Power policy

Cambodia has a limited number of clean energy policies in place today, and there are no incentives like feed-in tariffs or net metering to support residential or commercial solar. The country lacks a non-hydro renewable energy target and has directed power sector investment toward large hydro and coal-fired power plants, transmission and distribution, to support electrification. Non-hydro renewables investment has been slower to take off. Yet the government is changing direction due to the pressures of a drought in 2019 that caused widespread blackouts and led to increasing power demand.

In 2019, the state-owned utility Electricité Du Cambodge (EDC) launched a bidding for the first phase of a 100MW National Solar Park. Prime Road Alternative, a Thai-based private equity firm, won the bidding with the price of $0.0377/kWh and the plant is expected to be operational by June 2022. Preparation has also begun on launching the second leg of the bidding for the remaining 40MW. Blue Circle, a wind power plant developer, has also negotiated with EDC for a new 80MW wind project. However, the government is not in urgent need of developing new power plants as Cambodia’s power demand growth has slowed down during the Covid-19 pandemic.

Power prices and costs

Electricity Authority Cambodia (EAC) sets power retail prices nationwide. The average residential power price was $117.63/MWh in 2020, down by 22% since 2015. Time-of-use tariffs are available for only medium-voltage and high-voltage consumers who buy electricity from the national grid. The Ministry of Industry, Mines and Energy subsidizes electricity for certain classes of consumers as per the Law on Electricity.

Power market

Cambodia’s power market is dominated by the EDC. Almost all generation is owned by independent power producers, which can sell to EDC only via a special license. Electricity tariffs are higher relative to neighboring countries Vietnam and Laos, although they have dropped 22% between 2015 and 2020 thanks to government efforts to make power more affordable. EDC and the government have therefore favored large power plants with low per-megawatt costs, such as hydro and coal. In 2020, large hydro and coal-fired plants accounted for about 87% of domestic power generation. Most of these units have been built since 2012 to support Cambodia’s growing power demand.

The government’s ambitious electrification program has raised the share of households with access to electricity from 31% in 2010, to a reported 93% in 2019 – increasing demand for power fivefold. Quality of electricity supply remains an issue in remote areas. The government aims for at least 70% of total households in the country to be able to access grid-quality electricity by 2030. In remote areas of the country, electricity is supplied by hundreds of private operators that generate, deliver, and sell power.

Doing business and barriers

There is an absence of clear regulations in Cambodia around connecting rooftop solar to the grid, which is challenging for developers. Without any regulations on net metering, feed-in tariffs or export tariffs, only behind-the-meter projects with 100% self-consumption are possible. There is a hesitance to move forward with appropriate policy measures on EDC’s side due to the aging grid that is unlikely to handle a large number of small-scale resources. The tariff structure for rooftop PV owners is higher than for those without rooftop PV, so there is a lack of economic incentive for consumers to install rooftop PV.

EV market

The passenger EV market has yet to materialize in Cambodia. About 85% of the more than five million registered vehicles in Cambodia are two-wheelers. So the market could easily be electrified, and indeed some startups are raising equity to conduct business in the two-wheeler market. Singapore-based OYIKA already launched a battery-swapping service for two-wheelers in Phnom Penh in 2019.

EV policy

In terms of electric buses, the government has launched a $16 million investment plan to provide concessional financing for e-buses in Angkor. Aside from this, no substantial policy has yet been implemented in the sector and the EV market remains at an early stage.

Buildings market

In July 2020, the General Department of Energy (GDE) of the Ministry of Mines and Energy (MME) published the "Energy Efficiency and Conservation Master Plan of Cambodia". The master plan recommends that the government formulates and implements energy efficiency policies and programs. These could include developing an energy efficiency labeling system, setting energy performance standards for electrical equipment and appliances, and launching new sections within GDE that specialize in energy efficiency.

Buildings policy

As of August 2021, the government has yet to implement any substantial policy support in the sector, while the low-carbon heat market has minimal relevance for a subtropical country.