Demand analysis of emerging PV markets: Cambodia
December 22, 2020 Mars Chang
Cambodia has an estimated population of 1.7 million. The country has experienced rapid economic growth over the past years, with the annual GDP growth having stayed at around 7%. However, its economy is expected to contract this year due to the COVID-19 pandemic, and it may end up with the lowest growth since 1995. The Cambodian economy is also hit by intense public opposition to the government, which arose from widespread concerns over an ever-widening wealth gap, uneven resource distribution, and the prosecution of labor union leaders. International credit agency Moody’s assigns Cambodia a B2 rating.
Geographically, Cambodia borders Thailand in the west and northwest, Laos in the northeast, and Vietnam in the east and southeast. Plains occupy the central and southern parts of Cambodia; plateaus and hills dominate the eastern, western, and northern parts.
Cambodia has a hot climate characterized by high temperatures, abundant rainfall, and year-round summer. The local temperature averages 27 °C year around and stays at 24 °C from December to January.
Renewable energy development
Cambodia’s renewable development is still in its nascency. Renewables are kept away from the front burner of energy development due to a sparse transmission network and fragmentary infrastructures; the government has yet launched a roadmap for renewable development or set an installation target. Meanwhile, the Basic Energy Plan for Cambodia, released by the Economic Research Institute for ASEAN and East Asia, suggests Cambodia set a target of sourcing 10% of nationwide electricity from solar PV and biomass energy by 2030.
Hydropower is one of the major sources of renewable energy generation in Cambodia; other renewables that are seeing decent growth are biomass and solar energy. Cambodia develops forest biomass as its economy depends heavily on agriculture. The solar industry is growing these days by leveraging the abundant sunlight across the country—which can even reach off-grid PV systems in distant regions—and the financial support offered by the Asian Development Bank. Wind power, by contrast, can hardly be generated due to unfavorable natural conditions.
At the end of 2019, hydropower, PV, and biomass respectively made up 90%, 7%, and 3% of renewable installations in Cambodia.
Solar policies and outcomes
The Cambodian government mulls solving electricity shortage by developing renewables, although there is no clear plan for renewable development. While Cambodia is widely expected to develop solar energy, under-developed infrastructures, poor public finances, and a lack of policy framework and measures make it difficult to build PV systems.
What draws much attention to Cambodia’s PV development is a 100 MW national PV project that the government kicked off in 2017. In 2019, 60 MW of the project was procured through an auction; no news has been available about the remaining 40 MW. In that same year, the Cambodian government approved two projects that are respectively 140 MW and 120 MW in size, in order to make electricity available nationwide. Some of the aforementioned PV projects are said to have been supplied with modules since last year.
The Cambodian energy authorities say that over the next ten years they will place a hiatus on hydropower development and explore how to generate develop solar energy and natural gas—although a related policy is still in the pipeline. Since the Cambodian PV market is just taking shape, its growth potential will remain limited, whether in extent or duration, unless there is a well-thought-out policy in place. If such a policy is introduced, the market is likely to achieve massive growth.
Cambodia-China trade: Module import and export
China shipped 118 MW of modules to Cambodia in 2019, more than in 2017 and 2018. This increase was due to the need to construct utility-scale and independent-power-producer projects. Taking into its current module demand, Cambodia may witness module imports in 2020–2021 stay consistent with their 2019 level. And if there is a well-designed policy in place, module imports into Cambodia may reach new heights.
Hydropower forms the lion’s share of Cambodia’s renewable energy mix, followed by PV and biomass energy. With the focus of the renewable development agenda expected to shift to PV and biomass energy, both renewable sources will improve in installed capacity.
Since Cambodia’s PV market is still at the budding stage with a less-than-mature supply chain, it depends heavily on developers for modules and solar installations. Moreover, Cambodian PV development has been hampered by disorganized policymaking and under-developed infrastructures. While utility-scale projects launched in recent years has driven up solar demand in Cambodia, the market may not grow in a consistent or even sustainable manner unless the policy is thoroughly designed and infrastructures are complete.
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