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With its aim to expand solar energy investment by 12 percent by the end of this year and increase it up to 20 percent over the next three years, Cambodia has been facing challenges of transiting to clean energy development, according to report by Climate Investment Funds (CIF) and the Asian Development Bank (ADB).
A report titled “Cambodia’s transition to a clean energy development pathway” said while the objectives of the government, CIF and ADB aligned on introducing more renewable sources into the energy mixture, transitioning from traditional forms of production to more privately generated, solar-based energy posed major delivery challenges.
The issues of transparency, risk, pricing and the role of the private sector were challenges for formulating an enabling business environment while the country needs to integrate grid stability, efficiency and the national utility,the report observed.
According to the report, for the private sector and particularly for international investors, Cambodia presented a nascent energy market with a limited demonstration of the capacity to execute transparent, open-door tendering practices in a region where procurement costs are high.
The report highlighted that with many international bidders new to the country,
unpredictable and lengthy procedures for land acquisition posed a challenge.
Report added that “Geographic familiarity and bargaining advantages skewed competition towards potential local bidders and made the auction less attractive to international participants. The harder it was for international players to be competitive, the weaker the competitive tensions that would drive down prices.“Establishing a climate of transparency around the technical and financial architecture of the project and allowing participants to assess and price bids with confidence were problematic”.
The government will prioritise renewable energy development rather than hydroelectric power, Electricite du Cambodge (EdC) Director-General Keo Rattanak said.
Speaking at a presentation on Cambodia’s 2020 energy vision Rattanak stated that Cambodia will expand its solar energy investment by 12 percent by the end of this year and increase it up to 20 percent over the next three years.
According to the report, 18 percent of the country’s total electricity supply was imported fossil-fuel energy from Thailand and Vietnam and high tariffs of $0.14 to $0.17 per kilowatt (kW), well above those of regional counterparts, constrained economic competitiveness.
Presently with help from ADB Cambodia’s first national solar park of 100 megawatts has now been established.