The project will help the Electricite du Cambodge strengthen its transmission infrastructure.
MANILA, PHILIPPINES (11September 2020) — The Asian Development Bank (ADB) has approved a $127.8 million loan to support the construction of transmission lines and substations to help provide Phnom Penh and three other Cambodian provinces with stable and reliable electricity supply.
The project will also pilot the first utility-scale battery energy storage system in Cambodia, which will be funded by a $6.7 million grant. The amount includes $4.7 million from the Strategic Climate Fund under the Scaling Up Renewable Energy Program in Low-Income Countries and $2 million from the Clean Energy Fund under the Clean Energy Financing Partnership Facility. Both funds are administered by ADB.
“The Grid Reinforcement Project, along with ADB’s ongoing assistance to Cambodia in power system planning, shows that adequate, reliable, and environmentally sustainable power supply can be provided at a reasonable cost to support equitable development,” saidADBCountry Director forCambodiaSunniyaDurrani-Jamal. “The battery energy storage system will showcase how large-scale deployment of innovative technology applications can be used to operate Cambodia’s grid in the future and generate more renewable power.”
The government has set energy sector development as a national priority, as a more robust electricity supply will boost economic productivity andquality of life. While Cambodia has made significant progress in expanding lower-cost power generation in the past 15 years, its existing transmission infrastructure is reaching capacity and needs to be expanded and reinforced to avoid supply interruptions.
The project will help the Electricite du Cambodge, Cambodia's national electricity utility, strengthen its transmission infrastructure by financing the construction of four 115–230 kilovolt transmission lines and 10 substations in Phnom Penh and Kampong Chhang, Kamong Cham, and Takeo provinces.
The pilot battery energy storage project, located near the ADB-supported 100-megawatt (MW) National Solar Park, will come with on-the-job training. The government plans to increase solar photovoltaic generation capacity to 415 MW by 2022, up from 155 MW in 2019. The battery energy storage system supported by the project is capable of storing 16 megawatt-hours of electricity and providing services to help with renewable energy integration, transmission congestion relief, and balancing of supply and demand, among others.
“The project, by financing and constructing much-needed transmission infrastructure for sustainable electricity supply, will boost Cambodia’s economic productivity, competitiveness, and diversification, create jobs, and support the country’s recovery from the coronavirus disease (COVID-19) pandemic,” said ADB Energy Specialist Daniela Schmidt. “The project will create 1,300 direct jobs in construction, with spillover effects that will boost household incomes. It will also support the Electricite du Cambodge’s effort to promote inclusion and gender equality at the workplace and encourage women’s participation in the energy sector.”
The COVID-19 pandemic threatens to slow down Cambodia’s economic growth, which averaged 7.1% annually from 2010 to 2019. The economy is projected to contract by 5.5% in 2020, potentially pushing 1.3 million more people into poverty. The government is implementing an assistance program to mitigate the pandemic’s adverse social and economic impacts.
Since 1994, ADB has awarded nearly $200 million in loans and grants to Cambodia’s energy sector and provided $6 million in technical assistance. ADB funding has focused on expanding transmission and distribution networks and support for sector reforms and institutional capacity building. Last year, ADB committed $7.64 million to support the construction of the solar park through public–private partnerships, along with a roadmap for solar energy development.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.
The Asian Development Bank (ADB) is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. It assists its members and partners by providing loans, technical assistance, grants, and equity investments to promote social and economic development.
Cambodia — In past decades, the family of Heur Sophy, 44, made their living with the flow of the seasons in the northern riverlands of landlocked Stung Treng province.
During the rainy months in the Sesan district village of Kamphun, her father and grandfather would farm the rice fields. In the dry season, they turned to fishing, harvesting much of the family''s annual intake of protein from their nets along the river. From her early memories of life on the water, Sophy could remember her relatives easily filling their boat with night-time fishing excursions from the rich natural fishery.
However, the once-thriving routine of her family and more than 500 other families in Kamphun commune began to change with the construction of the 400-megawatt Lower Sesan II dam, which became operational in December 2018 and altered the river flow and fish habitats. Now, the fishing practices that once sustained entire communities produce only a dwindling, meager catch.
"The water flow has become unpredictable. Fish migration patterns are disrupted, and fish populations have declined," Sophy said.
Today, Cambodia’s domestic energy mix is largely dominated by hydropower and coal, which respectively account for 46% and 48% of supply. Meanwhile, solar arrays in the sun-drenched kingdom currently provide just about 5% of the country''s electricity.
However, this mix could be dramatically overhauled in the years to come. According to the kingdom''s master plan for energy development, by 2040 a growing use of solar photovoltaic arrays could produce the largest share of electricity on the national grid at nearly 30% of the country''s electricity. This would also come amidst lower investment in hydro or fossil-fuel-fired power.
Even as falling costs and improving efficiency of solar developments have driven up its feasibility, bureaucratic hurdles and political reluctance have historically limited its full potential in Cambodia. If the master plan comes to light, it would mean an about-face from current policy that appears to favor large-scale and often controversial hydroelectric projects.
The environmental tradeoffs of energy infrastructure development are perhaps most easily seen in the riverlands of northern Cambodia, where Sophy and other locals have struggled to adapt to the ecological decline caused by damming.
Near the Sesan II dam, where well-connected development groups are considering new proposals for additional major dam sites, families now make the best of what''s left in the natural fishery.
The same decline applies to their rice harvest during the rainy season. Locals and conservationists say the dams trap vital sediments needed for healthy agriculture around the Mekong River.
As with most forms of development, energy infrastructure planning depends on cost-benefit analyses.
"The greatest challenge with large infrastructure projects is finding the right balance between the necessary tradeoffs and avoiding overburdening local communities with negative impacts," said Courtney Weatherby, deputy director and research analyst at the Mekong-focused Stimson Center.
Rapid economic development and continued industrial growth are projected to quadruple electricity demand in Cambodia by 2040, according to the World Bank. This would require approximately $20 billion in investments to expand generation capacity and the transmission grid.
As the kingdom faces the need for these more broadly focused upgrades, Weatherby said it would be a good time to drive toward sustainability.
"Cambodia has an opportunity to push for a greener energy future by requesting investment specifically in clean technologies like solar, battery storage, and closed-loop systems of pumped storage hydropower," she said.
So far, large-scale solar farm development has moved slowly in light of the country''s immense amount of untapped shine. But that picture may be starting to change.
In 2018, Cambodia introduced a solar generation regulation, a new driver for the country''s solar PV system development. Cambodia''s grid-scale solar development started with just a 10 MW pilot in 2017. Today, nine solar power plants are connected to the national grid and are capable of producing up to 444 megawatts (MW), according to the Stimson Center''s Mekong Infrastructure Tracker.
That tracker also reveals 620 MW of capacity is on the way from two solar farms currently under construction, with an additional four installations planned.
Cambodia is also set to enhance its renewable energy infrastructure with two new storage projects, according to Minister of Mines and Energy Keo Rottanak. Speaking at an August regional ministerial meeting in Jakarta, Rottanak announced the launch of a 2,000 MW battery system next year and a 1,000 MW pumped storage hydro project set for completion by 2028.
This announcement follows Rottanak''s remarks in July, where he highlighted the government''s encouragement of solar energy use, pointing to the reduction of import taxes on solar panels from 35% to zero as a key measure.
Still, experts say more is needed from both hardware and public policy to clear the way for a solar renaissance.
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