Indigenous Hydro Power Developers in Myanmar

The Mae Mauk waterfall micro-hydro power plant is located couple of hours drive through the Shaan highlands from Pyin Oo Lwin,  the erstwhile summer capital of British Burma. The hydro power plant and the associated electric utility are managed by Lin Yuang Chi Mini-hydro Cooperative which employs 6 people including a manager to manage the technical and business needs of the micro-hydro-electric system and the micro-utility. The cooperative was established after an initial government funded hydro power plant failed in 2012. The micro energy utility has 450 customers spread over 11 villages drawing electricity from an 80kW hydro power plant set up below the Mae Mauk waterfall. Apart from providing electricity to 250 households, the system is also providing electricity to 200 public service institutions, village level enterprises including rural industries and farms. The utility has been in operation for 7 years since 2013 and has now reached a saturation level and is currently not accepting any new customers as the additional demand cannot be met by the current micro-hydro system. 

The Mae Mauk Waterfall
(Credits: Sustainable Energy Associates)

We were part of a group of hydro power enthusiasts visiting the hydro power plant and the electricity cooperative as part of a Board of Advisers meeting of HPNET– the Hydro Empowerment Network, a south-south knowledge exchange platform to advance local micro-hydro practitioners who work directly with village communities. I found a number of features of this micro-hydro power and micro-utility quite interesting and feel these might be relevant to micro-hydro and decentralised energy development in Myanmar and other developing countries with energy access deficits and decentralised renewable energy potential.

Metal Fabrication Workshops and other businesses make major contribution to annual revenues
(Credits: Sustainable Energy Associates)

Financial feasibility and business opportunities:In the absence of government or international development assistance, the projects are selected on the basis of financial feasibility. The financial feasibility in such cases is primarily determined by the business opportunities to use the generated electricity. In the case of the Mae Mauk waterfall micro-hydro there are telecom towers, fabrication workshops, brick making, coffee, poultry, silviculture etc. which are key in making the investments financially viable. The electricity cooperative does not charge any connection fees for such business opportunities but these opportunities make a major contribution by way of tariff payments to the annual revenue of $30,000 for the Lin Yuang Chi electricity cooperative.

Ownership and Operational model:while the legal form of the electricity utility is a co-operative, it is in effect a public-private partnership as the private sector manufacturer – Sai Htun Hla & Brothers hold 50% of shares in the cooperative with the rest held by the community and users. While the operation and maintenance of the hydro-mechanical and electro-mechanical systems, metering and tariff collection are done by the cooperative staff, Sai Htun Hla & Brothers provide the technical back-up support for repairs and replacements. This Build-Own-Operate (B-O-O) model is an important factor in the impressive operation of the micro-hydro power system and the associated utility over the last 7 years.

Regulatory Framework:in the absence of a national energy regulator or a regulatory framework for electricity and energy, the Lin Yuang Chi electricity cooperative has established local electricity tariffs that are cost-reflective and currently generate annual revenues of $ 30,000 against the expenses of $ about $11,000. Electricity tariffs are tiered with cooperative members paying lower tariffs compared to regular consumers. The regular electricity consumers pay tariffs in the range of $ 0.18-29/kWh and temporary users pay $0.59/kWh. There is also a connection fee of $135-440 to be paid by households depending on the distance of the house from the power house. These tariffs have been accepted by the community and there are no cases of payment defaults and payments have largely been regular, with some instances of delays. It may be possible to bring tariffs down if financing through low-interest loans or investment grants were available.

Simple or Sophisticated Technology?:The technology for the hydro-mechanical and the electro-mechanical equipment is indigenous and has been developed by – Sai Htun Hla & Brothers and implemented in over a hundred such micro-hydro power plants. The system does not use an Electronic Load Control (ELC) but a generator with an Automatic Voltage Regulation (AVR) allowing for reasonable frequency variations and control with manual interventions and a planned upgrade will use a flow-type load governor. The electric cooperative seems to have a strategy to keep the technology manageable and serviceable locally and to continue to provide electricity with slightly lower power quality. Several experts including my colleagues question this approach on technical grounds citing valid reasons but the customers and the electric cooperative seem satisfied with this solution. This seems to be an interesting case of locally developed and manageable technology providing reasonable energy services against the option of more sophisticated technology providing much better and safer energy services but with challenges to technical sustainability and probability of more downtime.  With my engineering background, I would have thought technical performance and safety was more important but the customers seem to be happy with the electricity service and seems to pay the tariffs regularly without fail. A case of Appropriate Technology vs Best Available Technology (BAT)?

Electricity has increased access to health services and hospital-based childbirths.
(Credits: Sustainable Energy Associates)

Social and Environmental Benefits:The Lin Yuang Chi electricity cooperative provides free electricity for all the street lights in the service area in all 11 villages, which has increased safety at night. Most households are using electric cookers which has reduced indoor air pollution particularly for women and children and has also reduced the need for firewood and reduced deforestation. Electricity offered at lower tariff bands to the health centre has resulted in increased access to health services including a marked increase in child births. Also, low-cost electricity to schools and monasteries has helped in formal and religious education of youth in the villages. Irrigation powered by electricity has increased the land area under agriculture enhancing income generation and improving food security. The decisions to offer free or low-cost electricity for public services were taken by the Lin Yuang Chi electricity cooperative members themselves in the absence of government support or policy. Several micro-hydro based rural electrification projects provide similar benefits which are not valued and captured adequately.

Women and children benefit from reduced indoor air pollution from a switch to electric cooking.
(Credits: Sustainable Energy Associates)

I understand from U Sai Htun Hla, the owner of Sai Htun Hla & Brothers and U Zaw Min the owner of Kyaw Soe Win Hydropower, another major manufacturer that there are over 2000 village hydro projects powering rural population in Myanmar. These have been established over the decades when the country had limited access to international technologies or technical expertise. This situation resulted in development of such impressive numbers of village hydro projects through a community driven bottom up process supported by local micro-hydro manufacturer developers on a PPP – BOO model. I have previously not witnessed such indigenous, self-sustaining and bottom-up village electrification solutions at this scale, in countries where I have advised on development of rural electrification programmes. The existence of these successful examples at a significant scale, provides a good platform and a sound basis to develop a rural electrification programme that is sustainable in the long term.

Currently Myanmar is in the process of a large scale-electrification drive through large scale-investments in power generation capacity, electrical grid development and mini-grid based solutions through renewable energy. This is a very welcome initiative which willhelp to provide electricity access to millions who had no modern energy access previously. There is a unique opportunity in Myanmar for the large-scale electrification initiatives to collaborate and partner with the indigenous hydro power developers and communities in Myanmar to achieve village electrification solutions that are sustainable, local and with higher social and environmental benefits.

The ‘Real 5P Model’ in Cinta Mekar

I first heard about the 5P model or the Pro-Poor-Public-Private-Partnership in 2012 when I was in the mountain kingdom of Lesotho. The UN’s Economic Commission for Africa were scoping for an energy centre to be run by a cooperative as a 5P model. I found the idea of PPPs in rural energy that focused on poverty alleviation quite compelling in the context of the rural energy work I was doing at the time. This approach was reflected in the Lesotho Energy Alternatives Programme (LEAP) that I developed for UNDP and the Sustainable Thermal Energy Partnerships (STEPs) project that Xavier Lemaire of UCL Energy Institute and I developed with during 2012-2013.

Fast forward 2 years and the STEPs project is generously funded by UK Aid and on its way and while responding to the baseline study on the STEPs project, I hear from Hongpeng Liu and Deanna Morris at the Energy Division of UN’s Economic and Social Commission for Asia-Pacific (UN-ESCAP) about the original 5P model which has been working for over 10 years in Cinta Mekar, Indonesia. With kind support from Tri Mumpuni of People Centred Business and Economic Institute (IBEKA) ( who incidentally is a recipient of Magsaysay award for her work on hydro power for rural electrification), weeks later I find my way to Cinta Mekar, a relatively remote hilly village about 3 hours drive from Jakarta.

The Cooperative at Cinta Mekar – Makar Sari is headed by a diminutive Yuyun Yunegsih, a grandmother of three who has been elected few years ago by the 450 members of the. The cooperative manages the 120 kW hydro power plant which was commissioned in 2003. The investment in the hydro-mechanical and electro-mechanical equipment and the building materials were financed 50:50 by UN-ESCAP and a private company Hidropiranti. The facilitation was by IBEKA and the members of the community and cooperatives contributed labour and local materials for civil construction in a normal PPP mode.

Today after 12 years the hydro power system is still working well and generating and selling electricity to the local utility – PLN at slightly over US cents 4/kWh. 40% of the $650-$1100 monthly revenues go to Hydropiranti and 40% to Mekar Sari cooperative while 20% is set aside for maintenance, repairs and replacement. The Mekar Sari cooperative has done a number of impressive ‘pro-poor’ initiatives over the years with its share of the revenues. It has provided financial assistance to households which could not afford to obtain an electricity connection. The cooperative also provides scholarships to 360 kids from the community, provides a land fund for members who do not have land holdings, provides an allowance for women in the community to cover childbirth related expenses and also pays an allowance to older members in the community. It has plans to construct public toilets, drinking water fountains etc. all of which seems very impressive. This is an impressive ‘pro-poor’ element that I have not seen in energy projects in general. I have seen impressive pro-poor energy initiatives driven by visionary and charismatic individuals but not by organisations for such a long duration and consistent track-record.

While the social development and pro-poor schemes have been very impressive, the business side has been slightly less impressive. The cooperative has not been successful in renegotiating in higher off-take tariffs in the power purchase agreement with PLN which pays almost a three times higher tariff for similar community hydro plants. A major investment in a manufacturing facility to make gluten-free banana flour which would have employed 10 people have not been successful and lies largely unutilised as the supply chain and market prospects were not investigated properly. It’s possible that the cooperative may have benefitted from some hard-nosed business advice. However the initiative can be considered a notable success in establishing a technical and management solution at an institutional level which has worked for over 12 years and has continued to be profitable and having driven social development in the community.

It was interesting to see that almost all the electrified community was using LP Gas or gathering wood from the forests for cooking, thus affirming our view that the thermal energy aspect is often overlooked and left to individual households to solve. What was interesting was also that many households which could afford were using electric rice cookers for cooking the main staple food. A 5P model which combines private sector quality, efficiency and investments with public and community investment and participation, with community organisations managing social benefits and which combines both electricity and gas supply could indeed be a better model economically and socially. The question whether the institutionalised community leadership in Cinta Mekar can be replicated elsewhere remains.

After my visit I asked Yuyun what the cooperatives biggest challenge was and contrary to what I expected it turned out to be the efforts by the local government to take over the cooperative. So while technical, economic and social challenges can be overcome in rural energy services, political challenges often pose a greater risk to sustainability.