It might seem risky to disrupt a power network. Nonetheless, welcome change is coming to Cambodia’s electricity system. Just as emails have disrupted postal services and personal computers have disrupted typing pools, new technologies are remaking the electricity industry. If authorities seize the moment, Cambodia can leapfrog over current problems and be at the forefront of the transformation.
Power systems need to get smarter not bigger. Electricity can now be produced where it is consumed. Centralised mega-plants are being by-passed. And digital technologies are changing the power business.
Distributors will no longer simply send power down the line but will actively manage networks. Customers’ power use, downstream of the meters, will also be shaped by IT algorithms to minimise consumption by turning off unneeded appliances when power loads (and hence power prices) are high.
Overall, less power will be used with greater variations in loads and supply. The electricity industry will not be about making money from an undifferentiated commodity. It will be about cleverly providing electricity services.
It is always true that making use of disruptive technologies means overcoming resistance, both technical and political. It’s difficult, but the key message is that incremental improvements to the existing system will not give all Cambodians reliable, affordable, sustainable power anytime soon. Change should be embraced.
Cambodia has done well in opening up its electricity system. The Electricity Authority of Cambodia (EAC) provides an independent process for licensing producers and distributors, overseen by relevant government departments.
The Electricity Law of 2001 has been forward-looking, aiming to promote private sector involvement while safeguarding national and consumer interests. The private sector is now involved with multiple independent power producers, many with detailed partnership agreements with Electricite de Cambodge.
And special purpose transmission licences have been used to finance and build extensions to the grid. The final pieces of robust international transmission links and a national despatch centre are coming.
All of that will open up the system to the new technologies. That will help meet the Power System Development Plan’s ambitious targets, with its commitment to 3867 MW by 2020.
However, Cambodia’s current approach is associated with well-known and well-documented problems. It conforms to the bigger is better approach and so is about big hydro dams, giving centralised generation and a 20th-century grid, with its attendant transmission losses.
This approach has been criticised for being environmentally damaging, which might be true. It is certain that it produces poor power outcomes. There are large variations in the price of power within the nation, and it is very expensive by world standards.
The price decreases announced in 2015 are welcome, but the process for determining them is unclear so we cannot know if they reflect cost declines or if they threaten the profitability of the industry.
There is a lack of buy-in from large private sector players, meaning a lack of competition in bidding for major projects, also raising costs. And despite the ambition, only 70 per cent of households will be connected to the grid by 2030.
All of that is well known.
That is why these new technologies are so significant. They will help make the government’s strategy succeed. Digital technologies are allowing the grid to be better managed so that the cheapest generators with the fewest transmission losses are dispatched to the nearest loads.
At the user end, intelligence can now be added to manage power use and, increasingly, power generation and storage. Peak loads will be attenuated as more of these management systems start operating in real time. All of this will transform network usage and performance.
But the biggest change is coming from the sharp, accelerating declines in the cost of generating and storing photo-voltaic power. Every two years solar installation rates are doubling and photovoltaic-module costs are falling by about 20 per cent.
Even without subsidies, the present costs of solar installations will halve by 2022. The pay-back period for solar cells on homes will be less than four years. Cambodia will embrace solar power – not because it is clean and renewable, but because it is cheap and reliable.
It is decentralised solar that will lead the change to distributed generation and distribution. This technology will most disrupt the existing system. There will be some large-scale solar plants but what will be more important is decentralised solar.
As has already happened in Australia (where the AARN is centred) power users will install solar cells on their rooftops. Most of that power is fed back into the grid and this arrangement will be important in Cambodia. But it is the off-grid options that most need to be embraced.
The impact of solar technologies accelerates when the declining cost of storing decentralised power is added to the declining cost of generating it. This will make the new technologies truly transformative. People who are on-grid will charge up their batteries first, for use later that day, and supply back to the grid only once they have banked as much as they can.
But many people who are off-grid will never become connected. They will operate micro-grids, not individually but collectively, at the village level. A study commissioned by the JICA, noted that 80 per cent of Cambodia’s villages are within 40 kilometres of provincial towns and so will be served by extending the grid.
But 20 per cent will need to use micro-grids, unattached to the national system and reliant on renewable energy sources with back-up batteries.
If Cambodia builds the grid out to its boundaries it will cost more, suffer from resistance losses and be less reliable than if it were to build solar-battery micro-grids in the hard to reach locations. Cambodia will jump ahead if it embraces the disruptive technologies and deals with the challenges.
Change is presently impeded by bureaucratic inertia. We can see that in the repeated reports on rural electrification which show that spending has failed to achieve the aims because insufficient technical and regulatory resources are available.
The recent “Powering Cambodia” conference, sponsored by the EdC in late February, made clear the desire for new directions to be taken. Everyone agrees that new generation is needed, supplied by the private sector. The conference added the tight, new focus on renewables, particularly solar, much of it decentralised.
Bringing about change means dealing with the incumbents. Power distribution companies in particular will not like it that some parts of Cambodia will be forever outside their reach. There are also many private generators, mostly using diesel fuel, whose position will be under-cut by very low cost power from sustainable micro-grids.
And there are technical problems like voltage intermittency (so-called flicker) or harmonic oscillations that can damage network equipment so there is the constant need to regulate the frequency of the system.
Unmanaged variations of loads or generation create imbalances and degrade the power factor or worse: They can create meltdown conditions if the right technical support is not in place.
All this simply reminds us that disruption will not be costless but, equally, remember the benefits of these technologies. As inevitable as the sun rising, households will start generating power each morning.
Fuel inputs will not be needed. As the day lengthens, the batteries will charge and, when the sun sets, that power will allow the productive life of the village to be extended. It will all be cheap, efficient and sustainable.
This is not to say it will be so cheap that it will be profitable in and of itself. The cost of creating micro-grids will need to be shared among government, aid donors and users. Cambodian villages will not be able to afford to build the infrastructure but that is even more true about extending the grid.
A key question is whether the EdC, and its authorising ministries, will provide the political and bureaucratic leadership that lifts the process above the quagmire of middle-level, cautious officialdom. Some of what is required appeared at the recent conference where repeated calls were heard for policy and regulatory reform.
Such calls are welcome but do not address the heart of the problem. To get micro-grids into rural areas requires that villages partially fund and fully operate the systems.
That creates technical and training challenges. It requires that all stakeholders – government, aid funders and villagers – are satisfied with the contractual arrangements. It is these arrangements that are the key missing link.
We need to conduct a pilot installation, preceded by a workshop to deal with the regulatory and other hurdles, and to which all stakeholders are invited.
The pilot program will be funded from aid programs and from it will come the template for structuring, managing and funding the future electrification of Cambodia’s villages.
Paul Chapman and Reaksmey Hong are members of the Adelaide Alumni Research Network