Cambodia’s Electricity Demand and Fossil Fuels
Over the past 15 years, Cambodia’s rapid population and economic growth have led to a tenfold increase in electricity demand. This has proved challenging, and despite its admirable renewable energy progress, Cambodia is far from total decarbonisation. Unfortunately, this trend will continue for some time. In September 2021, the Minister for Ministry of Mines and Energy, Suy Sem, emphasised fossil fuel needs in the near term, reflected in its new Power Development Plan (PDP).
Electricity Supply and Power System
Furthermore, the country’s electricity network lacks stability and often suffers from power cuts. However, cuts are avoidable with ongoing investments, but Cambodia is falling short. According to the Asian Development Bank (ADB), the state-run Electricite du Cambodge (EDC) should have invested USD 600 million for infrastructure upgrades over the last five years, yet failed to do so.
Cambodia also suffers from high and often very volatile power costs. Electricity prices, in 2020, reached both their lowest and the highest levels in the last 15 years. Meanwhile, gas prices in 2021 were tenfold higher than their 2020 levels making life for everyday Cambodians even harder. Overall, compared to its Southeast Asian neighbours, the county’s electricity tariffs are significantly higher.
Climate Change Pledges
On a global level, Cambodia’s climate pledges remain insufficient and entirely rely on international financial support. In other words, the country cannot accelerate renewable energy adoption on its own. Building on this, clean energy awareness across Cambodia is low, along with a high-risk perception amongst financiers and project developers.
Regardless of the challenges, Cambodia’s opportunities are boundless. Opening new doors for clean energy, in October 2021, Suy Sem, the Minister for Mines and Energy, pledged to end approvals for new coal-fired power plants. This is a part of the government’s intention to increase the utilisation of clean energy to “the maximum extent possible”.
Energy Supply and Energy Storage Systems
Additional focus areas include making fossil fuels cleaner, developing batteries and energy storage systems, and focusing on energy efficiency. Through such measures, authorities aim to target the energy supplies’ security, accessibility, affordability, and reliability across Cambodia.
Solar Power in Cambodia
Solar power, too, has a vast untapped technical potential at 65 gigawatt-hours (GWh) per year. In other words, with up to eight hours of sunlight per day, Cambodia has some of the richest solar resources in Southeast Asia.
Even though renewables now make up most of Cambodia’s energy, bigger ambitions are ahead. An additional 495 megawatts (MW) of electricity generation from seven solar power plants will be online by 2023. This will boost solar power’s share to 20% of installed power capacity. By 2030, however, Cambodia is aiming to have 1,815 MW of solar energy on its national grid.
ADAENG DEVELOPMENT CO., LTD is in the process of submitting for approvals to the authorities of Cambodia to develop a project known as “1815MW Solar Farm” in Cambodia. Any party wishes to enter a signed MOU to record the agreement in principle and obligations up to the establishment of a SPV together with all the necessary consents, approvals and licenses from the authorities of Cambodia subject to the provisions herein appearing.
ADAENG DEVELOPMENT party shall be responsible in:
(a) Securing all governmental consents, approvals, licenses and permissions relating to the establishment of 610MW from the relevant authorities of Cambodia. This include all necessary land and construction alienation matters, and specified documents as follows:
i. EAC (Electricity Authority Cambodia) – Project Approval or license.
ii. EDC (Electricité Du Cambodge) – Agreement to purchase up to 25 years, not less the 90% of 1,815MW, per KWH price, guarantee payment terms.
iii. CDC Tax incentive and tax free of import materials.
iv. Local authority for conversion of land for solar power generation.
v. Others ministires approvals, such as: Fire, environment, construction order approvals, and not limit to any others, as required.
(b) Purchase land, and rightful ownership, such as hard title of land, and transfer to SPV company.
(c) Set up a SPV company for operation, agreed on JV equity, terms of participation, responsibility and scope of works.
(d) Provide appointment and term of compensation agreement to your party.
Your party shall be responsible in:
(a) Provide detailed Project Proposal and assist to provide information for getting approvals mentioned.
(b) Provide financial statement to project.
(c) Introduce Financial and EPC Parties.
(d) Secure funding for this project.
(e) Provide assistance in securing EPC, audit and approve of design, construction implementation, material specification, schedule, costing.
(f) Provide business, operation and maintenance consultancy.
(g) Assist values contributing parities in forming an SPV and advise terms of collaboration.
(h) Option to own equity in SPV in case capital funding/investment raised from individual or corporation.
(i) Appoint EPC for the following:
i. Provide Engineering, Procurement, construction to this project.
ii. Provide installation and commissioning.
iii. Provide system commissioning approval from EDC
iv. Provide maintenance support proposal
v. Provide operation and management outline
vi. Provide training, operation procedure, and management consultancy.
Investment Proposal (Step and Expectation from Investor & Investment Options)
1.Investor review the Brief and decide if were to invest into the project.
2.Investor to issue an LOI to ADEANG Development Ltd (ADEANG) to shown an interest to JV with ADEANG to Develop the Projects.
3.Investor will also show Proof of Funds in a form of letter from their bank stating that they have the fund required for Development.
4.Upon receiving the proof of fund, ADEANG will then secure the land and submit the project proposal to CDC for approval and secure the Registration Certificate from CDC to certify the project as Qualified Investment Project or QIP.
5.Once ADEANG secure the QIP, Investor will then sign the JV agreement with ADEANG to form a new JV Company that will Develop the project.
6.ADEANG will purchase the land under ADEANG LAND and Lease the Land to the new JV Company for X Year for the development of the project. When the Development is completed, the land title will be transferred to the end buyer of the property (if they are Cambodian) by ADEANG on a separate agreement . If the Buyer is non Cambodian, then the Leasing of the 100 years will still apply (especially for the Commercial Development)
Note: If investor would like to have proxy (a Cambodian) to undertake the share holding in ADEANG LAND, Investor can hold up to 80% of the shareholding and 100% of the Management control. Contact ADAENG LAND CO., LTD via firstname.lastname@example.org for more information.