Discussion of Grid-Connected Small Scale Electrical Power Enterprise Regulations Nay Pyi Taw, March 2018 Chris Greacen, Ph.D. Good morning. It‘s a deep honor to be here with you all toady. Take a moment to look around this room. When it comes to building mini grids in Myanmar, no one knows more about it than you. As Patrick said, our priary purpose here today is to learn from you, from your expertise so that by the end of the day we have clear understanding of how these draft regulations might work to encourage greater invetment

MOEE (Union) State & Region Any project connected to the national grid   *The Relevant Union Ministry* Myanmar Grid-Connected Small Scale Electric Power Enterprise Regulations 2018 Notification No: [*] (-) date, (-) month, 2018 State & Region Any project not connected to the national grid   *The Relevant State Ministry* Myanmar Off-Grid Small Scale Electric Power Enterprise Regulations 2018 Notification No: [*] (-) date, (-) month, 2018 As noted in my earlier presentation, the regulation framework is broken into two parts. We’re focusing on the MOEE part, which asddresses grid-interconnection. As you know, in the room over there participatns are discussing state-level regulations that address projects that are isolated from the main grid. 08/11/2018

Characteristics of Small Scale Electric Power Enterprises Type of Small Scale Electric Power Enterprise Generation Distribution Sale Small Power Producer (SPP) Small Distribution Network (SDN) Small Electricity Retailer (SER) The small scale electricity electric power enterprises come in different flavors depending on whether they are engaged in generation, distribution, sales, or combinations of the these three things. Isolated mini grids are projects that are not connected to the main grid, and have their own generation, distribution and sell electricity directly to customers. In either the isolated or grid-connected realm, Small power producers (SPPs) only generate electricity and sell it at wholesale. Small Distribution networks (SDNs) operate the poles and wires, bringing electricity from the national grid or an SPP and distributing electricity to customers. Small electricity retailers (SERs) use the poles and wires of SDNs and sell electricity to retail customers. Entities can be combinations of these -- for example, a project can be both an SDN and an SER. 08.11.2018

Grid-connection Process Letter of Intent (LOI) Indication of intent by national utility to allow project of specified size/location to connect Interconnection certificate Based on review of engineering plans – agreement to allow interconnection SPPA or SPSA Contract to purchase / sell electricity at specified price Permit Legal right to operate (streamlined approval for projects <1 MW) Commissioning Interconnection with the national grid and commencing operations Grid-connection Process 08.11.2018

Interconnection certificate Letter of Intent (LOI) Indication of intent by national utility to allow project of specified size/location to connect Interconnection certificate … SPPA or SPSA Permit Commissioning Application 08.11.2018

LoI definitions Letter of Intent (LoI) On-grid LoI Off-grid LoI means a statement of intent by a LDN operator to connect to a SPP or SDN; On-grid LoI means a LoI issued by a LDN operator to an existing or proposed project which intends to connect to a LDN which is in the vicinity of the project; Off-grid LoI means a LoI issued to an existing or proposed project that operates, or will operate, in a mode that is not connected to a LDN and that intends to connect when a LDN expands into the vicinity of the Off-grid project; 08.11.2018

Request for Letter of Intent (§7) Receive notification of receipt of complete request within 7 days 3 Identification of suitable project site 1 Submit Request for LoI to LDN 2 Receive LoI within 30 days from date of receipt of complete request 4 LDN distribution upgrade & cost estimate within 30 days of LoI 5 MMK Accompanying documentation: GPS coordinates of the proposed location of project assets; Proposed project power export/import capacity (kW) Basis for denial: Can only be denied for technical (engineering) reasons or if it conflicts with another project Validity On-grid LoI: Valid for 12 months, but can be extended for a period of up to 6 months at a time up to 2 years Off-grid LoI: Indefinite (does not expire) until LDN network is within one mile of the project … at which point it is nullified and replaced with an on-grid LoI Transfer only with LDN approval Distribution Cost Upgrade Estimate Upgrades to LDN paid for by SPP/SDN developer 08.11.2018

Application for interconnection Letter of Intent (LOI) Indication of intent by national utility to allow project of specified size/location to connect Application for interconnection Based on review of engineering plans – agreement to allow interconnection SPPA or SPSA … Permit Commissioning Application 08.11.2018

Interconnection certificate definitions means a certificate issued by a LDN operator certifying approval of the interconnection engineering design submitted by the Electrical Project; 08.11.2018

Interconnection certificate application (§12) Receive notification of receipt of complete request within 7 days 3 Interconnection Certificate issued within 60 days from date of complete request 4 Before LoI elapses… 1 Submit Application for Interconnection 2 Accompanying documentation: Description of the project, site details Service territory (if SDN or SER) Electrical engineering design specifications Engineering studies (e.g. load flow or fault studies) Prescribed fee Basis for denial: Only technical (engineering) criteria 08.11.2018

Interconnection certificate Letter of Intent (LOI) Indication of intent by national utility to allow project of specified size/location to connect Interconnection certificate Based on review of engineering plans – agreement to allow interconnection SPPA or SPSA Contract to purchase / sell electricity at specified price Permit … Commissioning 08.11.2018

Standardized Small Power Purchase Agreement (SPPA) SPPA Key definitions Standardized Small Power Purchase Agreement (SPPA) means a standardized contract by which a Small Power Producer sells electricity at wholesale Feed-in Tariff means a generation technology-specific, standardized electricity rate paid for electricity sold to the LDN operator under a SPPA 08.11.2018

Standardized Small Power Sales Agreement (SPSA) SPSA Key definitions Standardized Small Power Sales Agreement (SPSA) means a standardized contract by which a Small Electricity Retailer purchases electricity at wholesale 08.11.2018

Interconnection certificate application (§12) + SPPA/SPSA (§13 & §15) Accompanying documentation: Description of the project, site details Service territory (if SDN or SER) Electrical engineering design specifications Engineering studies (e.g. load flow or fault studies) Prescribed fee Basis for denial: Only technical (engineering) criteria Receive notification of receipt of complete request within 7 days 3 Receive Interconnection Certificate within 60 days from date of complete request 4 Submit Application for Interconnection 2 Before LoI elapses… 1 Developer and LDN sign SPPA / SPSA within 90 days from Interconnection Certificate SPPA / SPSA: Standardized contract -- No need for each project to draft and negotiate from scratch each time. SPPA (SPSA) will specify a tariff for sale (purchase) of electricity to the LDN The Ministry may modify the SPPA / SPSA, but modifications only apply to agreements signed after the modification. 08.11.2018

Feed-in Tariffs determined by: A standardized methodology established by the Ministry; An avoided cost calculation as determined by an LDN operator, with approval from the Ministry; or Through a competitive bidding process. 08.11.2018

SER Tariffs (§33) SER Retail tariffs Allowed to be higher than tariffs charged to retail customers by LDN (e.g. higher than 35 kyat/kWh) Ministry allows tariff taking into consideration factors including: SER’s costs (capital, O&M, taxes, etc.) amount of electricity sold, Reasonable profit to SER Customers' alternatives. (§34) SER wholesale tariff Sufficient for well-managed company to earn profit at or above prime interest rate plus 8% 08/11/2018

Interconnection certificate Letter of Intent (LOI) Indication of intent by national utility to allow project of specified size/location to connect Interconnection certificate Based on review of engineering plans – agreement to allow interconnection SPPA or SPSA Contract to purchase / sell electricity at specified price Permit Legal right to operate (streamlined approval for projects <1 MW) Commissioning … Application 08.11.2018

Permit application (§21) Receive notification of receipt of complete request within 14 days 2 Ministry publishes in 2 newspapers, 14 days public comment 3 If > 1 MW Ministry evaluates within 60 days 4 Submit Application for Permit to Ministry 1 For all projects: Fee Site description Copy of SPPA/SPSA For projects >1 MW additional requirements: Business registration Business plan Proof of financial capacity Evidence of rights to use land (& water rights if hydro) Health & safety approvals Evaluation critiera (all projects): completeness, veracity and legality of the information Evaluation critiera (projects > 1 MW): The applicant’s record of compliance; Public comments and representations received from the public, if any; Protection of the environment; Financial capability of the applicant Economic efficiency and benefit to public & applicant. 08.11.2018

Authority to issue waivers (§20) The Ministry is authorized to issue waivers to requirements otherwise applicable to Permit holders pursuant to the Ministry of Electric Power Permitting (Permit Applications, Issuance, Modifications and Enforcement) Regulations, 2016, or its replacement, in order to minimize the regulatory requirements applicable to SPPs, SDNs and SERs. 08/11/2018

Interconnection certificate Letter of Intent (LOI) Indication of intent by national utility to allow project of specified size/location to connect Interconnection certificate Based on review of engineering plans – agreement to allow interconnection SPPA or SPSA Contract to purchase / sell electricity at specified price Permit Legal right to operate (automatic approval for projects <1 MW) Commissioning Interconnection with the national grid and commencing operations Application 08.11.2018

Commissioning (§30) Commissioning must happen no more than 3 years from SPPA signing (unless exception granted in SPPA or extension granted by Ministry); SPP/SDN must submit quarterly progress reports to LDN leading up to commissioning (and annual reports thereafter); Inspector General must verify interconnection equipment compliant with technical codes prior to interconnection. Issues Interconnected Facility Commissioning Certificate upon completion of testing; Ownership of all relevant assets on the LDN operator’s side of the Interconnection Point shall be transferred to the LDN operator upon commissioning. 08/11/2018

Small Scale Electric Power Enterprises Unit (§32) The Ministry shall establish Small Scale Electric Power Enterprises Unit Single point of contact Coordinate interactions among departments within the Union Government and the LDN operator; Facilitate the issuance of: LoIs; Environmental, health and safety approvals Review annual reports. Monitor project performance and maintain a database of all SPP electricity sales and SER electricity purchases. 08/11/2018

Feedback from Union-level consultation workshop with MOEE/MOI/DRD Tues 6 March, 2018 – Naypyitaw Regulations need to better integrate with existing (or soon to be released): MOEE technical codes (grid-code, distribution code, metering code), technical and industrial standards, code of conduct and inspection methods, and environmental regulations Feed-in tariffs need to be consistent with reasonable least cost approach Regulations should be promulgated under Electricity Law §72(b) rather than §72(a) so as to not require parliamentary approval. 08.11.2018

Questions? Suggestions? 08.11.2018

Guiding questions If these regulations were passed, would they help your business? What, if anything, would you change? Small Scale Electric Power Enterprises Unit – should there be one in each LDN, or just one inside MOEE? At the moment, ESE, YESC, MESC are the only LDNs. Should LDNs be defined to include smaller distribution utilities? If a request for LOI or application for interconnection is submitted to ESE, should it be submitted to the state-level office, or to the union/head office? What do you think about the processes on the flow-charts? 08.11.2018