For most of us, the past year hasn’t exactly gone as expected.
Though not of pandemic proportions, something similar could be said for the renewables sector in Cambodia. If 2018-19 was the year of green energy growth for Cambodia, then 2020 may herald a carbon expansion.
Until not long ago, the Kingdom sat in a favourable position of drawing roughly 80% of its power from renewable or hydroelectric sources, with the remaining 20% coming from carbon fuels. But if a slate of coal-fired projects announced last year come online as expected, that 80-20 split in the power supply is expected to reverse by 2030.
That kind of shift would place the grid at odds with national goals for sustainable development, a turn that comes as major figures in the garment industry warn that doubling down on coal could push carbon-counting manufacturers to leave the country and outsource production elsewhere.
What’s more, as international financiers from countries like Japan and South Korea have increasingly backed away from fossil fuel projects in Southeast Asia and elsewhere, energy observers have cautioned that coal plants built today could soon become stranded assets – money pits with little chance of yielding a return on investment.
Christer Horn af Åminne, the Cambodia and Vietnam country manager of Swedish clothing line H&M Group, stated in a recent email to Southeast Asia Globe that the brand can “celebrate” the Kingdom’s current ratio of renewable to fossil-fuel-based energy. But he cautioned that the current plans to skew the balance more in favour of the latter have already given pause to the fast fashion giant.
“For companies with 100% renewable energy commitments, whether under [industry] initiatives such as RE100 or Science Based Targets initiative (SBTi) or their own, such a negative movement represents a worrying future,” Åminne wrote.
I think what politicians and people in government want to see is cheaper electricity and a good transition, which can include changes to energy governance and upgraded transmission infrastructureHan Phoumin, Senior energy economist, ERIA
Both RE100 and SBTi represent an ongoing, corporate-led push for carbon-neutral production – a dream for companies hoping to remain profitable in an era of climate consciousness. For brands like H&M, that means scrutinising more closely the energy powering factories in the developing countries that produce the vast majority of the world’s clothing.
Looking to the future, Åminne said the added fees associated with carbon offset credits, along with other methods producers might need to meet their climate goals, “will likely play a strong role in deciding where to place orders in the future.”
H&M is hardly alone in pushing for greener energy. As consumers grow more anxious about their own contributions to climate change, major brands are touting their commitments to reduce carbon emissions. Last year, H&M joined a group of other producers – including apparel companies Adidas, Puma and Gap, US bicycle maker Specialized and even Cambodian-Thai concrete firm Chip Mong Insee – penned a letter to the Cambodian government arguing that increased coal investments were making the country “less attractive” to the manufacturers who drive a large part of the national economy.
Even with the Cambodian government’s seeming embrace of coal, energy experts aren’t counting out renewables. Stuart Thorncraft, an energy consultant and one of the architects of a 2017 solar master plan for the Kingdom, is looking on the bright side.
“I’m very optimistic about Cambodia despite the coal projects,” Thorncraft said. “I wouldn’t see it as a doom and gloom scenario just because they’re building some coal.”
Still, for many, the recent embrace of coal feels like shifting ground. 2019 was a strong one for Cambodia’s renewable energy sector, particularly the solar field. In that same year, the Kingdom installed a total solar capacity of about 120MW, about a fourth of which came from rooftop solar systems. By August 2019, four solar projects with a total capacity of 140MW had been approved by the government for construction across four provinces, bringing the total solar energy capture to 410MW in projects either built, under construction or approved.
Considering that number stood at only about 10MW in 2017, Cambodia seemed to be taking major strides towards a greener grid even as it expanded total energy output.
However, last year added a bend to that course amidst a ballooning in planned investments in coal-fired power. As the Covid-19 pandemic took a bite out of the global economy and dampened the Kingdom’s annual prospects, the Cambodian government approved 4,065MW of coal projects to come online through 2027, including a scheme to purchase 2,400MW of electricity from a coal plant sitting just over the border in Laos.
Aside from the Laotian-produced energy, the remaining 1,600MW would come from three different plants built within Cambodian borders. That roster includes a 700MW project planned for construction by major domestic development firm the Royal Group in Koh Kong national park, another 700MW in Sihanoukville by the Cambodia International Investment and Development Group (CIIDG) and China Huadian Hong Kong Co Ltd (CHDHK). Rounding out the pool is a 270MW installation proposed for Oddar Meanchey province.
The project announcements would represent a considerable amount of the total energy in Cambodia’s grid. But Han Phoumin, senior energy economist with the Economic Research Institute for ASEAN and East Asia (ERIA), puts the fossil developments in a more long-term perspective of development.
“If you take it all into account, solar energy in Cambodia increased quite suddenly,” Phoumin said. “I think what politicians and people in government want to see is cheaper electricity and a good transition, which can include changes to energy governance and upgraded transmission infrastructure.”
The rapidly falling cost of renewables means that solar and wind power are now cheaper than new coal and gas power plants in two thirds of the world’s countries.
Phoumin thinks it’ll also include more investments in renewables – as well as a fossil pivot from coal to cleaner-burning natural gas, providing consistent power to a country that is increasingly ravenous for it. Thanks to increasing electrification and massive economic growth, electricity demand now grows by an average of about 17% annually. Electricite du Cambodge (EDC), the French-monikered national utility, has reported 2019’s increase in demand was even higher, at more than 23%.
It may come as no surprise then that even as Cambodian households clamour for more energy, the industrial and commercial sectors remain the biggest consumers in the country. In 2019, the Electricity Authority of Cambodia (EAC) reported industry uses amounted to 31.26% of 2019’s total electricity consumption of 10,287,540MWh. That same year, commercial consumers bought a little more than 35%, while the residential sector bought nearly 33.52%.
Statistics from the EDC further highlight that growth in domestic supply and demand. As the Kingdom weans itself off energy imports from neighbouring countries, total domestic power generation in 2019 hit 8,986,330MWh. According to the utility, over the past 15 years, the capacity of Cambodian power sources has increased 14.5 times over. The amount of energy delivered to consumers has increased 12 times over in that same period of time.
In light of that growth, the EDC is believed to have aired some skepticism on the ability of renewables, and specifically solar, to provide adequate, consistent power across the country. And while local green energy boosters are quick to promote their product, they’re finding much of their arguments are being made for them by macroeconomics forces and globalised supply chains.
… regional competitors in ASEAN, including Vietnam, Thailand and Myanmar, are pushing ahead to bulk up their own power grids with more renewable energy
That’s because regional competitors in ASEAN, including Vietnam, Thailand and Myanmar, are pushing ahead to bulk up their own power grids with more renewable energy. Vietnam in particular is plunging into solar, with global consultancy McKinsey & Company declaring in a recent study that the country could save money, create jobs and meet its power needs by doubling-down on a renewable-led power strategy.
Further afield in China, an influential ally and key trading partner for Cambodia, they are advancing their own renewable agenda at a rapid clip. The rising power caught global attention last year by pledging to go carbon-neutral by 2060.
Such a feat may not be in immediate reach of the EDC, but that’s not for lack of sunshine. The minimal expansion of solar in Cambodia last year belied findings from the EDC’s 2017 solar master plan developed with partners such as Thorncraft and the Asian Development Bank (ADB). Studies from that plan estimated solar infrastructure could meet as much as 45% of peak demand load for the grid which, in 2025, could work out to roughly 2,173MW. That’s a great deal more than the 650MW capacity the EDC currently expects to be in place by that year.
Not long after that master plan was completed, ADB published a 2018 energy assessment and strategic roadmap that found plenty more bright spots for solar investment. Cambodia “enjoys some of the highest solar resources in the Greater Mekong Subregion” with an estimated 8,000MW beaming into the Kingdom every year, the roadmap stated.
This was recently confirmed yet again with a detailed analysis from Australian-funded consultancy IES, which hinted at natural potential in Cambodia for high-quality solar projects of an even greater scale than that found by ADB. In the broader field of renewables, IES also completed a wind analysis for the Kingdom that identified more than 6,000MW in wind energy potential.
Thorncraft says the EDC and others in the Kingdom are well-aware of that potential bounty, even as they take steps to increase coal-fired power. For Thorncraft, the pivot towards dirty energy seems to be one fuelled by a sense of urgency.
“They’ve decided that solar will play a role and they know the potential for solar in their country is exceptional,” Thorncraft said. “But at the same time, they’re very concerned about the rapid rate of demand – that’s been really high and they’ve already had blackouts.”
This article was first published in Globe Media Asia’s Focus Cambodia 2021-22 magazine.