Cambodia’s economy is growing fast, and so is its demand for energy. Decisions made today regarding sources of fuel and power generation will determine whether or not this ASEAN (Association of Southeast Asian Nations) member country will set itself on a path of sustainable energy and development, or increase its greenhouse gas (GHG) emissions and exacerbate climate change.
Twenty-six bidders submitted proposals to develop a 60 megawatt (MW) solar power project to state-owned Electricite du Cambodge (EDC) in September. The average bid price set a record low for Southeast Asia, which should persuade neighboring governments to embrace auctions, according to the Asian Development Bank (ADB). Thailand private equity company Prime Road Alternative Co. Ltd. reportedly submitted the lowest bid.
“The record low prices show the power of competition,” said ADB office of public-private partnerships director Siddharta Shah in a press release.
This is a new era for renewable energy development in Cambodia and the region, and particularly for solar power generation. This is good news for EDC and the people of Cambodia. We believe more governments in the region will adopt auctions as a strategy to procure renewable energy generation capacity and this structure and tariff will serve as a benchmark for future projects.
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Cambodia: an power sector overview
That said, Cambodia has been slow to embrace solar and renewable energy, as has been the case for ASEAN members generally. In addition to hydroelectric power generation, which accounts for well above half of national power capacity, Cambodia relies heavily on coal and other fossil fuels, increasingly liquid natural gas, for electricity generation and continues to subsidize exploration, production and consumption. Just two solar power plants are up and running in Cambodia at present, one a 10-MW plant developed by Singapore’s Sunseap and another, 60-MW facility in Kampong Speu.
Cambodia consumed a total of 2,650 megawatts of electricity in 2018, an increase of about 15% compared to 2017, according to the Ministry of Mines and Energy. Eighty-three percent of rural areas had access to grid power as of the most recent, publicly disclosed figures, leaving nearly 5 million Cambodians without access to electricity.
Daily blackouts became an increasingly common occurrence in Cambodia and across the Mekong region early this year as the region was affected by the El Niňo weather pattern. The national grid operator by and large has been struggling to keep up with power shortages, fast-growing demand for electricity and the government’s industrialization and economic development agenda, posing a chronic challenge for national development plans.
Industrial Electricity Tariff Cambodia
| Province | Electricity Cost | Unit |
|---|---|---|
| Phnom Penh | 0.21 | USD per kWh |
| Kampong Spue | 0.20 | USD per kWh |
| Kandal | 0.22 | USD per kWh |
| Kampong Cham | 0.26 | USD per kWh |
| Other | 0.22 | USD per kWh |
Data: Emerging Markets Consulting
Searching for alternative options, Cambodia joins a growing list of national governments who have come around to seeing solar and other distributed, emissions-free renewable energy resources as a cost-effective means of achieving national electrification, as well as national and international climate change and renewable energy, goals.
The government should take this lesson learned into consideration and should find other alternative options that will generate less impacts on social and environmental in order to reduce dependency on hydropower.
Cambodia relies on three main sources for electricity: hydroelectric power plants for more than half, a total maximum capacity of 1,329 MW as of last year, coal power stations of 538 MW, and solar energy of 64.77 MW, according to the ministry.
The government and fledgling, strictly regulated private sector continue to increase their investments in hydroelectric power generation despite warnings from scientists and environmental groups of over-exploitation of these natural resources, particularly in the Mekong River region, due to changing seasonal weather patterns that have increased the variability and lead to drops in output due to drought and other extreme weather. The government also continues to increase its reliance on coal power generation.
Longstanding Premier Samdech Techo Hun Sen in June said the Royal Government has been taking action to address the energy shortage problem. The premier highlighted that the government negotiated the purchase of 1,700 MW of electricity generated by hydroelectric and coal-fired power plants in Laos. He also noted that he requested Japan’s assistance during a recent visit, more specifically by building high-voltage transmission lines that would transport electricity from neighboring Laos to Cambodia.
“Next year, Phnom Penh capital will not face the electricity shortage problem anymore. Phnom Penh needs some 400 megawatts. We will increase the energy generation capacity by coal-fired power plants,” the Premier was quoted in news reports.
Government gradually turns to solar, renewable energy to resolve power shortages, achieve climate change, renewable energy and Sustainable Development Goals
Solar power capacity has been on a sharp ascent in Cambodia recently, increasing at a 10% annual rate from less than 1% of national generation capacity, however. Some 400-MW of solar-fueled power capacity is now connected to the national grid, according to the Department of Mines and Energy. Cambodian households and businesses are also increasingly investing in behind-the-meter (BTM) solar energy systems as they’re much easier and faster to deploy and costs are lower than utility grid rates, market analysts highlight.
© 2017 The World Bank, Solar resource data: Solargis.
EDC director-general Keo Rattanak said that Cambodia’s energy mix will change dramatically in coming years. “It has been brought up to our attention that power consumption in Cambodia has dramatically increased, mostly driven by construction projects. Therefore, investment in solar parks should go before hydropower, which now dominates domestic power consumption in the country,” he said.
Developments in solar energy are critical in dealing with the power shortage in the country…We will be able to produce at least 20% of our energy from solar systems in the next few years.
The Cambodian government has said it will increase its investments in solar energy by 12% by year-end 2020 and by 20% over the next three years, up from less than 1% at present. “So, in 2020, we will have about 15 percent from solar energy, and we will continue to further increase that number,” energy ministry director-general Vitor Jona said.
Solar and Cambodia’s National Strategic Development Plan
The Cambodian Cabinet approved four energy projects this past April, a US$231 million hydroelectric power and three solar power projects with a combined, rated, maximum power capacity of 140 MW. The latter are expected to come online and dispatch power to the national grid by 2020 and 2021 in four different provinces.
Some 347 households and farmland will be displaced and 5,355 hectares of farmland owned by 296 families will be taken over by the government as a result of building the Pursat hydroelectric power plant. In addition, 600,724 hectares of forest will be submerged or otherwise affected, according to Mines and Energy Minister Suy Sem.
The Pursat dam and hydroelectric power will be able to produce up to 70% of its total capacity during the dry season, however, Suy Sem highlighted. “It’s different from other projects because other projects can only produce 30 percent during the dry season, or even less, such as this year, for example,” Senate secretary-general Oum Sarith added.
Cambodia energy services provider SPHP is to develop the US$58 million, 80-MW Stung Pursat I solar power project in Pramoy commune under a 39-year, build-operate-transfer model. Two other 60-MW solar power plants are to be built in Pursat Province’s Krakor district and in Kampong Chhnang province’s Tek Phos district by jointly owned Canadian-Cambodian project developer Schnei Tec Renewable Co. Ltd. as per a 20-year build-own-model. In addition, cabinet ministers approved Schnei Tec’s proposal to increase the 60-MW solar power plant the company is building in Kampong Speu’s Oudong District by 20 MW.
Cambodia’s recent solar power tender is the first of a two-phase auction process that falls under development of a plan to build a 100-MW National Solar Park in Kampong Chhnang province. ADB’s Office of Public-Private Partnership is serving as a transaction adviser and assisting EDC to design and conduct an open and competitive bidding process, according to the multilateral development bank.
ADB’s financing package includes a US$11-million loan and a US $3-million grant from the World Bank administered Strategic Climate Fund, more specifically via its Scaling Up Renewable Energy Program.
ADB is supporting Cambodia’s efforts to expand, strengthen and modernize the state utility grid in additional ways. These include helping craft the development plan, as well as assisting with implementation of innovative clean energy technology, such as energy storage systems. The ADB acted as transaction adviser on the tender. The governments of Canada and Singapore helped with project preparation work.
China’s JinkoSolar, the world’s leading solar module manufacturer, is supplying the photovoltaic (PV) panels and other equipment for the Schnei Tec solar project. “The 60-MW solar installation is just the first step towards an abundant and vibrant renewable energy future in Cambodia. We have great expectations for the entire region,” global sales and marketing vice-president Gener Miao was quoted as saying. “The region’s booming populations, strong economic growth engines and abundant sunlight represent an exciting opportunity for solar power and for JinkoSolar.”
Taking a public-private partnership, with heavy emphasis on private sector capital
Cambodia is taking a public-private partnership approach to raising the capital needed to carry out its latest strategic development plan. The private sector will need to contribute no less than 75%, some US$43.4 billion. The government will contribute US$14.3 billion in order to fully fund the National Strategic Development plan.
Senator Sarith said that the 2019–2023 National Strategic Development Plan focuses on fostering inclusive growth and achieving UN Sustainable Development Goals—doing so would also help Cambodia make the transition from a lower-middle-income country to an upper-middle-income country come 2030.
“This strategic development plan plays an important role in implementing the government’s priority policy, which is stated in the Rectangular Strategy-Phase IV and the Sustainable Development Goals of 2016–2030,” he was quoted as saying.
“In the accumulation with the existing 10-MW project in Svay Rieng province and 80-MW of solar plant in Kampong Speu and a plan to construct a 120-MW in Kampong Chhnang and Pursat which have been approved, I think it is possible,” Vannara said.
Expanding solar generation is aligned with the country’s goal of increasing access to affordable and reliable sources of electricity.
Solar at Cambodia’s water-food-energy nexus
Rice cultivation and exports are the principal crop and source of agricultural sector revenues and employment in Cambodia, accounting for more than 20% of employment among the working-age population, according to the International Finance Corp. (IFC), which is also working to foster deployment of solar and renewable energy in Cambodia.
Aligned with achieving sustainable agriculture, energy and general improvement in livelihoods and living conditions, Cambodian Rice Federation (CRF) secretary-general Moul Sarith reportedly said that increasing solar power generation would help reduce electricity costs and boost the Kingdom’s exports. “I think it is good for the rice industry as production costs will be lower and this will provide us with greater potential to compete with other countries,” he was quoted in a July news report.
Private sector agricultural interests are calling electricity prices to be dialed down to between 400 and 500 riel per kWh (US$0.097–0.12). CRF member rice millers on average reportedly pay on average between riel 50,000 (US$12.18) and 150,000 (US$36.54) per month for electricity.
“We want to set up solar power plants in many locations. We believe solar power will provide lower prices. As EDC’s director, I do not want to see the Mekong River as part of the hydropower generation,” Rattanak said.
“Having reliable, sustainable, and affordable energy sources is crucial for the economic development of a rapidly expanding country such as Cambodia,” ADB’s Tharakan concluded. “ADB’s assistance will not only help diversify Cambodia’s energy mix through solar power development, but also help the country meet its greenhouse gas emissions reductions target, as per the Paris climate agreement.”
