The Asia Development Bank (ADB) announced yesterday that it will provide a $9.2 million loan to Singapore-based energy provider Sunseap Group for the construction of Cambodia’s first large-scale solar farm.

Sunseap International, the company’s international branch, announced last August that it had signed a 20-year power-purchase agreement with state electricity provider Electricite du Cambodge (EdC) for its planned solar farm in Bavet, the first deal of its kind in Cambodia. The $12.5 million, 10-megawatt facility is expected to be operational next August and provide around a quarter of Bavet city’s energy demand.

“While electricity consumption in Cambodia has increased significantly over the years, almost half of the country’s population currently has no access to stable, affordable electricity,” Sunseap founder and director Frank Phuan said in a press release yesterday. “Cambodia is a fast-growing market with a vast potential for solar development.”

In the release, the ADB said the loan would take the form of a debt financing package that was co-financed by an unnamed private sector institution. It added that part of the funds came from a concessional loan from the Canadian Climate Fund for the Private Sector in Asia (CFPS).

“The CFPS loan was instrumental in assisting the sponsors to overcome some of the early mover risks and cost premiums associated with a first-of-its kind project such as this,” it said.

Stephen Higgins, managing partner at Mekong Strategic Partners, said the ADB’s financial support was likely an important factor to make this type of solar project viable in Cambodia.

“Without concessional funding, this project would be very marginal given the low power purchase agreement price,” he said.

Higgins noted that the EdC could play a much greater role in helping develop solar energy in Cambodia, adding that its local potential makes its wider implementation a sensible solution to the country’s enduring energy problems.

“Solar could be rolled out very quickly which can help Cambodia achieve energy self-sufficiency, and it can be located much closer to major population centres so it doesn’t incur large transmission costs,” he said.