$127.8 Million ADB Loan to Help Expand Power Grid in Cambodia

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,” said ADB Country Director for Cambodia Sunniya Durrani-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 and quality 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.