To encourage private sector, manufacturers and industrial owners to use green energy, the government should consider adjusting the energy policy and regulation on General Conditions to connect solar photovoltaic generation sources to national grid.
For the latest Cambodian Business news, visit Khmer Times Business
Early last year, energy regulator Electricity Authority of Cambodia released the policy stipulating that the installation of solar photovoltaic system synchronised with the electricity supply system of the national grid is subject to the maximum capacity of the solar power project, which should not be more than 50 percent of the contracted demand stated in the Power Supply Agreement. It also identified two types of payments by solar photovoltaic users. The first is capacity charge, ranging from $7 per kilowatt per metre to $11.38/kW/m to be multiplied by the contracted demand in full. The second charge relates to the energy charge on actual consumption amount, costing between 9.3 cents/kwh and 12.5 cents/kwh.
Garment Manufacturers Association of Cambodia deputy secretary-general Kaing Monika says that green energy for businesses is no longer an option but a requirement for compliance by global markets and consumers. It demands that local manufacturers and factory owners have better management of energy efficiency which prompted garment customers and GMAC members to set up a sustainability program to promote energy efficiency and meet the request.
“Well-known brands like Adidas or H&M take this issue very seriously. As scheduled, H&M requires its vendors to enrol in its energy efficiency program by 2025,” he says.
However, when it comes to the use of solar energy, some factory owners and manufacturers are troubled by the policy. Monika says that capacity charge is an issue that some GMAC members are facing, urging that the government reduce or eliminate it if it (the government) wants to promote solar energy. “Capacity charge policy makes solar project less attractive (to the industry). We are asking EAC to look into it,” he adds.
Factories that are willing to invest in solar energy should be allowed to use solar power up to the maximum amount they produce while eliminating capacity charge, even if they are connected to the national electric supply system. He says Cambodia is favourably positioned to receive about six hours of peak sunlight, enabling solar power users to take maximum advantage of it.
Bloomberg reports that in 2008, the global market price per watt of solar photovoltaic was $3.15, and by 2018 it fell to just 22 cents. This has made installing new solar plants cost-competitive (when strictly looking at levelised costs of electricity) with conventional fossil fuel generation in many regions of the world, says United Nations Development Program resident representative Nick Beresford.
As such, there is no need to import the resource needed to generate electricity from solar (solar irradiance), which Cambodia has in abundance, with levels much higher than some of the leading solar countries, such as Germany.
“Solar is a form of clean energy that does not emit any carbon dioxide or other pollutants that contribute to climate change. Installing a solar plant is much quicker than other options. For example, Cambodia’s first solar plant in Bavet was built under one year,” he adds.
Solar energy can complement the existing energy mix and help alleviate some of the seasonal challenges Cambodia faces. It matches the growth profile of power demand led by the rise in Cambodian purchasing power. “Cambodians are able to afford electrical applicances such as air conditioners. As solar generates electricity during the day, Cambodians can now afford to use them when it is hot,” Beresford says.
Albert Teoh, manager of Bright Sky Pte Ltd, which produces garments and travel goods, tells Capital Cambodia of his plans to install 500 kVA (kilovolt-amps) of solar panels in the factory. However, due to EAC’s policy, he appeals to the government to reconsider the elimination or lowering the capacity charge, and actual consumption as it too expensive for manufactures.
“The cost of 500kVA solar panel installation is very high. It is between $500,000 and $1 million. On top of that, we have to pay capacity charge and actual consumption, so the total cost adds up for manufacturers who use green energy,” Teoh explains.
“Once we set-up the solar power system, it can generate up to 50 percent electricity but in the end, we estimate the actual usage to be 20 to 25 percent only from solar power. So, we still need to buy 80 to 85 percent of energy from Electricite du Cambodge. The government should give us more incentive and encourage more factories to install solar panels,” Teoh says.
In 2018, electricity capacity totalled 2,175 megawatt, with hydropower accounting for 1,330MW or 62 percent, and fossil fuel power generation making up 780MW or 36 percent. Despite having abundant solar radiation, current solar generation capacity in the country is only 10MW.According to Asian Development Bank, Cambodia can add about 200MW of solar energy to the grid by 2021, using available technology and with no disruption to the grid.
Victor Jona, director-general of the Mines and Energy Ministry, says that the government has introduced incentives to the private sector, including manufacturers to enable them to install solar panels. The government’s goal is to promote green energy, particularly energy that does not affect the environment.
“Previously, the import tax for solar panel equipment was 39 percent but now we have reduced it to seven percent. This is to facilitate and improve the installation in residential units and factories, and connect it to the EDC for a combination of electricity supply. As a policy, we want to promote and encourage the use of solar power. For now, the source of power is mixed (hydro, coalfire plant, fuel, solar and biomass) including electricity import from neighbouring countries,” says Jona.
However, EAC says that solar power generators are only allowed to use 50 percent of solar power. It is to compensate the huge investment spent to build the infrastructure by the government and investors. Thus, it is only fair that solar power users buy the remaining 50 percent from EDC. “If there is no demand (government-supplied power), investors would face losses after heavily investing in the infrastructure,” Jona explains.
The mix in energy supply is viewed as mutual contribution to infrastructure investment. “In any case, we will discuss with EAC to see how we can reduce the tariff on actual consumption, and capacity charge,” he says.