Changing rural agriculture businesses with electricity
Reducing fuel dependency and growing income from rural agri-processing business: Swe Lynn Aung’s story.
According to the government’s update in December 2019, half of Myanmar’s households (50%) is connected to the national electricity grid. Despite the progress, Myanmar’s electrification rate is still one of the lowest in Southeast Asia.
Rural entrepreneurs without access to electricity rely on diesel generators to run their businesses and the average cost of power generation is high — up to 1,200 MMK (USD$0.80) per unit. The high costs limit the amount of energy that businesses can afford to generate using diesel engines.
Through a unique public-private partnership structure comprising Myanmar’s Department for Rural Development (DRD), global financing institutions, community electrification committees and entrepreneurs, GIZ and multiple private sector mini-grid developers, Smart Power Myanmar is supporting the effective and sustainable use of electricity in rural Myanmar villages. Working in a number of villages that have received stable and affordable electricity supply through decentralised energy access (i.e., solar mini-grids), Smart Power Myanmar provides interest-free loans to business customers for connection fees, electricity meter upgrades as well as purchasing commercial and industrial equipment and electric motors. Through our Energy Impact Fund (EIF), businesses receive financial and business support to convert from using diesel engines to electric motors to improve business processes and increase the utilisation of mini-grids, especially in daytime hours when household consumption is low.
Swe Lynn Aung is one of the rural entrepreneurs who accessed a loan from the EIF to convert from using diesel generator to electricity from a solar-powered mini-grid.
Swe Lynn Aung runs a small rice grinding business in Than Pyar Chaung village in Myanmar’s central Dry Zone. Since 2012, he used a 12-HP diesel generator to operate the grinder spending on average 20,000 MMK (US$13) per month on fuel, retaining a modest monthly profit of 50,000 MMK (US$33). Swe Lynn Aung recognised two problems with diesel generation — the cost of fuel was high, and the noisy generator disturbed his neighbours.
In 2018, Pro-Engineering — one of the private sector recipients of DRD subsidies to promote rural electrification — installed a 39-kW solar mini-grid in Swe Lynn Aung’s village. After hearing about Smart Power Myanmar’s EIF, Swe Lynn Aung requested a loan of 600,000 MMK (US$390) to purchase a 3-kW electric motor to power his grinding machine from the mini-grid. Over a period of six months, his monthly fuel cost decreased by 50% as he now spends around 9,000 MMK(US$6) on electricity bill. The savings go towards his monthly profit of 60,000 MMK (US$40). Now his sister, Khaing Thin Kyi, can also operate the grinder with ease and his neighbours appreciate that the noise has ceased. Swe Lynn Aung plans to expand his business and buy an additional grinding machine to process rice to produce flour. His sister’s ambition is to start selling traditional fried snacks made from Swe Lynn Aung’s flour.
Agriculture is the backbone of Myanmar’s economy, contributing to around 40% of the country’s GDP. The opportunity to covert diesel-powered energy production in rural villages to more sustainable solutions was identified in Pact’s Diesel Mini-grid Assessment.
Smart Power Myanmar is working to assess rural energy demand and mobilise financing to support agri-processing businesses through improved electricity access. Conversion from diesel engines and increasing rural productivity will result in higher incomes for millions of people who depend on agriculture for their livelihoods. In addition, agri-processing facilities can serve as anchor customers to increase the utilization of mini-grids, therefore making mini-grid business models sustainable and viable, attracting investments into the decentralised energy sector. Achieving this will require the combined and coordinated efforts of all stakeholders working in the energy-agriculture-water space as well as pooled resources to inspire positive change and economic growth across Myanmar to transform lives of the 28 million people who currently live without access to reliable and affordable electricity.
