I was asked recently, “What is holding back clean energy progress in Cambodia?” My answer was simple: electricity planning decisions. An electricity plan was made in the wake of the 2019 power shortages, but understandably that was made quickly and under pressure.
That plan will see 74 per cent of electricity supplied from fossil fuels by 2030, mostly from importing coal fired electricity from Laos or importing coal or gas to make electricity in Cambodia. The purchase price for the 2.4GW Laos coal project was stated in 2019 as $0.077/kWh – compare this with the competitive auction for a 60MW solar project at $0.0387/kWh led by the Electrite du Cambodge (EDC) and supported by the Asian Development Bank (ADB).
It’s only in the last two years that project developers in Cambodia have demonstrated that solar and wind can make electricity cheaper than burning coal, oil, gas and often hydro. This means new scenarios are required to compare costs and benefits with different share of this new solar and wind resource to ensure Cambodia is on the best economic and technical path.
Thankfully, the ADB is supporting the government to develop Power Development Master Plan out to 2040. It has been going slowly due to hesitation from the government to have scenarios comparing the 2019 plan with scenarios with higher levels of cheaper solar and wind power – and perhaps some the deals done in 2019 may need to be abandoned. But if Vietnam is planning to walk away from 17GW of coal projects on their books following the success of its domestic solar and wind industries, then it’s possible for Cambodia, too.
Fortunately, much of the technical data collection work has been done. Work completed last year by the Intelligent Energy Systems (IES), supported by the Australian government, concluded that Cambodia has 44GW of high potential solar, 6GW of wind, far higher than the 15GW Cambodia is projected to need by 2040. Back in 2017, expert electricity analysis funded by the ADB showed the Cambodian electricity grid can take 10-20 per cent capacity solar with no problem, up to 40 per cent with manageable limited impacts. Today, the grid is doing really well with eight per cent solar capacity, but that share will now decline as more coal projects come online. Cambodia now has excellent and commendable experience in integrating solar output into the grid – from 2016 when no solar was on the grid to over 0.23GW of solar by the end of last year.
So it is now possible to compare the Business as Usual 2019 plan with other scenarios with higher shares of solar and wind. Why should this be done? Because these sources are cheaper than coal, oil and gas. They are also produced within Cambodia, creating jobs, investment and contribute to the government’s aim of increasing energy independence. Only by comparing the technical and economic difference between the plan set after the 2019 power shortages with alternative plans can we know if Cambodia is on the right path. Certainly, Bloomberg New Energy Finance show global trends moving away from fossil fuels towards solar and wind, while Cambodia is rapidly heading in the opposite direction.
This is what Cambodia’s big investors – like Adidas, H&M, VF Corporation – have been asking the relevant ministers to consider. Forward looking companies have to meet their own global renewable commitments to their customers – and within a tight timeframe. The above mentioned garment companies make up more than 30 per cent of all Cambodia garment exports – more than $2 billion of exports. Factories producing for Adidas employ 80,000 Cambodians. These and many more companies operating in Cambodia are calling on the government to consider if the grid can avoid following the 2019 plan.
Equally important is the lost opportunity for more investment in Cambodia. The Laos 2.4GW of coal projects is around $3 billion of investment – inexplicitly not in Cambodia, but in Laos, even though the Cambodian government is underwriting those projects with a purchase agreement. If a competitive process was made for all that power to be produced in Cambodia, I wonder how much money could be saved on the electricity purchase price, and what jobs and investment could be made for the country?
The only way to know this is to model the scenarios and be willing to compare the costs, benefits and technical aspects of solar and wind. As a starting point, it should be easily possible to build on the existing hydro resources and model a scenario where half electricity is from renewable energy up to 2040.
This type of independent scenario analysis in China showed that increasing solar and wind generation (from three per cent now to 28 per cent and 11 per cent respectively) they could lower their electricity production costs from $0.0735/kWh to $0.065/kWh and reach half of generation from renewable energy by 2030 – well on the way towards supporting China to their net-zero target by 2060.
Cambodia is still at a crossroads and it’s not too late for Cambodia to alter its path. Those Laos coal projects haven’t closed finance, and there are some technical considerations such as the long transmission line from Laos to Phnom Penh, and even the availability of suitable coal deposits in Laos. There is still a chance to walk away from plans to have three quarters of Cambodia’s electricity depending on imports of coal, gas or electricity from neighbours. Cambodia can still consider the economic, social, environmental and energy independence benefits that could come from a more ambitious share of locally produced solar and wind power, and be a country demonstrating green energy leadership.
Bridget McIntosh is country director of EnergyLab in Cambodia – an organisation established to support the growth of the clean energy market in Cambodia (www.cleanenergycambodia.org)
