The development of solar power in Cambodia could be significantly scaled with the help of cost-effective de-risking instruments, such as more secure power purchase agreements and guarantees. If successfully deployed, these measures could lead to increased investment across four solar sub-sectors, economic savings of up to USD 146 million *, improved tariff affordability, access to electricity, and lower GHG emissions. Investments in just over 700MW of solar energy can directly abate 8.7 million tonnes of CO2 in Cambodia by 2045.
These were the headline findings from the recent report by UNDP Cambodia, Kamworks and South Pole. The report, Cambodia: Derisking Renewable Energy Investment (DREI), provides the first in-depth analysis of investment risks and opportunities in all four sub-sectors for solar PV development in Cambodia – utility-scale PV, rooftop PV, solar-battery mini-grids and solar home systems – as well as instruments to de-risk investments in the respective sub-sectors.
The findings are the result of a two-year research project led by South Pole, which draws on insights from domestic and international investors and project developers, government officials, and international development agency actors active in the on- and off-grid solar PV space in Cambodia and Southeast Asia. The Cambodian government – in particular the ministries of Environment, Mines and Energy, Economies and Finance, as well as the National Council for Sustainable Development – were instrumental in providing strategic guidance and inputs during the project.
The DREI report offers clear recommendations to Cambodian policy-makers and serves as an input to the national and sectoral energy development planning processes, which together will shape the forthcoming updates to the national Power Development Plan. The recommendations are furthermore transferable to other Southeast Asian countries, such as Laos and Myanmar, which are in a similar stage as Cambodia in terms of renewable energy development.
Yulia Dobrolyubova, Head of Climate Policy & Finance Asia Pacific, South Pole says: “We can dramatically accelerate the speed and scale of private investments into renewable energy by helping governments create the right policies that make such investments profitable and at lower risks. The solutions are there. This is evident in the feasible regulatory measures in support of solar PV deployment we recommended for the Cambodian government, which were based on our in-depth knowledge of renewable energy markets in Southeast Asia and our detailed analysis of the Solar PV market in Cambodia.“
H.E Say Samal, Chair of the National Council for Sustainable Development, Minister of Environment, says: “One way to encourage and support investments in clean and renewable energy is by derisking them and creating a favorable and enabling environment for investors in this sector. In this regard, Cambodia's DREI report has sought to adapt innovative solar power policies and financing solutions to the national context and craft a fully localised set of – cost-effective derisking measures – which serve as an input to national and sectoral energy development planning processes and help shape the forthcoming update to the Power Development Plan.