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Renewable energy development in Cambodia: Status, prospects and policies

Authors:
Chapter 7
Renewable Energy Development in
Cambodia: Status, Prospects and Policies
Kongchheng Poch
Economic Institute of Cambodia (EIC)
August 2013
This chapter should be cited as
Poch, K. (2013), ‘Renewable Energy Development in Cambodia: Status, Prospects and
Policies’, in Kimura, S., H. Phoumin and B. Jacobs (eds.), Energy Market Integration in
East Asia: Renewable Energy and its Deployment into the Power System, ERIA Research
Project Report 2012-26, Jakarta: ERIA. pp.227-266.
227
CHAPTER 7
Renewable Energy Development in Cambodia: Status,
Prospects and Policies
KONGCHHENG POCH
Economic Institute of Cambodia (EIC)
The central question of this study is how to accelerate renewable energy (RE)
development in Cambodia in a sustainable manner. Based on international
experience, setting a national target for RE’s share is an essential part in guiding
and inducing RE development. The supporting mechanisms of both financial and
non-financial policies should be in place to achieve the national target effectively.
Currently, the scale of RE deployment in Cambodia remains low, although there has
been steady progress. Rather than focusing predominantly on hydropower and coal,
the government should increase its efforts on the development of other REs (e.g.,
biomass and solar), as the vast potential has been under-utilised. The government
should systematically expand RE promotion and information to the general public;
especially those potential consumers who live in areas where publicly provided
electricity is not available. Public financing is needed to aid the private sector to
pioneer RE projects, because of the high upfront investment costs and the public
bidding process ensures fair competition. Enhancing the data management of the RE
industry, adopting a pricing policy, and relevant regulations are also required to
build trust in the private sector to invest in RE projects and to integrate renewables
based electricity into the national grid.
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1. Introduction
Cambodia, officially known as the Kingdom of Cambodia, is located on the
mainland of Southeast Asia and is bordered by Lao PDR, Thailand, and Vietnam.
With a total population of approximately 15 million, of which approximately 80 per
cent live in rural areas, the country is one of the poorest in terms of economic
development and electricity accessibility throughout the region.
Cambodia’s electricity demand has grown faster than what was projected. The
demand has averaged 19.0 per cent per annum (p.a.), which is higher than the
previous estimate of 12.1 per cent p.a. (REEEP, 2012). The consumption of
electricity per capita has grown roughly seven per cent p.a. over the past five years
(Prime Minister, 2013). Nonetheless, this growth rate is not sufficient for such a fast
growing economy. Excluding the year 2009, when the economy was affected by the
global economic downturn, the average economic growth rate during 2003-12 was
9.0 per cent p.a., according to the data received from the National Institute of
Statistics (NIS).
The majority of the people, especially those living in rural and remote areas, still
have no access to electricity. By 2011, while almost all the households in Phnom
Penh (98.9 per cent) had access to on-grid electricity, only 23.5 per cent of total
households in rural areas had access to publicly provided electricity (Prime Minister,
2013).
The diversification of power sources is a critical issue for Cambodia for
expanding the rate of electrification and increasing the electricity supply. At present,
the supply is constrained in terms of quantity and quality. Power is produced mainly
by generators that use costly Heavy Fuel Oil (HFO), diesel, hydropower, and coal,
the last two being the minor sources. Instability and inefficiency continue to be
concerns for power distribution. These two factors create difficulties for households
and businesses in addition to expensive electricity bills.
Cambodia is blessed with an abundance of renewable resources, which have
great potential for power production. Situated in the middle of the Greater Mekong
Sub-region (GMS), Cambodia contains major rivers and waterways, which are
suitable for hydropower development. Given its geographical location, the country is
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also endowed with wind and solar resources that have not been exploited to generate
electricity for industry or household consumption. Moreover, the agricultural sector
has annually produced an abundance of residues that are suitable for electricity
generation.
The development of Renewable Energy (RE) is a significant solution to
accelerate power sector development. The crucial question–how to promote RE
development–is vital and needs to be explored. In the context of regionalism, how
Cambodia can develop the potential of its renewable resources and contribute to the
domestic and regional Energy Market Integration (EMI) is an intriguing question.
Many studies on RE in Cambodia have been conducted, but studies on RE
development in the context of regional integration are lacking. This study intends to
bridge that gap in the current literature and more importantly; it aims to develop the
policy implications for Cambodia’s RE development. This study has three main
objectives , which include:
examining the current condition of the RE sector in Cambodia to identify
the barriers, challenges, and possibility for RE development;
examining international experience and using the lessons learnt to develop
Cambodia’s RE sustainably; and
deriving policy implications to accelerate RE development in Cambodia and
to enhance EMI in the region.
Reviewing the literature on RE development is carried out to create a foundation
and to gather the essential data for analysis. Consultation with key informants is
conducted to collect primary data, verify secondary data, and to acquire industry
insiders’ insights. A SWOT (strength, weakness, opportunity, threat) analysis is
employed in the study as well.
This study is undertaken with the perspective of accelerating power sector
development. RE development is essential for other sectors such as heating,
cooking, and transportation. This study, however, focuses primarily on enhancing
RE development in order to resolve concerns in the electricity sector.
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2. Renewable Energy Development – International Experience
2.1. RE deployment
RE is considered the best alternative for power supply in terms of environmental
friendliness and sustainability. RE is essentially produced from such resources as
hydropower, wind and solar energy, biomass, biogas, biofuel, solid wastes, and
geothermal energy. These resources have their own potential and require different
extractive technologies, but they are fundamental in promoting the sustainability of
power sector development.
Energy security, environmental concerns, and sustained economic growth are the
essential drivers for RE deployment. The International Energy Agency (IEA, 2011a)
indicated that RE deployment is driven predominately by energy security, the
reduction of CO2 emissions and environmental impacts, economic development, and
innovation and industrial development.
RE development is increasing. Over the last five years, the IEA (2011b) found
that the deployment of RE technologies has increased significantly around the world.
It is no longer an interest typical of the countries in the Organisation for Economic
Co-operation and Development (OECD) but of many other countries as well. China
has become a leader in RE deployment.
RE development, however, faces critical barriers. According to the IEA (2011a),
obstacles to RE deployment can be classified as techno-economic and non-economic
barriers. The non-economic barriers include:
regulatory and policy uncertainty;
institutional and administrative issues.;
the markets;
finance;
infrastructure.;
the lack of knowledgeable and skilled personnel.;
public acceptance; and
environmental concerns.
Deployment difficulties are dynamic and vary from country to country. The
dynamics relate to the maturity of a particular energy technology, the condition of
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domestic markets for that technology, and the status of global markets for that
technology (Muller, et al. 2011).
RE production also requires different kinds of technologies and different levels
of technological application, due to the distinctive types of renewable resources and
diverse areas. In this regard, RE promotion policy plays an essential role in
accelerating renewable technologies (Zhang and Cooke, 2009).
A conducive investment environment plays a crucial role in stimulating RE
production. The European Renewable Energy Council (EREC, 2008) found that
easing administration and regulation created a favourable environment for businesses
and was beneficial to RE advancement.
The government supports RE market businesses through production subsidies
that promote electricity generation from renewable resources. These subsidies
contribute to the cost of electricity production from renewable resources, through
either Production Tax Credit (PTC) or by subsidising the initial capital investment.
This has a positive effect on RE production (Doner, 2007).
2.2. RE Policy
Regulators and policy makers have an essential role in promoting and
accelerating RE deployment. One of their tasks is to enact policies or regulations
that are conducive to RE deployment across the country. The IEA’s Renewable
Energy Technology Deployment (2012) stated that, “policy-makers play a key role in
accelerating deployment of RE technologies by influencing near-and long-term
planning and investment decisions through government policy.”
Favourable policies and a regulatory framework are the underlying basis for
diffusing RE deployment effectively. It also creates suitable conditions for the RE
market. The IEA (2012a) found that supportive policies and a market framework in
OECD countries stimulated a maturing portfolio of RE technologies, which led to an
unprecedented expansion of global RE capacity.
Transitioning from a fossil fuel based economy to a renewables based economy
requires an inclusive policy that commits the government to certain policy targets
and close collaboration with the relevant stakeholders, especially the private sector.
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Strong cooperation between policy makers and businesspeople can make the crucial
change in the power system both timely and successfully (IEA-RETD, 2012).
Setting the national target for an RE share of total energy consumption is
understood as a common policy agenda (EREC, 2008). As of 2009, RE policy
targets exist in at least 73 countries worldwide, including all 27 European Union
countries, the U.S., Japan, and developing countries such as China and India (Zhang
and Cooke, 2009). There are also at least 64 other countries implementing specific
support schemes (Pegels, 2009).
Policy action is a necessary instrument for RE deployment, as it is a guide to set
the direction and drive the implementation. To accelerate RE deployment
successfully, The IEA-Renewable Energy Technology Deployment (2012) proposed
six policy acts called ACTION:
Alliance building: Build alliances and reach agreements among policy
makers and relevant stakeholders; including industry members, consumers,
investors, and others
Communicating: Communicate knowledge about renewable energy
resources, technologies and issues to create awareness on all levels, address
the concerns of stakeholders, and build up the needed work force
Target setting: Clarify the goals, set ambitious targets on all levels of
government, and enact policies to achieve those goals
Integrating: Integrate renewables into policymaking and take advantage of
synergies with energy efficiency
Optimizing: Optimize policy frameworks by building on own policies or
other proven policy mechanisms and adapting them to specific
circumstances
Neutralizing: Neutralize the disadvantages in the marketplace, such as
misconceptions of costs and the lack of a level playing field
According to the Renewable Energy Policy Network for the 21st Century (2012),
three types of policy devices are available for the government to promote RE
development including financial incentives, public financing, and regulatory
policies. Financial incentives are comprised of capital subsidies, grants or rebates,
tax incentives, and energy production payments. The two financing strategies of
public investment are loans or financing and public competitive bidding. Regulatory
233
policies include Feed-in-Tariff (FIT), utility quota obligation, net metering,
obligation and mandate, and tradable RE Certificate (REC).
2.3. Incentives for RE Development
Government granted incentives are imperative to promote private sector
participation in the RE market because there are high costs and numerous risks
associated with initial RE projects. Zhang and Cooke (2009) stressed that successful
RE development was derived from the incentives set by central and regional
governments. Many such incentives go directly to the developers of renewable
energy projects, such as capital investment subsidies, tax incentives, and low-interest
loans.
The appropriate arrangement of incentives for developing a functional RE
market is an essential prerequisite to foster RE development. The IEA (2012b)
emphasized that, “incentives are justified to compensate for market failure.” In its
sustainability survey of 2011, which interviewed 551 qualified sustainability experts,
GlobeScan (2011) found that four out of five experts thought governments should
subsidize solar and energy efficiency initiatives to accomplish low-carbon energy.
Incentives for the government to support businesses are justified because there
are exorbitant costs for businesses to initiate RE projects. It should, however, be
reduced over time once the market has matured. It is also worth noting that different
stimuli are required as there are a wide range of renewables at different stages of
technological and market development (IEA, 2012b).
To attract financial investments from the private sector for RE development, the
government must formulate policies that are beneficial for businesses by incentives
and the market environment. Doner (2007) found that to maintain RE growth,
government policies should be designed in a way that investors are given incentives
to channel their finances into the development of RE technologies.
2.4. Case studies
2.4.1. China
Over the past three decades, China’s economy has averaged a growth of more
than 10.0 per cent annually. During this strong economic performance, China’s
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energy demand has surged 13.0 per cent p.a., since 2001 and it accounted for 10.0
per cent of the global energy demand. Its share of global energy consumption has
continued to rise to over 15.0 per cent, making China the second largest energy
consumer in the world (Wang, Yuan, Li & Jiao, 2011).
Renewable energy development is a priority for China to satisfy its ever-
expanding energy demands, mitigate CO2 emission and pollution, and maintain a
sustained economic development. Schuman and Lin (2012) pointed out that to
further its low-carbon economic development strategy, China needed to enlarge the
share of renewable energy in its energy mix. Wang, et al. (2011) agreed that
expanding the RE share in the energy mix was a way to sustain economic
development and reduce the negative effects on the environment and realise the
target of reducing GHG emission by 40-45 per cent from 2005.
China aims to achieve a target of 10 per cent of RE of total energy consumption
by 2010 and 15 per cent by 2020 (Schuman and Lin, 2012). The mid-term and long-
term RE Development Plan 2007-2020 (REDP) also set specific targets of installed
capacity for various RE technologies in 2010 and 2020 (Table 1).
Table 1: Installed capacity targets for China’s renewable energies
Type 2010 2020
Hydropower 190 GW (50 GW from small
hydro) 300 GW (75 GW from small
hydro)
Wind power 10 GW 200 GW
Solar PV 0.3 GW 30 GW
Solar water heating (SWH) 150 million m2 300 million m2
Biomass power 5.5 GW 30 GW
Bioethanol 3 million tons 10 million tons
Biodiesel 0.2 million tons 2 million tons
Biogas 19 billion m3 44 billion m3
Source: Compiled from Fourmeau (2009), APCO (2010), and Schuman and Lin (2012)
The ambitious target of RE’s share of total energy consumption was almost met.
The RE share in the total energy consumption rose significantly from 7.0 per cent in
2005 to 8.2 per cent in 2010, expanding 1.2 percentage points (Figure 1). The RE
industry has developed quickly in recent years as well as the scale of equipment
manufacturing for renewable energy. The research and development of
industrialisation technology has also experienced a swift expansion (Zhang and Ding,
2012). Given this rapid expansion in RE share of total energy composition since
235
2006, China is placed among the leading countries in deploying renewable energy
(Schuman and Lin, 2012).
Figure 1: China's Energy Consumption in 2010 by Sources (%)
Source: Li (2011).
The Renewable Energy Law (REL) and its associated regulations had a
substantial impact on the growth of RE (Schuman and Lin, 2012). China’s REL,
which came into effect in 2006 and was amended in 2009, is the guiding policy
directing RE development. The REL set out specific RE targets; a mandatory
connection and purchase policy, on-grid electricity price for renewables, and a cost-
sharing mechanism. The defined targets provided the consent to industry (including
generators) grid companies, equipment manufacturers, and indicated to government
officials at all levels that the central government supported RE development
(Schuman and Lin, 2012).
A stimulus program of US $68,724 million was devoted to sustainable energy
and released in late 2008 (Fourmeau, 2009). In addition to the feed-in-tariff (FIT) to
incentivise investments in REs subsidies (e.g., Golden Sun program and the Building
Integrated PV Installation program for solar energy), special funds for project
developments are provided for various types of renewable technologies. Given the
FIT measure that was announced in late 2009, wind energy has accelerated faster
than the government anticipated and has more than doubled each year since 2005
(Schuman and Lin, 2012).
68.7
21.6
2.7 7.0
68.3
19.2
4.3 8.2
0
10
20
30
40
50
60
70
Coal Oil Natural gas Hydro and other
renewables
2005 2010
236
Policy and regulatory framework plays a vital role in promoting the RE industry
and in expanding the RE share of total energy consumption. Financial incentives
were also crucial to stimulate investments in RE including production, distribution,
equipment manufacturing, and technology research and development.
2.4.2. South Africa
South Africa is an emerging economy and a member of the BRICS group
(Brazil, Russia, India, China, and South Africa). The economy gained a moderate
growth of 2.8 per cent p.a. during 2010-12 after the economy had contracted by 1.5
per cent in 2009 due to the global economic downturn.
With a per capita GDP of US $3,825, electricity consumption per capita was
4,802.5 kWh in 2010 (WDI database, 2013). Although it is a middle-income
country, a quarter of the total population remains without access to electricity
according to the World Development Indicator (WDI) database.
In response to the global concern of greenhouse gas emission and energy
security, the government of South Africa adopted the White Paper on Renewable
Energy in 2003 to guide its RE development. The target of the policy was to produce
10,000 GWh of electricity from renewables including biomass, wind, solar, and
small-scale hydropower by 2013.
Figure 2: Share of RE in Electricity Production (Excluding Hydropower)
Source: World Development Indicator Database (2013)
Winkler (2006) argued that financial support for renewables in the form of
subsidies and tax incentives should be considered, but for a limited period.
0%
2%
4%
6%
8%
10%
12%
14%
2003 2004 2005 2006 2007 2008 2009 2010
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In 2009, the Renewable Energy Feed-in-Tariff (REFIT) was introduced. With a
guarantee of tariff payments for a period of 20 years (Pegels, 2009), the REFIT is, “a
mechanism to promote the deployment of renewable energy that places an obligation
on specific entities to purchase the output from qualifying renewable energy
generators at pre-determined prices.”
Edkins, et al. (2010) pointed out that, “the REFIT has resulted in a great interest
by independent power producers to develop renewable energy projects.” The impact
of the REFIT program is clearly demonstrated by the instalment of more than 1,100
MW of wind energy, which is under firm development, as well as 500–600 MW of
Concentrated Solar Power (CSP) and 0.5 MW from solar PV (Edkins, et al., 2010).
Within ten years of implementation, the target of 10,000 GWh by 2013 seemed
unrealistic. However, since the announcement of the REFIT, it is conceivable that
the renewable energy market in South Africa is set to go. Edkins, et al. (2010)
projected that South Africa could achieve the set target by 2011 if the REFIT had
been introduced into practice earlier than its current phase.
The projection showed that 4,700 GWh could have been supplied from biomass,
1,400 GWh from landfill gas, nearly 2,000 GWh from wind, 2,300 GWh from CSP,
and about 100 GWh each from solar PV and small hydropower in 2011 (Edkins, et
al., 2010).
Though the REFIT seems to be a productive mechanism, it has a crucial flaw.
The state owned utilities Eskom is the unchallenged purchaser of electricity from all
types of RE projects and responsible for distributing it to consumers. RE
investments, however, are not secured because Eskom is not oblighed to buy the
electricity produced from those projects (Pegels, 2009).
Consequently, the achievements remain far short of the policy target.
Accelerating the implementation of the REFIT is a priority and reforming the
existing electricity infrastructure as a means to encourage further investments in RE
is required.
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3. Cambodia’s Electricity Sector Overview
As stated in the National Strategic Development Plan Update 2009-2013
(NSDP), the electricity sector is one of the Cambodian government’s development
priorities. The government aims to accomplish two policy targets: (1) by 2020, all
villages in the country should have access to electricity; and (2) by 2030, at least 70
per cent of total households in the country should have access to quality grid
electricity. Achieving these two main targets depends on the utilisation of all types
of electricity sources and the participation from relevant stakeholders.
Electricity consumption has expanded significantly during the last decade. Per
capita consumption of electricity reached 190 kWh in 2011, increasing almost four-
fold from 54 kWh in 2005 (MIME, 2012). Practically all people in urban areas can
access electricity from different sources, although price and quality remain crucial
concerns. However, only a small fraction of the rural population has been electrified.
Electricity coverage remains low despite the progress that has been made. More
than half of the total villages in the country have not been connected to transmission
lines. Out of 13,935 villages, only 43.6 per cent have transmission lines in their
villages (EAC, 2012b). The electrification rate grew to 34.1 per cent in 2011, which
is up from 20.3 per cent in 2007 (MIME, 2012). Yet, more than 60 per cent of the
entire population is still has no access to electricity.
Table 2: Electricity Sector in Cambodia at a Glance
Description Unit 2010 2011 % Change
Electricity generated Million kWh 968.364 1,018.540 5.18
Electricity imported from
Thailand Million kWh 385.278 430.790 11.81
Electricity imported from
Vietnam Million kWh 1,155.409 1,392.396 20.51
Electricity imported from Lao
PDR Million kWh 5.749 6.599 14.79
Total electricity import Million kWh 1,546.436 1,829.786 18.32
Total electricity available Million kWh 2,514.800 2,848.326 13.26
Generation Capacity kW 360,078 569,041 58.03
Number of consumers # 672,709 810,984 20.55
Electricity sold to consumers Million kWh 2,254.039 2,572.737 14.14
Overall loss % 10.37 9.68
Source: EAC (2012a).
239
Electricity transmission in 2011 was diffused by fragmented grids. A national
grid incorporating 68.0 per cent of the total energy input would serve only 48.7 per
cent of total consumers. This grid covers only a few areas of the country including
Phnom Penh, Kandal, Kampong Speu, Takeo, and Kampong Chnang province. Other
grids inputted by local electricity generators and imported from neighbouring
countries supplied electricity to other parts of the country.
The installed electricity capacity in 2011 was 569 MW, expanding by more than
half of the previous year’s capacity due to newly introduced hydropower plants and
other power plants. The installed capacity could generate electricity of 1,018.5
GWh. In 2011, electricity was generated from four types of facilities: (1) hydropower
plants; (2) diesel power plants; (3) coal-using thermal power plants; and (4)
wood/biomass power plants.
Figure 3: Electricity Generation by Types of Sources in 2011
Source: EAC (2012a).
Nevertheless, domestic electricity generation remained substantially below
electricity needs. Annual demand within the country grew at an average rate of 19.0
per cent. The demand, however, in Phnom Penh was 25.0 per cent (Jona, 2011).
Electricity consumption in 2011 was 2,848.3 GWh, expanding 13.3 per cent from the
previous year’s 2,514.8 GWh. Given the limited domestic production, electricity is
Diesel and
HFO, 89%
Hydropower,
5% Coal,
5%
Wood and
Biomass,
1%
240
imported from three neighbouring countries, Lao PDR, Thailand, and Vietnam to
satisfy the rising demand.
Cambodia is unduly dependent on electricity imports for domestic consumption.
Total electricity imports represented more than half of the entire electricity
consumption within the country. Based on the data from the Electricity Advisory
Committee (EAC), Cambodia is highly reliant on electricity imports from Vietnam
and Thailand, which have low electricity consumption in their own territories.
In 2011, Cambodia’s total electricity imports expanded by 18.3 per cent,
reaching 1,829.8 GWh. This accounted for 64.2 per cent of the total electricity
supply within the country. Imports from Vietnam were 1,392.4 GWh and accounted
for 76.1 per cent of total imports, while another 430.8 GWh and 6.6 GWh were from
Thailand and Lao PDR with 23.5 and 0.4 per cent of the total imports, respectively.
In other words, while the domestic production of electricity was only 35.8 per
cent of the total supply in 2011, imports from Vietnam accounted for 48.9 per cent,
followed by 15.1 per cent from Thailand, and 0.2 per cent from Lao PDR.
Figure 4: Electricity Supply in the Country in 2010-2011
Source: EAC (2012a).
Cambodia’s electricity tariffs are the highest in the region and in the world. The
tariffs for industrial consumers range from US ¢11.71-14.63 per kWh and is the most
Domestic
generation,
38.5%
Domestic
generation,
35.8%
Thailand,
15.3% Thailand,
15.1%
Vietnam,
45.9% Vietnam,
48.9%
Laos, 0.2% Laos, 0.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011
241
expensive in ASEAN. The high rates of electricity tariffs make Cambodia less
competitive in global and regional trade and investments.
The high tariff is because Cambodia’s domestic electricity generation is highly
dependent on oil and Cambodia is a net oil importer. Diesel and Heavy Fuel Oil
(HFO) remain the main source for power generation, though power sources are quite
mixed. Diesel and HFO comprise 89.0 per cent of the total power sources used to
produce electricity in 2011 (EAC, 2012a).
Electricity tariffs vary considerably across the country due to the diverse sources
of electricity supply. While only a small number of rural households are accessible
to electricity, they pay higher tariffs than their urban counterparts. For the EdC grid,
which is generally available in urban areas, consumers pay US ¢9-25 per kWh, while
consumers in rural areas pay US ¢40-80 per kWh (Lieng, 2010). The differences in
tariffs between the urban and rural areas are due to several factors; including
different capacities of electricity suppliers, economy of scale, load factor, fuel
transportation cost, cost of capital and financing, power supply losses, and high risk
premium for rural consumers (Poch and Tuy, 2012).
4. Why Renewable Energy for Cambodia
The lack of electricity is unmistakable and almost two thirds of the total
population is without access to electricity. Even the capital Phnom Penh suffers
from electricity shortages due to higher than forecasted demand and the slow
progress of investment in electricity generation. Electricity outages are quite
frequent because the electricity needs to be cut off for a period in some areas to
supply other areas. Phnom Penh’s electricity demand in 2012 was 456 MW, while
the supply could serve only 412 M, resulting in a deficiency of 44 MW.
Beside expensive tariff rates, electricity provision is not reliable. Diesel and
HFO, the only main source of power generation, are imported from foreign countries.
This makes electricity tariffs very high and exceedingly volatile, as they fluctuate
with the price of imported oils. Due to the unstable supply from diesel and HFO
242
based power plants, old facilities and voltage fluctuations the reliability of electricity
supply remains a daunting challenge for the country.
Despite the fact that Cambodia is a low-income country, getting electricity is
costly and only a fifth of the total population living in rural areas has electrical
access. In addition, rural households spend on average 10.0 per cent of their income
on fuel and electricity and have to spend roughly 3-4 hours per day on energy
related activities such as collecting fuel wood, boiling water, and cooking (World
Bank, 2009).
Electricity security is significantly at risk. Electricity supplies across the country
rely predominately on imports from neighbouring countries. Moreover, domestic
production, which is generated almost exclusively from diesel and HFO, is exposed
to oil price shocks. Therefore, the country’s economic activities are particularly
vulnerable. More importantly, this situation has a considerable effect on political
and social stability. Protests relating to electricity disconnection and tariff increases
have been significant.
It is evident that Cambodia’s power sector is narrowly based and the
diversification of power sources is essential. Various renewable resources can play a
key role in tackling the rising electricity demand and extend electricity coverage
across the whole country. Furthermore, if they are able to push down the electricity
tariffs, more households and businesses would have access to low-cost electricity.
The reduction of fossil fuel imports is critical, at least in the mid-term as long as
domestic oil production has yet to materialise. This would lessen the country’s
vulnerability to oil price crises and maintain a macro-economic stability and
sustained growth. Cambodia experienced an extremely high inflation rate of 25 per
cent in 2008 due to the global oil price crisis. Moreover, reducing the use of fossil
fuel is beneficial for mitigating pollution and the negative environmental impacts.
Climate change is a grave concern for the country’s power sector development.
The growing consumption of fossil fuels and the higher demand for sufficient energy
supplies are a major cause of climate change (Abbaspour and Ghazi, 2013). To
address such energy challenges as climate change, the growing demand for energy,
and energy security renewable energy requires effective technologies (Zhang and
Cooke, 2009). Renewable energy has the potential to mitigate the negative impacts
243
of climate change and CO2 emissions. It can also lead to a reduction in global
warming (Toch, 2012).
Restructuring the power sector is indispensable if a greener growth is to be
realised. The Cambodia Green Growth Roadmap and The National Policy and
Strategic Plan for Green Growth 2013-2030 were enacted in 2010 and 2013. In order
to achieve the envisaged green growth objectives, focusing on the utilisation of
renewable resources for electricity generation is required. Furthermore, renewable
resource development will help create green investments, jobs, and technologies that
are correlated with green growth and environmental sustainability.
5. Analysis on Renewable Energy Development
5.1. Overview
Although Cambodia is endowed with huge potential, the RE share of total
electricity production is at present minimal. According to the data compiled by the
Electricity Authority of Cambodia (2012a), even including both large and small-scale
hydropower and biomass the RE share could reach only 6.0 per cent of the total
electricity generation in 2011. If large-scale hydropower (larger than 10 MW) was
excluded, the RE share would fall to around 1.0 per cent.
Based on the Rural Electrification Master Plan (REMP), the government is
intending to expand the electrification of rural areas through RE in addition to other
options. There is, however, no specific target of how much renewable energy will
share in the total energy mix by a particular deadline. This unspecified plan might be
attributed to a greater focus on hydropower and coal power development.
The deployment of RE technologies remains at a low level and various RE
projects are still in the pilot or demonstration stage (Toch, 2012). The people’s
acceptance of RE technologies is quite slow due to limited knowledge and
inadequate information dissemination.
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5.2. Renewable Energy Potential and Development
Cambodia has a variety of viable RE resources including hydropower, biomass,
biogas, biofuel, solar and wind energy, to address the rising energy demand in the
country. The Japan Development Institute (JDI, 2007) projected that if 10.0 per cent
of alternative sources replaced imported fossil fuels in power generation, Cambodia
would be able to save up to US $30 million by 2020. Nonetheless, these resources
are presently underutilised, though hydropower has been progressively utilised.
1) Hydropower
The potential of hydropower is estimated at 8,600-15,000 MW of installed
capacity, of which 90.0 per cent is located in the Mekong River basin and its
tributaries. The remaining 10.0 per cent is in the southwestern coastal areas (CRCD,
2006b). However, according to the government (Figure 5), prospective hydropower
is roughly 10,000 MW, of which 72.0 per cent is located in the northeastern region of
the country, 27.0 per cent in the southwestern region, and another one per cent in
other regions (Eav, 2011).
Figure 5: Hydropower Development Sites
Source: Eav (2011).
As of now, approximately 220 MW capacities have been installed, while 1,104
MW are under construction according to the data compiled by The Ministry of
Industry, Mine and Energy (MIME) and EdC. Therefore, about 10.3 per cent of the
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total 10,000 MW has been exploited and many other projects are under feasibility
studies. Most hydropower projects have been carried out under the Build Operate
Transfer (BOT) modelled by Chinese companies.
Electricity demand by 2020 is estimated to grow to around 4,000 MW (Jona,
2011). Seventeen (17) hydropower projects have been proposed for development
and they might meet at least half of the total estimated demand. The total capacity of
the proposed projects is 4,048 MW, but this capacity is unlikely to deliver its
maximum potential.
Hydropower plants’ electricity supply is significantly vulnerable to seasonal
variations in hydrology, weather pattern, and climate phenomena (e.g., droughts).
Cambodia has two seasons, rainy and dry. The former is generally able to provide
enough water to run hydropower plants. During the dry season, however, the
country is very likely to run short of water for hydropower plants’ operations.
The development of large-scale hydropower is indeed risky, not only for the
electricity supply itself but also for socio-economic development and environmental
sustainability. The alteration of the water flow is anticipated and fisheries production
is expected to decline. As a result, the livelihoods of people will be affected. The
extinction of species is anticipated due to accumulative impacts of proposed large-
scale hydroelectric dams, particularly on the mainstream of the Mekong River
(Worrell and Seangly, 2013).
According to the EdC in March 2013, the Kamchay hydroelectric dam, the
country’s largest hydropower station, was reportedly operating at 10.0 per cent of its
total 190 MW capacity due to a water shortage. Because the station served almost
half of the electricity supply to Phnom Penh via the national grid, electricity
shortages and outages were a recurring problem. This has prompted the EdC to urge
big businesses to use their own generators, which are very costly in terms of
production and maintenance, to ease the electricity demand from the grid.
2) Biomass
Traditional biomass is composed of wood and charcoal and accounts for about
80.0 per cent of the total energy consumption in the country. It is primarily used for
cooking in rural areas and by a small segment of households in urban areas. This has
put considerable pressure on forests in Cambodia. Though the dependence on
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firewood has declined from 90.4 per cent in 1998 to 79.5 per cent in 2010, it remains
far behind the national target of 52.0 per cent by 2015 (UNCSD, 2012). Encouraging
people to use alternative energy sources (e.g., electricity and liquefied petroleum gas)
for cooking is particularly challenging given the fact that almost one-third of the total
population remains in poverty and live in rural and remote areas. Other energy
sources are expensive and the electrification rate remains extremely low. Wood is
also used in biomass combusting gasifiers for electricity generation, but it is not
encouraged because it is not a renewable energy.
Rubber trees are also a wood based biomass that can be used for electricity
generation. Proper planning is required to use this type of biomass material for power
generation sustainably. Jona (2011) revealed that more than 25,000 tons of old
rubber trees are available every year and rubber production is on the rise. As of
2011, the total number of rubber plantation regions reached 213,104 ha in which
45,163 ha, or 21.2 per cent, have been tapped (MAFF, 2012). The Ministry of
Agriculture, Forestry and Fisheries (MAFF) expects that rubber plantation regions
will increase to 300,433 ha in 2020 (MAFF, 2011).
An abundant amount of agricultural residue and the rapid growth of the agro-
industry has resulted in growing biomass resources (modern biomass) available for
power generation. As an agrarian economy, Cambodia grows many crops–the most
important being rice–which produces a considerable amount of biomass materials.
Other types of agricultural residues such as corncobs, peanut and coconut shells, and
other kinds of plant husks are potentially usable for biomass combusting electricity
production.
With 8.4 million tons of rice produced in 2011 (Figure 6), roughly 1.8 million
tons of rice husks, or about 22 per cent of total rice milled in the country is available
for power generation. Approximately 2 kilograms (kgs) of rice husks can generate
nearly a kilowatt-hour. The total estimate of rice husks can generate around 924
million kWh of electricity, which is 32.4 per cent of the total electricity supply in
2011.
Although roughly two million tons of rice is exported from the country every
year there remains more than one million tons of rice husk usable for electricity
generation. Currently, the country exports about 0.2 million tons of milled rice. The
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government plans to expand milled rice exports to one million tons by 2015; this
would require at least 1.6 million tons of rice surpluses after domestic consumption.
Consequently, rice husk available for power generation will have to be expanded.
Given the significant potential of reduced production costs and increased
savings, biomass combusting gasifiers have powered many industries; including rice
milling factories, brick kilns, ice-making enterprises, garment factories, rural
electricity enterprises (REEs), and electricity retailers in rural areas. Many rice-
milling factories located in Battambang, Kampong Cham, Kampong Thom,
Kampong Speu, Kandal, and Takeo province, have started using gasifiers to produce
electricity for their own consumption and selling the surplus to households in their
communities. The exact number of gasifiers being operated in the country is not
available at present. By June 2009, with six suppliers of gasifiers, 126 gasifiers had
been installed.
No formal arrangement has been agreed upon as to how the electricity surpluses
from these producers are to be sold to the state owned utilities or other electricity
wholesale distributors. Producers sell their surpluses through their own small grids
or households contribute to the grid extension for electricity connection.
Figure 6: Rice Production (million tons) and Cultivated Area (million ha)
Source: Ministry of agriculture, forestry and fisheries (MAFF).
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Production - left Cultivated Area - right
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3) Biofuel
Cambodia has great potential for biofuels to replace fossil fuels and as long as
the country prioritises the use of biofuels to meet internal demand over export,
economic sectors would be less vulnerable to fluctuations in oil prices (ADB, 2012).
A range of agricultural materials such as cassava and sugar cane provide substantial
potential for biofuel production.
The JDI (2007) recommended that given its good soil and weather, Cambodia
should plant cassava, as it holds considerable potential for biofuel extraction. Total
cassava cultivated areas and production has increased rapidly over the last decade.
These cultivated areas increased twenty-fold, from 19,563 ha in 2002 to 387,952 ha
in 2011 and production expanded to 8.2 million tons, up from 0.1 million tons in
2002.
Cambodia’s first ethanol shipment was sent to the European market in late 2008
by a Korean company, the first company to produce ethanol from cassava. Cambodia
could export 9,600 tons of ethanol to Europe in 2009 (May, 2009). Ethanol
production in Cambodia is primarily for export, because domestic consumption is not
considered. Recently, production was not stable because the price of cassava
fluctuates significantly, causing difficulties for a company’s operation. Ineffective
management of the company is largely responsible for this issue. At present, few
companies are setting up their ethanol producing operations in the country.
Sugar cane production has also increased rapidly. While sugar cane can be
processed into products such as sugar and ethanol, its bagasse is extremely useful for
electricity generation. Cultivated areas expanded to 24,103 ha in 2011 and
production was 524,126 tons. The total amount of bagasse was approximately
157,238 tons with 30 per cent from sugar cane processing, which can generate
roughly 70,757 MW of electricity and was nearly 2.5 per cent of the total electricity
supply in 2011. Sugar cane production is dispersed across the country but there is a
concentration of production (e.g., sugar cane plantations via land concessions). More
importantly, rural areas are more likely to get electrical access because they are
located near the sugar plantations. Two plantations have already used sugar cane
bagasse to generate electricity for their factories’ operations and supply surpluses,
although a small amount of power, to local communities. However, there is no
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policy in place on how the electricity surpluses are to be sold and fed into the
national grid.
Figure 7: Sugar Cane (tons) and Cassava (million tons)
Source: Ministry of agriculture, forestry and fisheries (MAFF).
Biofuel production can also be extracted from around 1,000 ha of jatropha and
4,000-10,000 ha of palm oil (So, 2011). These two crops have significant potential
for electricity generation using biodiesel in the country. As the price of fuel is on the
rise and the current tariff of electricity is expensive, interest in cultivating biofuel or
biodiesel to generate electricity is increasing. This is possible over the next 5-10
years, when an adequate electricity supply and a sharp drop of the tariff are not
anticipated. A feasibility study was conducted to establish a power plant using
biodiesel from jatropha seeds to supply electricity to Cambodia’s Phnom Penh
Special Economic Zone. How these resources can be extracted for biofuel
production and thus electricity generation is not indicative.
4) Biogas
A number of projects have been effective with small-scaled biogas, though they
are still in the pilot and demonstration stage. The conversion of waste material (e.g.,
animal and human waste) into high quality gas for cooking and electricity for
-
1
2
3
4
5
6
7
8
9
-
100,000
200,000
300,000
400,000
500,000
600,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sugar Cane - left Cassava - right
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lighting can deliver remarkable socio-economic, heath, and environmental benefits
for poor and rural households.
A joint development program between Cambodia’s Ministry of Agriculture,
Forestry and Fisheries (MAFF) and the Netherlands Development Organization
(SNV), with the financial support of the Dutch Ministry of Foreign Affairs National
Bio-digester Program (NBP), is aimed at establishing a market oriented biogas sector
in Cambodia. More than 15,000 bio-digester plants have been installed since 2005
and an additional 23,000 units are anticipated by 2016.
The NBP provides a fixed subsidy of US $150 per unit for all plant sizes.
Moreover, farmers who have the technical potential and credit worthiness can get a
loan of up to US $1,000 from participating microfinance institutions. This program
has exhibited a significant effectiveness that is due to several key factors. Farmers
are convinced that their animal waste can be converted into gas for cooking and
electricity for lighting and subsidies share a significant portion of the farmers’
financial burdens. The subsidies range from 37.5 per cent of the investment cost of
small sized bio-digester (4m3) to 16.7 per cent for the largest ones (15m3). The
quality of biodigester construction, training for farmer usage, and after-sale services
also play a crucial role.
Though the government plans to disperse electricity transmission lines across the
country by 2020, but not all villages will be able to connect to the grids due to
economic inefficiency. Given the current pace of electricity generation and
transmission development, biogas is expected to satisfy the growing demand for
scarce products such as electricity and gas in poor and rural areas, where grid
connection remains out of reach.
Adopting biogas over the grid is dependent on the cost of running biogas and the
tariff of grid electricity, which is not expected to be reduced. A bio-digester has a
lifespan of 10 years, which gives a household the ability to save up to US $1,400 and
around 2,600 hours in collecting firewood (GreenSeat, 2013). Although a specific
policy for the biogas sector has not been spelled out, the government plays a crucial
role for alternative energies, including biogas in expanding electrification and
reducing the forest dependency ratio.
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5) Solar energy
Average sunshine duration in Cambodia is 6-9 hours per day and solar radiation
is estimated at 5 kWh/ m2 per day. This creates a huge potential for Solar Home
Systems (SHS), solar Photovoltaic (PV), and Concentrated Solar Power (CSP). The
total technical potential of solar power is 65 GWh per year (CRCD, 2004) but only
about 2 MW of solar power has been installed so far (Toch, 2012).
The country’s solar power is driven mainly by donor projects extending from
pilot stages. With the assistance of the World Bank, the Bulk Purchase, and the SHS
Installation project implemented by the government’s REF, the goal is to install 30W
and 50W SHS for 12,000 households in rural areas where mini or the national grid is
not anticipated for the next 5-10 years. This subsidized project allows beneficiary
households to repay the cost of system installation to the REF in instalments of up to
four years. As of March 2012, the project has installed 11,975 units throughout eight
provinces. Alongside this project, other solar powered solutions projects have been
carried out by other donors; such as the Japan International Cooperation Agency
(JICO), the Korean International Cooperation Agency (KOICA), the United Nations
Industrial Development Organization (UNIDO), the Agence Française de
Développement (AFD), and other NGOs.
A solar energy market is emerging. About 20 companies have been importing
and selling solar products (e.g., solar panel, lantern, and lamp) in the country.
Though these companies are typically targeting households living in areas where grid
connection is not available, only a number of companies are active in rural areas.
The solar energy systems face a crucial challenge for acceptance by rural
households. The upfront costs of solar powered solutions are significantly expensive
and rural households are low-income or poor. Rural and poor people possess a
limited knowledge while solar technologies are rather complicated and public
financial support is not available to promote this fledgling sector. Poorly designed
systems or poor quality solar products damage the reputation of solar technologies
and the market.
The solar systems are not financially competitive with battery charging, which
costs a household about US $2 per month for lighting. Though the import tax on
solar components has been reduced from 30.0 per cent to 7.0 per cent since 2009,
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solar technologies remain costly for rural households. A SHS of 40Wp costs US
$298 and can only generate 45 kWh per year and the 80Wp unit costing US $450
produces just 130 kWh per year (Picosol, 2011).
With a lifespan of approximately 20-25 years, the cost of electricity generated
from the 40Wp SHS for lighting is roughly US $1 per month or US $0.26-0.33 per
kWh excluding other maintenance costs. Moreover, the lifespan of a battery used
with a solar system is about 3-4 years, so maintenance cost increases.
The uptake of solar power will expand as long as the cost of solar technologies
decline to a level that is competitive with the current cost of the electricity tariff or
battery charging in rural areas.
6) Wind energy
Wind speeds of at least 5 meters per second are available for electricity
generation in the southern parts of the Tonle Sap River and coastal regions such as
Preah Sihanouk, Kampot, Kep, and Koh Kong province. The Cambodian Research
Centre for Development (CRCD, 2004) pointed out that wind energy could deliver a
total electrical capacity of 3,665 GWh per year.
The development of this renewable resource is in the early stages. A few
projects have been piloted in the northeastern and southwestern provinces. The first
wind turbine, costing roughly US 1.74 million, is located in Preah Sihanouk
province. It is co-funded by Cambodia’s Sihanoukville port authority (48%),
Belgium (28%), the EU (24%), and was inaugurated in January 2010. The pilot
project was to demonstrate that wind power could be an effective energy source in
Cambodia as well as in the region. The generated electricity is to supply the
Sihanoukville port.
Since the resources remain untapped, investments in this sector are scarce. The
private sector has not indicated that there is opportunity for investments. This can be
attributed to a range of factors. First, the upfront investment is extremely costly.
Second, policy direction and incentive schemes for development of the sector are not
in place. Third, while electricity demand in Phnom Penh and other provincial towns
is substantial, the areas to generate electricity from wind power are in the southern
coastal areas and the national grid is not available yet.
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Table 3: Summary of Potential Energy Generation and Saving
Energy Sources Technical
Potential
(GWh/year)
Currently
Installed
Projects
(GWh/year)
Theoretical
Remaining
Potential
(GWh/year)
Potential Annual
GHG Abatement
(kton CO2
equiv.)
Solar 65 1 64 44
Wind 3,665 - 3,665 2,556
Industrial energy
efficiency 547 - 547 381
Residential energy
efficiency 6,591 29 6,562 4,576
Total 10,868 30 10,838 46,931
Source: CRCD (2004).
5.3. Power Development Plan and RE Analysis
According to government projections, electricity demand in the country will
reach almost 4,000 MW by 2020 (Figure 8). The Power Development Plan 2008-
2020 indicated that hydropower would account for more than half of the total
installed capacity by 2020, followed by coal, gas, imports, diesel and HFO.
Electricity imports will be kept at roughly 250 MW per year and applies to electricity
generated from diesel and HFO.
Figure 8: Power Development Plan 2008-2020
Source: Jona (2011).
If electricity demand increases to around 4,000 MW by 2020 as projected, the
Power Generation Plan (PGP) over the period of 2011-20 is very likely to meet the
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estimated demand. Total installed capacity of the planned 29 projects in the Power
Generation Plan 2011-2020 is estimated at 5,137 MW. As long as the planned
projects are commissioned by 2020, combined with the existing capacity of 585
MW, the total electricity supply will reach 5,722 MW. The PGP is essentially
focused on large-scale hydropower to meet the electricity demand by 2020. Out of
the total 5,137 MW estimated capacity, hydropower will account for 4,261 MW
(82.9 per cent), followed by coal (15.6 per cent), imports (1.4 per cent), and diesel
(0.1 per cent).
However, there remain risks. First, the feasibility of planned hydroelectric dams
remains in doubts as hydropower projects on the Mekong River are subject to
agreement by the other three Mekong River countries, Lao PDR, Thailand, and
Vietnam. Second, due to the number of large hydroelectric stations on the upper
Mekong River, the planned projects in Cambodia are not likely to produce at
maximum capacity. Third, as explained in the hydropower section, the relentless
concentration on hydropower is undeniably precarious for the country, especially in
the current context of climate change. More importantly, when hydropower is the
primary focus, the government abandons opportunities to develop alternative
resources to achieve electricity development goals in a sustainable and equitable
manner.
Cambodia can rely on power imports from neighbouring countries, but it should
not depend completely on imports to power its fast growing economy while it holds
considerable potential of energy resources. It can, however, import electricity to
supply areas where domestic supply is inefficient (e.g., areas along its borders).
Dependence on power imports is highly insecure for the country. On 22 May 2013, a
wide spread power outage affected Phnom Penh for a few hours due to an electricity
interruption in Vietnam (Chan and Henderson, 2013). Rather than being a power
importer, Cambodia should utilise its potential energy resources to become not only
power self-sufficient but also a power exporter in the region.
There is a role for RE to expand power generation and consumption. It can
support power development given the deficiencies of large-scale hydropower
projects. The government also needs to achieve the regional target of RE share by
15.0 per cent of total energy consumption by 2015.
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Figure 9 illustrates the transmission development plan to create a national grid
by 2020. The dark lines are current transmission lines and additional lines are in the
planning stage. According to this scheme, some parts of the country are still left
without connection to the national grid.
Figure 9: Transmission Development Plan 2020
Source: Hirata (2012).
By 2020, the total number of transmission lines will increase to approximately
2,106 kilometres (Jona, 2011). The transmission development plan consists of 17
projects for transmission lines to be built. This will expand the grid to cover the
main parts of the country, particularly in areas of high population density, which are
in the areas along the Mekong and Tonle Sap Rivers. Electricity distribution,
however, to areas of low density remains a critical challenge because of the economy
of scale and efficiency issues. For these reasons, electricity generated from
renewable resources is the solution.
5.4. Barriers
The slow progress of RE development can be explained by the lack of accurate
data. Another factor is that the accuracy and reliability of the data on RE resources is
questionable due to the lack of scientific studies, systematic storage, and the update
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of data. The distrust of government among private businesses, related to potentially
sensitive business data that could be used to extract higher taxes and fees or assist
competitors, results in incomplete RE data (Williamson, 2006). Though some data
are accessible, they need to be verified and updated in order to reflect the changes
that occurred from the time the studies were conducted to the current situation so that
real conditions are reflected.
Institutional capacity is undoubtedly a crucial barrier. The concept of RE has yet
to be widespread among government agencies and relevant stakeholders. Well-
trained professionals in RE technologies and development skills are not readily
available in government agencies or the private sector. According to Toch (2012),
the government has little experience in the development of RE resources. Moreover,
relevant government agencies are deficient in resources and the technical capacity to
collect data (Williamson, 2006).
Policy makers are not encouraged to implement renewable energy policies since
there is an expectation that current electricity problems will be resolved by imports
from neighbouring countries and by investments in large-scale hydropower and coal
power plants. Oil and gas deposit are also anticipated to provide cheaper fossil fuels
for electricity production in the country. This is termed the “high hope” barrier
(Williamson, 2006).
An important barrier is technology stigma (Williamson, 2006). RE technologies
are costly so as they are not prevalent in the country, while there are cheaper sources
of energy available.
The lack of financial support is a barrier to RE development and public financing
is not available. The government’s national budget, which about half is financed by
foreign aid and loans, doesn’t allocate a particular amount for the promotion of RE
production and deployment. Consequently, on-going RE projects are primarily
financed by donors.
The lack of maintenance and management skills in RE equipment (e.g., solar PV
products) is decisive barriers. The population in rural areas does not have a sufficient
knowledge to maintain or repair RE products. Therefore they are reluctant to adopt
the use of these products, which are now available through imports.
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5.5. Policy and Regulatory Climate
The Renewable Energy Action Plan (REAP) and the Rural Electrification
Master Plan (REMP) are the main policy papers that have been introduced since
2003 to promote RE development and utilization. The REMP emphasises the use of
renewable energy to increase the supply of modern electricity services to the rural
population.
To implement the Rural Electrification Policy, the government has established a
Rural Electrification Funds (REF), which is an institution to promote the equity of
access to electricity supplies. It also encourages the private sector to invest in a rural
electricity supply in a sustainable manner and to encourage the use of renewable
energy.
Since it was created in 2004, the REF has played a role in carrying out pilot
renewable energy projects that are jointly supported by the government and
development partners. Minimal progress has been made as this institution is short of
human and technical resources and financial support from the government.
Implementing projects to expand electrification and use renewable energy is mainly
dependent on the funding from development partners.
Tax incentives are provided to encourage the private sector to engage in RE
development. Since 2009, import taxes on solar PV components, biomass, and solar
water heating components have been reduced from 30 per cent to seven per cent and
from 15 per cent to zero per cent, respectively (Bun, 2012).
Referring to the power sector development plan, if both large and small-scale
hydropower is considered renewable energy, the RE will account for more than half
of the total energy production by 2020. The adopted policies, however, do not set
out a specific target within a particular timeframe for the other types of renewable
resources, such as biomass and solar power in the total energy mix.
Given the fact that large-scale power projects, hydroelectric and coal fired plants,
are the main focuses until 2020, the government’s incentive schemes are
disproportionately directed towards these two types of power projects. The
government provides guaranteed payments to hydroelectric and coal fired plant
developers for generated electricity during the concession periods. As of early 2013,
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the government has provided guaranteed payments to 13 power projects in the
country (Naren and Chen, 2013).
Incentive schemes are not available for other types of RE such as biomass and
solar power. The solar power market has been predominantly driven by the
electricity needs of people who are unable to access on-grid electricity. Increased
solar PV installation is also stimulated by the two programs implemented by the REF
and the MIME, which are funded by the World Bank and AFD, respectively.
6. Key Findings
RE deployment is on the rise. Energy security, environmental concerns, and
sustained economic growth are the driving forces. Enabling the regulatory and
business environment is fundamentally important to promote RE development.
Supporting mechanisms via financial and non-financial policies are always a part of
the national target setting, which is a common policy tool.
The experience of China and South Africa shows that a national target is
beneficial in spearheading RE development. At the same time, other supporting
policies are required to achieve the target by the prescribed deadline.
The scale of RE deployment in Cambodia remains low. To expand the
electricity supply, substantial investments in hydropower are anticipated over the
next decade and coal is another priority. The electricity generated from biomass
combusting gasifiers is gradually growing among Small and Medium Enterprises
(SMEs), especially in rural areas.
While the limited biofuel production has been primarily for export, biogas based
electricity has been adopted for cooking and lighting by a small percentage of
households in areas where publicly provided electricity is not available. The solar
energy market has been emerging because a small portion of the total households in
the country has access to electricity. Wind energy is in its early stages.
Though the demand for energy in the future is expected to be fulfilled by
hydropower and coal power by 2020, there remains a role for RE. RE helps diversify
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power sources, reinforces hydropower, increases the power supply, hastens the
electrification rate, and lessens power import dependency.
Feeding the power surplus from RE using producers (e.g., biomass) into the
national grid is not available and the regulatory framework for the sale of electricity
surpluses to communities or national grid is not defined.
RE development is obstructed by many barriers, such as the lack of accurate
data, institutional capacity, government commitment and financial supports, and the
people’s awareness and acceptance.
The national target is not defined and the supporting policies are extremely
limited. Though there is an emerging market, the lack of public effort and financing
has resulted in slow progress for RE deployment.
7. Conclusion
The national target for RE’s share of total energy consumption, or energy mix, is
the primary instrument in guiding RE development. It is employed worldwide not
only in advanced countries, but also developing countries such as China and South
Africa. RE development requires the government’s political will and actions in
establishing a favourable business environment, effective institutions, and providing
financial support.
RE is typically utilised for the electricity supply in Cambodia’s rural areas,
where power grids are not available, so electricity access cannot be expanded. A
considerable amount of RE potential remains untapped, so there are ample
opportunities for advancing RE development in response to the growing electricity
needs and ultimately to achieve continued economic development and environmental
sustainability.
Hydropower, together with coal power, will be major power sources in satisfying
the power needs of Cambodia by 2020. The role of RE, however, will be significant
because of the deficiencies of the major power sources, the increasing availability of
RE resources such as biomass and biofuel, and the growing demand for power.
Moreover, nearly two-thirds of the total population remains non-electrified.
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Although there are many decisive barriers, the RE market is slowly emerging.
An appetite for power, where the electricity grid is not available, prompts an
increasing demand for RE technologies (e.g., solar PV, bio-digesters, and gasifiers).
People’s awareness, however, and the acceptance of RE technologies is a formidable
barrier. Another critical barrier is the lack of government commitment and support.
The policy and regulatory framework is inadequate to promote RE development.
The national target for RE’s share in the energy mix is not specified by a particular
timeline and the supporting mechanism is not enough to energise the RE market.
Integrating the power surpluses generated from renewable based producers is a
decisive challenge. Pricing policies and regulations need to be adopted to promote
RE development, to expand electricity access, and to reduce tariff rates.
8. Policy Implications
Implications for Cambodia:
Setting the national target for RE’s share in the total energy mix is vital to
spearhead government resources and efforts to mobilise the private sector’s
participation in RE development.
Financial incentives (e.g., subsidies and tax incentives) are essential to attract
investments and encourage consumer usage. At the same time, public financing is
needed to assist the private sector to pioneer RE projects, because of the high upfront
investment costs and to ensure fair competition. Incentives, however, should be
balanced and reduced over time as market conditions change.
FIT is proven to be a useful application in various countries including China and
South Africa. It should be defined to promote renewable based electricity generation
and to integrate that electricity into the national grid.
The business environment needs to be improved in order to attract investments in
the RE industry. Enhancing the data management of the RE industry, adopting
pricing policy, and relevant regulations are required to build the trust of the private
sector so it will invest in RE projects.
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The government, or the REF, should systematically increase RE promotion and
information dissemination to the general public, especially those potential consumers
who live in areas where the power grids are not available.
Rather than focusing exclusively on hydropower, the government should
increase its efforts on the development of other REs, as the vast potential has been
under-utilised.
The government should provide financial incentives to promote electricity
production using biomass, such as rice husk and other plants husks. A policy to
integrate the electricity surpluses generated from biomass into the national grid
should be enacted.
Public financing and tax incentives should be channelled into the biofuel
industry to promote production for either export or domestic consumption. A policy
on how to use ethanol with diesel should be introduced to increase electricity
generation from this renewable resource.
The government should augment its effort to increase public awareness and
acceptance of biogas in daily cooking and lighting, particularly in the areas where the
national grid has not reached.
The government needs to create a mechanism to control the trade and
distribution of solar products in Cambodia to prevent the inflow of poor quality
products that can ruin the reputation of solar energy technologies and thus the solar
market.
The government should engage the private sector to participate in wind energy
production through public financing, financial incentives, and regulatory policies,
such as FIT.
Implications for EMI in East Asian Summit (EAS) countries:
To accelerate the role of RE in EMI, setting the target for the RE share in the
energy mix in EAS countries is fundamental. Each country needs to commit to a
specific target of RE share in the energy mix by a particular timeframe.
For the purpose of bridging the developmental gap, countries in the region
should set up a mechanism for the technical transfer, cooperation, and the best
practices for sharing to promote RE deployment in the region.
262
Capacity building should be at the centre of cooperation in the region. Less
developed member countries are desirous of knowledge and the know-how to use RE
technologies that are available in the market.
Given the fact that financing is the most crucial challenge, financial cooperation
is a policy priority to help poorer member countries to embark upon RE
development. This can be carried out through multilateral financing mechanisms.
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... Cambodia focuses mainly on the development of hydro-power electricity plants. Unfortunately there is no specific target on those two policies regarding the share of renewable energy in Cambodia's energy mix or the timeframe (Poch 2013). Based on the IRENA country profile, the Government of Cambodia has announced an intention to achieve the target of 15 percent of rural electricity supply from renewables by 2015 (IRENA 2013b). ...
Book
This study develops a new indicator for national and global sustainability. The main components of the EIIW-vita indicator are: the share of renewable energy, the genuine savings rate and the relative "green export" position of the respective countries; it is in line with OECD requirements on composite indicators. As green exports are related to technological progress and environmental-friendly products, there is also a Schumpeterian perspective of this indicator. An extended version furthermore looks at water productivity. The analysis highlights the BRIICS countries as well as the US, Germany, France, Spain, Italy, the UK and Japan. Moreover the special challenges and dynamics of ASEAN countries and Asia are discussed. The book derives key implications for economic and environmental policy and shows that the new global sustainability indicator is not only relevant for green progress, but also useful as a signal for international investors. The construction of the EIIW-vita global sustainability indicator is such that investors, citizens and governments can easily interpret the results. Correlation analysis of the new sustainability indicator with the human development index indicates complementarity, so that a new hybrid superindicator can be constructed. Sustainability rhetoric dominates environmental policy. This fresh assessment of key "pillars" of sustainable economic performance and growth is a valuable contribution to greening the economy, the leitmotiv of the latest Rio Earth Summit. The book places the discussion of sustainability on solid data. The rather surprising results of its new sustainability index should make policy makers rethink their environmental and economic strategies. Many people put the economy first when sustainability concerns are raised, while environmental indicators are often developed without a sense of socio-economic performance. This important new book bridges the gap. It sheds light on crucial indicators such as renewable energies, exporting green goods and services, genuine savings, and water productivity. And it helps to observe the impressive changes at a global scale and in countries such as China. A must read for all experts interested in those issues. © Springer International Publishing Switzerland 2016. All rights reserved.
... Cambodia's climate is dominated by the annual monsoon cycle, the northeast monsoon (dry season) and southwest monsoon (wet season). The temperature reaches its highest values in March and April during the dry season with values between 30 1C and 40 1C [75]. ...
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Thesis
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Thesis
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