles are the main sources of energy used forlighting by households in all 20 selected villages surveyed in and nearby Mandalay. As shown in
Figure 4 below, about 37 percent of the households rely mainly on D-sized dry cell batteries
used to power light-emitting diode (LED) lights, and supplement LED lighting with candlelight.
On the other hand, about 32 percent of the households rely solely on candlelight, and use
candles in combination with LED light powered by dry cell or small car battery. Diesel gen-set
mini-grid accounts for 14 percent. The field survey also reveals the significant penetration of
solar PV home systems (SHS). Approximately 11 percent of the households were found to use
SHS, with system sizes ranging from 80 watt peak (Wp) to more the 200 Wp. Interviews with
households using solar PV home system confirmed that these households tend to be among the
more financially better off households in their village. On the other hand, households relying
solely on candlelight, and candles in combination other energy sources, tend to be the poorer
households of the village. While households using only candlelight and candles with wick lamps
are considered the poorest household group in the village, it is important to note that these
households tend to spend money more on their lighting energy. This is because poor
households buy one or a few candles or a very small amount of diesel fuel (for wick lamp) at a
time, which can amount to considerable spending over time.
Source: Rapid Appraisal and interviews with Village Chair Persons/Officialsand Households, October 2013.
Figure 4: Sources of Electricity and Energy for Lighting in Mandalay Region
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Household interviews reveal that most households with access to a diesel mini-grid own
one electric lamp; a small minority of these households own two lamps. A typical electric light is
either a 20-watt compact fluorescent lamp (CFL) or a 20-watt fluorescent tube, with a small
minority using 8- to 10-watt T4-size fluorescent tubes. Households with solar PV home systems
also use these types and sizes of CFL and fluorescent tubes. The average number of electric
lights owned by households using solar PV home systems is about two. For households using
dry cell batteries, LED lighting is the most popular light source. The number of LED lights owned
and used by the household only averages to one. The most popular size of LED lights powered
by dry cell batteries requires only two D-size dry cell batteries; the second most popular is
slightly larger and requires three D-size dry cell batteries. Beside lighting appliances, a smallnumber of households using electricity from solar PV home systems or diesel-generated mini
grids own a small television, with the most popular model being a 9-inch television equipped
with DVD player. Examples of these technologies are found below.
Typical LED light powered by dry
cell batteries
Candle used by poor households
for lighting
Typical SHS using car batteries without controller
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With regard to LED light powered by dry cell batteries, households using this method
confirm that it is far better than candlelight, although all users complain about the quality and
reliability of the LED light. Based on interviews with users, the average lifespan of an LED light
is about three months, but many households complain that theirs break down easily and may
last less than one month. Public perception of LED light powered by dry cell batteries is not
positive overall, with one user saying, It breaks down easily and its lifespan is not predictable,even though it is much better than using candle.
In general, household demand for lighting in all selected villages centers on two time
periods. The first period occurs early in the morning before the sun rises and lasts for about one
to two hours, depending on when the sun rises and how early the household wakes up.
Traditionally, women wake up during this period to prepare food for other household members
and monks. The second period is in the evening after the sun sets, for about three to four hours
before going to bed. Lighting demand in the evening hours is the most crucial since it serves
lighting needs for everyone in the household, whereas demand for lighting in the morning is
much smaller since it only serves one or two people (mostly women) limited to the kitchen area
of the house. In sum, at present, each rural household uses electricity and/or needs lighting forapproximately four hours per day, one hour in the morning and three hours in the evening. In
households with access to diesel genset mini grids, these grids are able to provide electricity
supply for two to three hours in the evening.
4.2 Chin State
Unlike rural households in Mandalay, many rural villages in Chin State have constructed
micro hydro systems themselves to generate electricity for their villages for a few hours a day
during the rainy season.11In fact, all but one village (Thluanlan Village) were found to be using
or have recently constructed micro hydro to generate electricity for the village. These systems
have been constructed by villagers using their own funding with no technical support from the
government, though both central and local governments have encouraged their efforts. The
typical size of a self-constructed micro hydro in these villages is quite small, with a maximum
size per power generation unit of less than 40 kilowatts (kW) and total combined generation of
usually less than 50 kW. In addition to hydro power generation, villagers have also constructed
mini-grids to distribute electricity to households within the village.
The construction requirements for building a micro hydro plant are site-specific, and
these engineering challenges compounded with limited capital investment and technical
knowhow within the villages have been problematic to almost all the village-constructed micro
hydro systems. The most common problem is insufficient water to generate electricity,especially during the dry season. Moreover, even during the rainy season, there is not sufficient
water to generate electricity for more than 3 to 4 hours a day, and the system overloads due to
heightened demand for electricity. Interviews with electricity committees and villagers in all the
villages visited by the team confirm that none of the village electricity committees have
11Micro hydro is a type of hydroelectric power that typically produces up to 100kW of electricity. These installations
can provide power to a small village or community.
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introduced stringent load control measures to deal with heightened demand for electricity. Only
a few villages have implemented a ban on incandescent light bulbs.
Other problems identified during the field visit include artificial reservoirs constructed for
power production being too small and some leaking, improperly installed valves and turbines,
lack of technical capacity to re-install the system, distribution lines being too long and/orimproperly sized to the conductors, and sub-standard and un-safe distribution networks.
Solutions proposed by villagers from all the villages visited include utilizing new water sources
and constructing new artificial reservoirs located farther away from the village. Appendix C
provides a summary of problems and proposed solutions provided directly from each village in
Chin State which could be considered for implementation in this or upcoming phases of the
ADBs off- grid program.
Artificial reservoir in Chun Cung Village, Chin State Artificial reservoir in Sopum Village, Chin State
Electricity distribution lines in Tinam Village, Chin State
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It is important to note that hydroelectric facilities require a dependable flow and
reasonable height of fall of water. Any potential hydro power sites/sources must therefore be
thoroughly examined and studied. Moreover, as micro hydro planning is highly site-specific,
investment costs for the necessary civil engineering analysis as well as investment costs to
construct transmission and distribution lines to the village can be very high due to the long
distance and challenging terrain from the power house to the village. It is therefore consideredlogical to compare the cost of all alternative supplies of electricity, in addition to the micro hydro
plants, in determining the least cost of electricity supply. For the new micro hydro sites proposed
by villagers, the first and foremost upfront investment cost would involve securing a qualified
hydro engineer to determine whether water flow at the proposed site is sufficient, dependable,
and has reasonable height of fall of water.12Given the terrain and geographical location of each
village, and taking into account the number of households in each village, the cost of electricity
supply through a properly constructed micro hydro plant could be too high. The cost of
alternative electricity supplies such as SHS could be more competitive.
12The consulting fees and expenses for a qualified hydro engineer and support staff could be as high as US$500-
1,000 per day or more, and each engineer and support staff would need to survey the site one or two times. Theteam must spend at least five to ten days on each site, bringing overall consulting fees for one site to potentially overUS$20,000.
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5. Household Ability to Pay, Manage, and Maintain Electricity
Services
The range of household monthly spending on electricity and lighting in the surveyed
villages varies among the available sources of electricity and energy for lighting, as well as
among rich, medium-income, and poor households. Moreover, even within each category of
electricity and energy sources, household monthly spending varies depends on the appliances
available and different household habits. The low end of household monthly spending ranges
from 1,000 to 3,750 Kyats per month, but the high end varies significantly from 3,450 to 7,000
Kyats per month. Current monthly spending levels on electricity and other energy for lighting for
rural households is quite high compared to the amount of electricity and lighting the households
actually receive, or when compared to households with access to grid electricity. For example,
households with access to a diesel mini grid would pay 2,000 Kyats per month to power a 20-
watt CFL. The total electricity usage of a 20-watt CFL for 3 hours a day over 30 days amounts
to only 1.8 kilowatt-hours (kWh) per month, meaning that the cost of electricity is about 1,111
Kyats (US$1.23) per kWh. An average household with access to a diesel mini grid owns one ortwo lamps and occasionally a small 9-inch television. This means that the maximum total
electricity consumed by such a household is less than 7 kWh per month, for which the
household pays about 5,000 Kyats per month for two lights and one television at a rate of $.80
per kWh.13The average cost of electricity delivered to households through the national grid is
currently estimated to be around 75 Kyats (US$0.083) per kWh. Therefore, if electricity from the
grid were priced at 75 Kyats/kWh, rural households which are currently using electricity from
diesel mini grids could afford to pay for and use 36 to 72 kWh of electricity per month.14Given
current levels of monthly spending, it is evident that a household could afford to pay up to 1,000
Kyats (US$1.00) per kWh of electricity for alternative sources of electricity.15
If households were to be given an alternative source of power, they could reallocate theircurrent spending to acquire the new source of electricity. As shown in Table 1 below, poor
households (accounting for about 25 percent of all households in the 22 selected villages) could
spend between 1,000 to 2,000 Kyats per month on electricity. However, there are a few outlier
households that could spend more. Affordability of households with medium wealth, accounting
for about 49 percent of all surveyed households, ranges from 2,200 to 4,375 Kyats per month. It
is therefore evident that alternative sources of electricity costing outside these ranges of
affordability would require some sort of subsidy.
With respect to the ability to pay upfront costs or provide upfront investment in
households in Mandalay, interviews with households in this region confirm that about 11 percent
of households are able to purchase SHS directly from the market (see Table 1). Field
observations reveal that these households appear to be financially better off than other
households in the village. These households spend about US$80 to US$125 (72,000 Kyats to
13Electricity tariff for diesel mini grid usually give discount for two lights: 2,000 Kyats for one light, or 3,000 Kyats for
two lights.14
Currently, households with access to diesel mini grid are paying between 2,700 and 5,400 Kyats per month. At 75Kyats/kWh, household could use between 36 to 72 kWh of electricity each month.15
There is one exception: it is not possible to compare the cost per kWh of electricity from a dry cell battery.
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112,500 Kyats) to purchase one SHS, the sizes of which range from 50 to 80 watt-peak (Wp).
This information has led the team to conclude that financially better off households could spend
between US$80 to US$125 (72,000 Kyats to 112,500 Kyats) in upfront investments for
household energy.
On the other hand, most households in the observed villages in Chin State were found tobe using micro hydro mini grids. Delivery arrangements in all villages require that villagers
contribute to the construction of the villages micro hydro and mini grid. Average contribution
requirements per household range from US$55 to US$90 (50,000 Kyats to 80,000 Kyats).
Interviews with villagers and electricity committees in all villages reveal that at least 30 to 35
percent of the households in the village could pay the required contribution in full. The remaining
households pay by installment and/or up to as much as they can afford. Similar to Mandalay
Region, it appears that a significant portion of households in Chin State are able to spend
upfront investment as high as US$55 to US$90 (50,000 Kyats to 80,000 Kyats).
Table 1: Range of Household Monthly Spending on Electricity and Energy for Lighting
with Household Wealth Classification
Source of Electricity and Energy for
Lighting
Range of Monthly
Spending (Kyat)Percent of
Households
Wealth
ClassificationLow High
Solar PV Home System n/a n/a 11% Very High
Diesel mini grid 2,700 5,400 14% High
LED light powered by dry cell batteries and
some candlelight2,750 3,450 37% Medium
Car battery power T4 size fluorescent tube
or CFL or LED light2,200 4,000 5% Medium
Candle and LED light powered by dry cell
batteries or small battery3,750 4,375 7% Medium
Candle & wick lamp 1,000 6,000* 15% Low
Candle 2,000 7,000* 10% Very Low
Solar lantern n/a n/a 0.30% n/a
Source: Rapid Appraisal and Interviews with Village Chair Persons/Village Officials and Households, October 2013.*Households with very high spending number very few, and are considered to be outlier households.
Interviews with village chairpersons, village officials and households confirm that several
villages have significant experience with organizing themselves to manage projects and/or
activities sustainably. Most of these demonstrated experiences include street lighting and
community-owned, diesel-powered mini grids. Villages with such prior experience may be in a
better position to receive immediate help from any proposed assistance activities, since many of
the proposed projects providing renewable energy solutions require an operator to run as well
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as to manage and maintain the installations. These proposed renewable energy solutions
include solar lantern charging stations and solar PV mini grids. The field survey has confirmed
that seven villages in the Mandalay Region and all visited villages in Chin State have
demonstrated such self-organizing experience. For villages with no experience in organizing
themselves, additional assistance would be required to ensure that villages can manage and
maintain the energy services to be provided under this project. Technical training will beprovided in all cases to ensure that villagers are able to maintain any new equipment and
systems.
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6. Proposed Solutions to Improve Electricity Access for MandalayRegion and Chin State
As a result of this field study, the team has identified and developed several pilot
projects which will be implemented in Myanmar through the Energy For All Initiative. The largest
project, intended for both Mandalay Region and Chin State, will promote Solar PV HomeSystems (SHS) through an Output-Based Aid (OBA) subsidy with the objective of helping rural
households in both areas overcome the upfront cost of purchasing a SHS. Several smaller pilot
projects are also proposed which will be implemented in specific villages to test different
delivery mechanisms and business models, and help develop best practices for scaling up
renewable energy access in rural Myanmar. These pilot projects have been designed to be
flexible to several factors including least cost of electricity supply alternatives, the readiness of
households and the community to operate and maintain their own electricity services, differing
market approaches, and the sustainability of the provided electricity services. The technologies
and target communities of these smaller pilot projects are more diverse with the intention of
testing financing schemes for solar charging and rental stations and solar PV mini-grid systems
in select villages. This following section will describe these projects and their implementation,
with further detail about the target villages and projects can be found enclosed in Appendices D
and E for Mandalay/Naypyitaw and Chin State, respectively.
6.1 Component 1: Promoting Solar PV Home Systems in Mandalay Region and
Chin State using an Output-Based Aid Subsidy
Estimated Cost: US$85,000
The primary project proposed will be a bi-regional pilot program which uses an OBA
subsidy to promote solar PV home systems (SHS) in households in both Mandalay Region and
Chin State. The proposed SHS promotion will combine market mechanisms and an OBAsubsidy to help rural households overcome the upfront cost of purchasing a system, as well as
to stimulate and to enhance the overall SHS market in both regions.
A field rapid appraisal has confirmed that a market for SHS exists in many districts and
townships in Mandalay Region. Electronic shops in the main markets in Chin State have also
been found to sell SHS.16Rapid appraisal has also confirmed that 11 percent of the households
in the 20 selected villages in Mandalay Region are already using SHS, and some households in
Chin State were also found to be using SHS to supplement electricity derived from micro hydro,
or to be using SHS as their main source of electricity. A field rapid appraisal survey confirms
that most households currently using SHS are financially well off, while the main obstacle
among those not yet using solar energy is the high upfront cost of the system. In addition, themarket penetration of SHS is currently limited to villages located near larger townships and/or
districts, since electronic shops selling SHS and related equipment tend to be located in the
main market of larger townships, or in the main market of the districts.
16 The SHS market in Chin State is currently small since solar radiation during the monsoon season is low.
Households in Chin state recognize these limitations to SHS use in their region.
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While it is possible that the SHS market could expand to smaller townships with a larger
market base, it will take some time for the market mechanism to grow. The bi-regional pilot
project proposed herein could play a major role in helping the SHS market to expand and reach
a greater number of rural households. In addition, the present quality and technical standards of
SHS-related equipment, components, and parts available in the market vary widely. Households
and consumers are not provided with sufficient technical information to help them with makingenergy-related decisions, and they lack proper information about maintaining and operating any
systems they do buy. Interviews with rural households currently using SHS have confirmed that
they rely solely on information provided through sale pitches from shop owners and sale-
persons who are promoting SHS. All current SHS users interviewed during the field rapid
appraisal indicated that they just follow the verbal instruction provided by the shop owners and
sale-persons in connecting all of the components and installing the system by themselves. The
proposed pilot project will not only expand the use of SHS and enhance the SHS market, but
also help establish standards and higher quality for SHS-related equipment, and assist and
educate households/consumers to maintain these technologies once acquired.
6.1.1 Output-Based Aid (OBA) Subsidy to Promote Solar PV Home Systems
Through this pilot project, a subsidy will be provided using an OBA approach for every
SHS which is sold to a household/consumer. The amount of the OBA subsidy provided to each
rural household will be dependent on several factors, particularly the households ability and
willingness to pay and the current retail price of SHS, so that any new SHS sold under the pilot
will be able to compete with the SHS currently being sold in the market. The mechanism of the
proposed OBA program is presented in the flow chart in the figure below. Additional detail is
included as Appendix F.
Figure 5: Flow Chart Describing the Proposed OBA Program
!"#$%&'() +,- .)%/&"$01
Ministry of IndustriesADB
Private Supplier
Eligible Households for OBA - Beneficiaries
Installation ofSHS as per
agreed standards
Invoice to ADB forOBA subsidy after
verification
Payment of OBAsubsidy afterverification
IndependentVerification
Agent
Verification -Installation of SHS
Reports to ADB/MOI
4
5
2
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It is important to note that the solar systems now being sold in the market consist of low-
cost components and parts, usually using car batteries instead of deep cycle batteries and often
lacking a controller. This cheaper quality ensures that the retail price of SHS systems can be
kept low and affordable to the households, but results in significant operational shortcomings
once installed. Moreover, given the low technical standards involved, current market SHS are
more costly to operate than higher-quality SHS since households must frequently spend moneyon battery and parts replacement.17 In an effort to improve the standards of SHS sold in the
market in Myanmar, all parts and components of SHS which are sold to rural households under
this pilot project will meet higher and more reliable technical standards, which will also have the
effect of making these new solar systems more expensive than those currently available on the
market.
With respect to demand, the teams field visit to the Mandalay Region reveals that
households currently using SHS spend an average of US$80 to US$125 (72,000 Kyats to
112,500 Kyats) on purchasing a SHS. The typical size of the panel bought by households
ranges from 50 Wp to 100 Wp. In Chin State, the field survey team determined that households
contribute an average of US$55 to US$90 (50,000 Kyats to 80,000 Kyats) to construct microhydro and mini grid systems in their village. With respect to supply, the typical retail price of a
solar PV panel ranges from only US$1.00 to US$1.25 per one Wp, and the average price of a
car battery ranges from US$30 to US$50 (27,000 Kyats to 45,000 Kyats). Prices quoted by
potential suppliers for higher quality systems that meet international standards are significantly
higher than the typical SHS now sold in the market.
Taking into account current supply and demand in the energy services market, and
considering users ability to pay and the desire to make the pilots SHS price competitive, the
subsidy to be offered to each household will need to be relatively high. Table 2 outlines the
subsidy amounts required based on three pricing scenarios for two sizes of SHS: (i) a 30 Direct
Current (DC) SHS, which is sufficient to provide lighting needs and mobile charging; (ii) a 70 Wp
DC SHS, which could support a 7-9-inch TV and DVD in addition to lighting and mobile
charging; and (iii) a 110 Wp Alternating Current (AC) SHS, which could support a 21-inch LCD
TV and DVD in addition to lighting and mobile charging. As shown in Table 2, the level of
subsidy required for each SHS is about 30-40% percent of the total cost of the system. This
relatively high level of subsidy will be provided to ensure that rural households can afford to pay
for the system, and that the final price paid by the households is competitive to current market
SHS.
This pilot is only proposing to support 30 Wp, 70 Wp and 110 Wp SHS because these
three sizes provide a minimum level of lighting and electricity, and thus will serve the mainintention of the pilot to test the market for small systems which will benefit relatively poor rural
households. Both sizes will include a solar PV panel, a deep cycle maintenance free battery,
controller, mobile phone charger, and two or three LED lights depending on the size of the
17Car batteries are not designed for deep discharge, and will survive only 5 or 10 cycles, so they are not suitable to
store energy for solar PV application. For solar applications a battery needs to be capable of being dischargedhundreds or even thousands of times. This is the main reason why battery known as a deep-cyclebattery used tostore energy for solar PV application.
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system. The technical specifications of these proposed technologies are enclosed as
Appendices G, H and I for the 30 Wp, 70 Wp and 110 Wp systems, respectively.
Table 2: Budget for Subsidy Requirements for Solar PV Home Systems (SHS) (USD)
Size of SolarPV Home
System
EstimatedPrice of SHS
System
SubsidyRequirement
per System
Subsidy in
Percentageof Total
Cost
Per system
Household
Pays
TotalNumber
of Units
EstimatedSubsidy
Required
30 Wp, DC 134 54 40% 80 410 22,140
70 Wp, DC 225 100 44% 125 410 41,000
110 Wp, AC 408 122 30% 286 150 18,300
Total 970 81,440
As shown in Table 2, the total budget required for the OBA subsidy payment is
estimated to be US$81,440. This will cover approximately 970 households or systems. Asidefrom the OBA subsidy payment, another US$3,560 has been set aside to provide additional
incentives to suppliers selling SHS in Chin State, amounting to approximately US$10 to US$12
per SHS sold. This is intended to incentivize supplier by helping them pay for transportation and
related logistical expenses since most villages in Chin State are located in remote mountainous
regions which are difficult to access. This additional subsidy is only for Chin State and will be
covering approximately 300 installations.
6.1.2 Business Model
Subsidies will be provided to qualified sellers who sell SHS to the
households/consumers. However, to adhere to OBA principles, the sellers will only receive thesubsidy after it has been verified by an independent third party that the SHS has truly been
bought by a household/consumer. Sellers will be required to submit the name, address, and
contact information of each buyer to the project administrator, who will pass this information
along to an independent third party for verification. The independent third party will be required
to verify and confirm that the SHS has been bought by the household/consumer. To ensure that
the SHS being sold under the pilot project meets the projects required technical standards, an
expert from the ADB will develop specifications for the SHS and call for qualified suppliers to
propose an appropriate price of 30 Wp, 70 DC system, and 110 Wp AC systems, including
delivery and installation expenses, to the ADB. Selected suppliers will sell the systems directly
to the households and collect payment at that time which covers only the portion which
households are responsible for paying. Upon independent verification, the suppliers will receive
the balance from the ADB. To ensure competition, it is conceivable that more than one supplier
may be selected to supply SHS through the pilot project.
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6.2 Component 2: Proposed Pilot Projects in Mandalay RegionEstimated Project Cost: US$ 113,500
In addition to the bioregional OBA program (Component 1), a second component of
ADBs pilot activities will consist of five smaller sub-projects in Mandalay Region. These sub-
projects will be implemented in Thazi, Kyauk Da Daung and Kyoske District in MandalayRegion. The total cost for all five sub-projects is estimated to be US$113,500, which is budgeted
separately from the cost estimates of the OBA program. The following sections provide
additional information and cost estimates for each sub-project.
6.2.1 Component 2.1: Solar Lantern Charging and Rental Station in Ywar TawVillageEstimated Cost US$6,500
Ywar Taw Village is administratively part of Kyaukse Township, Kyaukse District in
Mandalay region. Ywar Taw village is located 1.5 kilometers from the main road and 39.5
kilometers from Kyaukse Township, giving villagers access to the main agricultural products in
the township. There are currently about 84 households living in Ywar Taw village, just two of
whom lack land holdings. Interviews with several villagers reveal that the gap between rich and
poor in Ywar Taw village is significantly lower than other nearby villages. This may be due to the
fact that most households in Ywar Taw village own land and some households own arable land
with access to irrigation.
About 34 households in Ywar Taw Village currently use SHS. The size of these systems
ranges from 80 to 150 Wp. Aside from SHS, about 50 households use car batteries to power
small T4 fluorescent tube, or compact fluorescent lamp or LED light and candle. Almost every
household owns LED light powered by dry cell batteries. Interviews with the households reveal
that there is a battery charging service available for villagers in the village. The battery chargingservice provider picks up batteries and takes them to the charging station. The fee for pick up
and charging for one battery is only 500 Kyats, suggesting that the charging station uses
electricity from the grid. Households using car batteries to power LED light indicate that each
charge would provide sufficient electric power for 40 hours for two LED lights. However, the cost
of a car battery could range from 25,000 for a used car battery to over 40,000 Kyats for a new
50 Amp car battery. A used car battery lasts only six months, but a new one lasts about a year.
This means that the cost of lighting using a car battery and two LED lights could range from
7,000-8,000 Kyats per month.
This pilot project proposes setting up a solar lantern charging and rental station to
reduce the financial burden of lighting on households in the village. The teams financialanalysis shows that the rental fee should be set at 2,547 Kyats (US$2.83) per month per
household, or a daily rental fee of 84.90 Kyats (US$0.094), in order to ensure that the total
revenue will meet total investment plus operation and maintenance cost over the lifespan of the
project (seven years); or the net present value (NPV) for the project is positive. Households
living in the village who are using LED lighting powered by dry cell batteries are currently
spending about 7,000 to 8,000 Kyats per month on lighting. Based on their current spending on
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lighting, subsidies are not needed because household monthly spending on lighting is much
higher than the calculated monthly rental fee.
Table 3: Financial Analysis for Solar Lantern Charging & Rental Station in Ywar TawVillage
Total equipment cost: US$6,500Interest rate: 15% per year
Project life: 7 Years
Total number LED lanterns: 50 Lanterns
Exchange rate: 900 Kyats=US$1
Rental fee at cost per month: 2,547.00 Kyats (US$2.83)
Household ability to pay based on current spending: Over 2,600 Kyats (US$2.83)
Total subsidy required per household/month: None
Financial Analysis (in USD)
Year Equipmentcost
O&M
% ofcost)
O&Mcost
Total
cost(PV)
Rental
fee atcost/mo
Total
Revenue(PV)
Afford-ability Subsidy/hh/month
1 6,500.00 0.01 65.00 6,565.00 2.83 1,698.00 >2.83 0.00
2 - 0.02 130.00 113.04 1,476.52
3 - 0.04 260.00 196.60 1,283.93
4 - 0.06 390.00 256.43 1,116.46
5 - 0.08 520.00 297.31 970.84
6 - 0.10 650.00 323.16 844.21
7 - 0.12 780.00 337.22 734.09
Total 6,000.00 2,795.00 8,088.76 8,124.05
NPV 35.29
Delivery and Business Model:Using a public-private partnership business model, the
project will work with private investors to invest in the solar lantern and charging and rental
station. In this proposed scheme, no subsidy is required since affordability levels are higher than
the calculated rental fee. However, to incentivize the private investor to establish the solar
lantern charging stations, the ADB will provide a 20 percent grant subsidy on its upfront cost.
The regional government of Mandalay is also willing to contribute 10 percent upfront cost and
provide land free of charge to set up the village charging station on a ten-year lease to the
private investor.
6.2.2 Component 2.2: Solar Lantern Charging and Rental Station in Than Taw
VillageEstimated Cost US$6,500
Than Taw village is part of Thazi Township is located about three miles off the District
Council road linking Pyaw Pwe and Windwin, situated at the foot of a mountain range near the
Shan State border. There are currently about 225 households living in Than Taw village with a
total population of around 1,117 people. About 100 households in the village do not have land to
plant crops. Landless households in Than Taw village tend to earn their living as farm labor
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within and outside the village, as well as by collecting forest products. The majority of these
households are relatively poor when compare with other households in the village. Currently,
only 15 households in the village are using SHS, almost all of which are used for lighting and
television. All other households use LED lights powered by dry cell batteries and/or candles.
LED lights are usually bought from the market in Thazi Township. A LED light costs around
1,500 to 2,000 Kyats depending on the size of the light (2, 3, or 4 D-sized dry cell batteries).Some household use up to nine dry cell batteries and spend about 2,250 Kyats per month for
dry cell batteries, though most households use fewer than nine batteries. For poor households,
candlelight is the only inexpensive option. Interviews with poor villagers confirm that most poor
households try to use only one candle per day. One candle costs 50 Kyats, indicating that poor
households spend less than 2,000 Kyats per month on candles. Typical lighting needs for the
household tend to be one to two hours in the early morning hours and a few hours in the
evening.
This pilot project proposes setting up a solar lantern charging and rental station to
reduce the financial burden of lighting on households in the village. Project financial analysis
shows that the rental fee should be set at 2,547 Kyats (US$2.83) per month per household, or adaily rental fee of 84.900 Kyats (US$0.094), in order to ensure that the total revenue will meet
total investment plus operation and maintenance cost over the lifespan of the project (seven
years); or the NPV for the project is positive. Poor households living in the village who are using
candles for lighting are currently spending slightly less than 2,000 Kyats per month. Based on
their current spending on lighting, a small subsidy estimated at 547 Kyats (US$0.61) will be
needed since household monthly spending on lighting is slightly less than the calculated
monthly rental fee (see Table 4).
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Table 4: Financial Analysis for Solar Lantern Charging & Rental Station in Than Taw Village
Total equipment cost: US$6,500
Interest rate: 15% per year
Project life: 7 Years
Total number LED lanterns: 50 Lanterns
Exchange rate: 900 Kyats=US$1Rental fee at cost per month: 2,547.00 Kyats (US$2.83)
Household ability to pay based on current spending: 2,000 Kyats (US$2.22)
Total subsidy required per household/month: 547 Kyats (US$0.61)
Financial Analysis (in US$)
YearEquipment
cost
O&M
(% of
cost)
O&M
cost
Total
cost
(PV)
Rental
fee
(cost/mo)
Total
Revenue
(PV)
Afford
-
ability
Sub-
sidy/hh
/mo
Actual
revenue
per year
(PV)
Actual
subsidy
per year
(PV)
1 6,500.00 0.01 65.00 6,565.00 2.83 1,698.00 2.226 0.61 1,333.33 364.67
2 - 0.02 130.00 113.04 1,476.52 1,159.42 317.10
3 - 0.04 260.00 196.60 1,283.93 1,008.19 275.74
4 - 0.06 390.00 256.43 1,116.46 876.69 239.77
5 - 0.08 520.00 297.31 970.84 762.34 208.50
6 - 0.10 650.00 323.16 844.21 662.90 181.30
7 - 0.12 780.00 337.22 734.09 576.44 157.66
Total 6,500.00 2,795.00 8,088.76 8,124.05 6,379.31 1,744.74
NPV 35.29 0.00
To enable poor rural households to gain access to electric light, subsidies on the upfront
investment cost will be provided. This is to ensure that monthly service fees can be set at 2,000
Kyats (US$2.22) per month (or at the same monthly spending levels as households currently
spend on candles and diesel wick lamps). This will ensure that the net present value of theproject will be positive or at least equal to zero. Financial analysis reveals that a minimum 26
percent subsidy on the upfront cost would be required to ensure that monthly service fees are
set at 2,000 Kyats (US$2.22) and the NPV of the project will be positive (see Table 5).
Table 5: Financial analysis for 26% subsidy on upfront costs in Than Taw Village
Year
Subsidy
upfront 26%
(ADB 16% +
community
10%)
Equipment
cost after
subsidy
O&M rate
O&M
Cost
(PV)
Total
cost
Cost per
unit/mo (in
US$)
(high
affordability)
Total
revenue
(PV)
1 1,720.00 4,780.00 0.01 65.00 4,845.00 2.2200 1,332.00
2 - 0.02 113.04 113.04 1,158.26
3 - 0.04 196.60 196.60 1,007.18
4 - 0.06 256.43 256.43 875.81
5 - 0.08 297.31 297.31 761.58
6 - 0.10 323.16 323.16 662.24
7 - 0.12 337.22 337.22 575.86
Total 4,780.00 1,588.76 6,368.76 6,372.93
NPV 4.17
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Delivery and Business Model:Using a public-private partnership business model, the
project will work with private investors to invest in the solar lantern charging and rental station.
Since the affordability is relatively high and subsidy requirement is lower than the 30 percent
upfront cost subsidy threshold, the prospective investor will receive an upfront subsidy cost as
high as 30 percent of the total investment cost. Under the proposed business model, ADB is
proposing to provide a 20 percent grant subsidy on the upfront cost to incentivize the privateinvestor to invest in putting up the solar lantern charging stations. The regional government of
Mandalay is also willing to contribute 10 percent of the upfront cost and provide land free of
charge to set up the village charging station on a ten year lease to the private investor.
6.2.3 Component 2.3: Solar Lantern Charging and Rental Station in Zawin Village
Estimated Cost US$6,500
Zawin village is administratively part of Thazi Township, Thazi District, Mandalay
Region. Household interviews reveal that there are currently about 101 households living in
Zawin village, of which eight use SHS. All other households in the village can be classified into
three groups: (i) households using LED lights powered by dry cell batteries and somecandlelight, (ii) households using car/small battery to power LED light or T4 fluorescent tube,
and (iii) very poor landless households that rely mostly on candlelight. To provide better sources
of lighting and electricity to poor households which use candles as their main lighting source, as
well as to test business models for delivering inexpensive sources of electric light, this sub-
project proposes investing in setting up a solar lantern charging and rental station in the village.
The solar lantern charging and rental station will include 50 lanterns, batteries and charging
equipment. Total investment is this sub-project estimated to be about US$6,500.
Project financial analysis shows that rental fees should be set at 2,547.00 Kyats
(US$2.83) per month per household, or a daily rental fee of 84.90 Kyats (US$0.094), in order to
ensure that the total revenue meets total investment plus operation and maintenance cost overthe lifespan of the project (seven years); or the NPV for the project is positive. Analyzing
household monthly expenditure levels reveals that poor landless households living in the village
which use mostly candle for lighting spend about 1,250 Kyats per month on their lighting needs.
Based on these current spending levels, and to ensure that poor landless households can afford
to pay for the lantern rental fee, an appropriate subsidy would be 1,297 Kyats (US$1.44) per
month per household (12,547.00 - 1,250.00 = 1,297). Since the actual rental revenue per month
per household is only 1,250 Kyats (US$1.39) per month, the actual NPV of the rental revenue
over the life of the project is estimated to be 3,588,362.02 Kyats (US$3,987.07); and the total
NPV of the subsidy is estimated to be 3,723,284.43 Kyats (US$4,136.98).
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Table 6: Financial Analysis for Solar Lantern Charging and Rental Station in Zawin village
Total equipment cost: US$6,500
Interest rate: 15 Percent per year
Project life: 7 Years
Total number LED lanterns: 50 Lanterns
Exchange rate: 900 Kyats=US$1Rental fee at cost per month: 2,547.00 Kyats (US$2.83)
Household ability to pay based on current spending: 1,250 Kyats (US$1.39)
Total subsidy required per household/month: 1,297.00 Kyats (US$1.44)
Financial Analysis (in US$)
YearEquipment
Cost
O&M rate
(% of
cost)
O&M
Cost
Total
Cost
(PV)
Rental
fee
(cost/
month)
Total
Revenue
(PV)
Afford-
abilitySubsidy/hh/mo
Actual
revenue
/hh/year
Actual
subsidy
/year
1 6,500.00 0.01 65.00 6,565.00 2.83 1,698.00 1.39 1.44 833.33 864.67
2 - 0.02 130.00 113.04 1,476.52 724.64 751.88
3 - 0.04 260.00 196.60 1,283.93 630.12 653.81
4 - 0.06 390.00 256.43 1,116.46 547.93 568.53
5 - 0.08 520.00 297.31 970.84 476.46 494.38
6 - 0.10 650.00 323.16 844.21 414.31 429.89
7 - 0.12 780.00 337.22 734.09 360.27 373.82
Total 6,500.00 2,795.00 8,088.76 8,124.05 3,987.07 4,136.98
NPV 35.29
To enable poor rural households to gain access to electric light, subsidies on the upfront
investment cost will be provided. However, to ensure that monthly service fees can be set at
1,250 Kyats (US$1.39) per month (or at the same monthly spending levels as householdscurrently spend on candles and diesel wick lamps), a subsidy on the upfront cost must be
provided. This will ensure that the net present value of the project will be positive. Financial
analysis reveals that a minimum 63 percent subsidy on the upfront cost will be required to
ensure that monthly service fees are set at 1,250 Kyats (US$1.40) and the NPV of the project
will be positive. Under this business model, private entrepreneurs who are interested in the solar
lantern charging and rental business could work with the project to provide services to villagers,
since prospective investors will be able to expect a reasonable return on his/her investment.
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Table 7: Financial analysis for 63% subsidy on upfront costs in Zawin Village
Year
Subsidy
upfront 63%
(ADB 53% +
community
10%)
Equipment
cost after
subsidy
O&M rate
O&M
Cost
(PV)
Total
cost
Cost per
unit/mo
(US$)
(high
affordability)
Total
revenue
(PV)
1 4,070.00 2,430.00 0.01 65.00 2,495.00 1.40 840.00
2 - 0.02 113.04 113.04 730.43
3 - 0.04 196.60 196.60 635.16
4 - 0.06 256.43 256.43 552.31
5 - 0.08 297.31 297.31 480.27
6 - 0.10