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Power Development Critical for Cambodia

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The Ministry of Mines and Energy has announced Cambodia’s Power Development Plan (PDP) in 2022, setting ambitious goals until 2040. Presently, Cambodia’s energy sector is characterized by limited access to electricity in rural areas, reliance on imported energy sources, and inadequate infrastructure. Most electricity generation comes from hydropower dams, leaving the country vulnerable to fluctuations in water levels and the impact of climate change. Higher electricity prices have hindered industrial growth and dampened foreign investment, limiting economic progress.

Cambodia’s electricity demand has skyrocketed in recent years, driven by industrial expansion and a growing urban population. According to the PDP, peak demand rose from 508MW in 2012 to 2,026MW by 2021, an average annual growth rate of 19%. This rapid growth continues, requiring significant further investments in generation capacity.

The PDP 2022-2040 was developed with three main objectives:

1 – to fulfill the future demand for power adequacy with the supply of reliable and affordable electricity across all sectors in Cambodia

2 – strengthen energy security by reducing the dependency on energy imports and maximizing the development of domestic energy resources.

3 – to increase the share of clean energy, including renewable and variable renewable energy, and energy efficiency, by ensuring reliability and affordability of supply, to contribute to the achievement of Cambodia’s national environmental goals and global commitments to reduce greenhouse gas emissions.

Cambodia possesses abundant renewable energy resources, including solar, wind, biomass, and hydropower. Leveraging these resources presents a promising avenue for sustainable energy development. Solar energy holds immense potential, given Cambodia’s tropical climate and ample sunlight throughout the year. Investing in solar infrastructure diversifies the energy mix and reduces dependence on fossil fuels while mitigating environmental degradation. While the PDP shows an intention to boost solar production by 70% by 2030, a recent Asian Development Bank study has shown that Cambodia has the potential to generate as much as 10,000MW in solar power, while a separate UN Development Program reports a potential for a further 5,000MW of offshore wind power.

While hydropower dominates Cambodia’s energy landscape, there are opportunities for expansion and innovation. The government’s commitment to developing large-scale hydropower projects, such as the Sambor Dam on the Mekong River, underscores its strategic commitment. However, this is balanced with the need for environmental impact and concern for local communities.

According to the PDP, it will cost USD 9 billion to expand domestic generation capacity. USD 2.5 billion has already been allocated towards ongoing projects by 2025. The remaining USD 6.5 billion will be invested in hydro dams, solar PV plants, natural gas, and biomass along with improved storage infrastructure from 2026.

The PDP offers a strategy to transition towards a cleaner power grid while meeting existing government agreements. The plan focuses on reducing emissions by deploying renewable energy sources, energy efficiency upgrades, and importing power from neighboring systems through interconnections. The PDP outlines a comprehensive long-term plan for Cambodia’s power sector that includes forecasts of demand, expansion of generation, and a plan for transmission and distribution from today until 2040.

Improving reliable access to electricity in rural areas is a priority under Cambodia’s power development plan. Grid modernization initiatives, coupled with decentralized off-grid solutions, will improve electricity supply and empower rural communities. Upgraded technologies, such as microgrids and solar home systems, offer cost-effective and environmentally friendly alternatives to traditional grid extension.

As a part of this, the Cambodian government has also developed its National Energy Efficiency Policy (NEEP), a framework containing measures to reduce Cambodia’s energy consumption by boosting efficiency. It sets national targets for reducing consumption as well as sector-specific targets.

Meanwhile, Cambodia will continue to import some power, even by 2040. This is mainly from neighboring Laos and Thailand at around 3,000MW combined. Cambodia faces some challenges in meeting the needs of an expanding economy while ensuring greater energy reliability and at the same time diversifying power generation while reducing emissions.

Cambodia’s power development plan sets a strategy for ongoing investment in power generation, along with improved grid capacity and efficiency. Opportunities exist for capable international energy companies to enter the Cambodian market.

Author: Klaus Kretzschmar, Asian Insiders’ Cambodia Partner / klaus.kretzschmar@asianinsiders.com

To read the original article, click HERE.

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