Cambodia’s solar regulation

Content image - Phnom Penh Post
Trainees assemble a solar lantern at a workshop in Manila. NOEL CELIS/afp

Cambodia’s solar regulation

On january 26, the Electricity Authority of Cambodia (EAC) enacted for the first time a solar generation regulation. The regulation is a new driver for the country’s solar photovoltaic (PV) system development. The solar generation regulation has elevated the regulatory framework in Cambodia with a foreseeable positive impact to its future solar PV development.

Having six to nine hours of daylight on a daily basis, the solar irradiation in Cambodia is recorded at 5kWh/m2/day.

Despite having such potential, Cambodia is still dependent on imported electricity which accounts for 36 per cent of its power generation last year, which is an increase from 2015 and 2016 (26 per cent and 23 per cent respectively).

Role of Solar PV in Cambodia

Prior to this regulation, the Cambodian government has successfully increased the country’s electrification rate from 36 per cent in 2013 to 68 per cent last year through consistent implementation of the ‘Power to the Poor’ programme and solar home systems.

With the lowest tariff bidding scheme (as stated in the World Bank’s Private Participation in Infrastructure Database), the first 10MW utility-scale solar power was built in Svay Rieng province in 2016 despite having no incentive – in the form of a feed-in-tariff (FiT) scheme – from the government. The price for this electricity was approved at 9.1 cents/kWh (Taiyang News, 2016).

Brand New Regulation for Solar

This new regulation poses several core directives for all renewable energy (RE) stakeholders.

The first directive covers the principles to set solar PV supply tariff. Prior to the regulation, the Cambodian government only had a financing scheme for rural electrification programme. Some subsidies were provided by Electricite du Cambodge (EdC) through RE funding.

Now the solar PV tariff is based on the aggregate cost of all electricity sources in the national grid. EdC must buy the solar PV plants if they want to connect them to the national grid system. This is regulated under the Power Purchase Agreement as approved by the EAC.

The second directive is on the synchronisation of solar PV to the supplier’s grid.

The government now allows lower-voltage consumers to develop standalone solar PV systems without asking for permits. Very often the permit procedure becomes a hindrance, making solar PV unattractive for consumers.

As the price of electricity in rural areas is expensive (ranging from 14.8 to 25.9 cents/kWh), the electricity generated by standalone solar PV deemed more affordable for rural households, where the Asean’s levelised cost of electricity for solar PV is at 22 cent/kWh on average. This regulation will drive Cambodia to achieve 100 per cent of electrification ratio by 2030.

For higher voltage consumers, they are required to meet the following conditions: the individual harmonic component (one per cent to three per cent), harmonic distortion (1.5 per cent to five per cent), anti-islanding (0.2 seconds for frequencies above 50.5Hz and below 47.5Hz), DC power injection (less than one per cent) and flicker (not creating objectional flicker). The regulation also contains information about the technical standards of solar PV installation and the prerequisites of its security and reliability at economical costs.

Learning from Asean members

The new regulation on solar PV will benefit Cambodia in many ways as it did to other Asean member states.

However, Cambodia ought to provide more information on the cost of solar PV in their regulation to attract more investors as several other Asean members did.

A study by the Asean Centre for Energy (ACE) and the China Renewable Energy Engineering Institute on Asean FiT mechanism indicates that Malaysia, the Philippines and Thailand set their FiT based on the levelised cost of electricity (LCOE), which provides a return of investment for different technologies. Detailed price information on their tariff settings will be helpful for investors to identify their return on investments.

In Malaysia, the FiT scheme contains information on solar prices including the benefits of basic FiT (10.96 up to 17.09 cents/kWh) and FiT bonus (1.28 to 3.21 cents/kWh). Solar PV projects in Malaysia created about 2,000 green employments in 2011 and increased to 10,103 in 2017.

In Indonesia, the tariff is based on ceiling price according to production costs in different regions. If local production cost is higher than national production cost, the maximum price is 85 per cent from the local production cost. If it is lower than national production cost, than the cost is agreed upon by related parties.

Indonesia boosted its electricity ratio from only 67.15 per cent in 2010 to 95.35 per cent in 2017. The total off grid solar and hybrid capacity have significantly increased from only 122MW in 2014 to 296MW in 2017. With the aim to achieve 100 per cent electrification ratio before 2019, Indonesia has been providing solar-powered energy saving lamps for people who have no access yet to electricity.

In the Philippines, the tariff is set under a single FiT at 16.71 cents/kWh. Solar PV generation in the Philippines jumped to 141MW in 2015 and 728MW in 2016, from only 22MW in 2014 after the enactment of solar PV regulation by Energy Regulatory Commission in March 2015. The Philippines recorded up to 81,918 green jobs from 2009-17 through 892MW solar installation.

In Thailand, the tariff ranges from 13.13 to 18.02 cents/kWh, while for solar PV rooftop it ranges from 19.13 to 21.81 cents/kWh.

As the largest installer of solar PV in the region, with a relatively mature industry and policy frameworks, Thailand has installed 2,446MW, which generates 3,430GWh power to households since 2008. Its policy framework provides a win-win solution through binding regulations for all stakeholders involved in the solar PV industry.

In Vietnam, after FiT was announced, solar developers are trying to engage the government by proposing 70 new solar projects with total capacity 3,000MW in operation before June 2019 (Vietnam Investment Review, 2018).

For Cambodia, the solar generation regulation is just a starting point to transition the nation into the maximum utilisation of renewable energy.

There have been suggestions that Cambodia establishes a funding mechanism for solar developers through green bonds or bank guarantees to ensure the attractiveness of solar PV industry for investors. Furthermore, additional regulations pertaining to the solar PV industry may create more jobs for people in Cambodia.

Cambodia’s prospected success in solar PV development significantly contributes to the aspirational target for renewable energy under the Asean Plan of Actions for Energy Cooperation 2016-25, where all Asean nations aim to achieve 23 per cent of renewable energy share in the energy mix by 2025.

According to the 5th Asean Energy Outlook published by ACE last year, Cambodia is expected to install 527MW solar PV by 2025, which is equal to $620 million of investment in Cambodia.

The Asean Centre for Energy is an Asean intergovernmental organisation that represents the member states’ interest in the energy sector and serves as the regional think tank for Asean energy.

MOST VIEWED

  • Phnom Penh authorities ban march for Human Rights Day

    Phnom Penh authorities have banned a planned march as local NGOs and workers’ unions gear up to celebrate the 70th anniversary of the signing of the Universal Declaration of Human Rights on Monday, with a youth group leader saying they would march nonetheless. The UN

  • Government deports 235 Chinese scammers

    THE Immigration Department of the Ministry of Interior on Thursday deported 235 Chinese nationals, 35 of whom were female, via the Phnom Penh International Airport for their part in a Voice over Internet Protocol (VoIP) online money extortion scam. The deportees were arrested on November 26 over the

  • Phnom Penh’s Jet’s Container Night Market shuts down

    The famous Jet’s Container Night Market in central Phnom Penh has shut down due to the high cost of the land rental, company representatives claim. Jet’s Container Night Market is the largest such market in Phnom Penh. It operated for just over two

  • International buyers snap up new locally produced watch

    A Cambodian entrepreneur has launched a stylish high-end watch, hoping to promote the Khmer creative talent and increase demand for the Kingdom’s products abroad. Designer Seth Pitu launched his brand PU a mere 60 days ago, and hopes to combine traditional Khmer art with sleek