Fitch Solutions Slashes Solar Forecast For Myanmar

Political Crisis & Civil Conflict Following Military Coup Forces Fitch Solutions To Pull Down Cumulative PV Capacity Forecast For Myanmar To 280 MW By 2030, Up From 84 MW At 2020-End

Fitch Solutions Slashes Solar Forecast For Myanmar

There is a massive downgrade of solar power capacity forecast for Myanmar by Fitch Solutions’ analysts as political and economic uncertainties raise their head. Analysts expect aggregate solar capacity to grow to 280 MW only by 2030, from 84 MW at the end of 2020. (Source: Fitch Solutions)

  • Fitch Solutions has downgraded its forecast for solar power in Myanmar for overall capacity to settle at only 280 MW by 2030
  • Political crisis and civil conflict in the country may force investors holding on to their final investment decisions on projects till situation improves
  • Ongoing global supply chain pressures and price rise of PV components may lead to price rise for solar tenders that military government has reportedly announced
  • China may increase its presence as the continuation of current situation may emphasize international isolation for Myanmar
  • As price of solar falls, the military administration here may want to continue to encourage it since it also helps the country’s electrification rate

In November 2020, analysts at Fitch Solutions Country Risk & Industry Research forecast for Myanmar for 2030 was its non-hydro renewable energy capacity to grow from 92 MW at the end of 2019 to exceed 2 GW by the end of 2029, led majorly by solar PV capacity (see Fitch: Over 2 GW Non-Hydro RE Capacity For Myanmar).

Around 9 months down the line, the analysts have pulled down their forecast for the country, now expecting it to add only 280 MW solar power capacity in aggregate by 2030, increasing from an estimated 84 MW at the end of 2020. They do not expect any projects to come online this year as several investors are ‘withholding’ their final investment decisions on further projects.

They state, “We expect businesses with the ability to halt investments will likely do so, if not liquidate their assets and withdraw their funds altogether.”

The reasons include a political crisis in the country following a military coup in February 2021 leading to civil protests and unrest. While wondering about the fate of winning projects from previous tenders, analysts caution that already approved projects under tenders executed by the previous administration, may be superceded the new round of solar tenders Fitch Solutions said the current military administration has announced.

According to the analysts, there seems to be interest from some Chinese, Thai and domestic companies for the new solar tenders; however, they worry about the ‘quality and viability’ of the projects ‘even if they were to try’. Investor entry criteria having been relaxed would mean companies with no sufficient experience will also compete.

Also, their reasons for this predicament range from challenges related to acquisition of necessary administrative documents, capital controls, restrictions in the banking sector, and growing pressures on their currency weighing on the broader financing and construction environment for projects.

At the same time, bid prices for the tenders may increase due to the ongoing global supply chain pressures and increase in prices for polysilicon and steel.

“Regardless, unless the bid prices are deemed too high and unaffordable, we believe that the military government is still likely to award the projects based on its pool of bids as a way to reassert its capabilities,” argue the analysts. “That said, we will remain cautious on the progress of these projects given the aforementioned challenges and include it into our forecasts only when we see concrete project development going forward.”

Speaking of China, Fitch Solutions points out that if the conflict in Myanmar persists, it would embolden China to increase its presence here in the face of increased international isolation for the nation. Nonetheless, the military government may want to continue to support renewables as prices fall and the country improves its electrification rates with private investment coming in.

About The Author

Anu Bhambhani

Anu Bhambhani is the Senior News Editor of TaiyangNews

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