Background
With approximately 5.8 hours of peak sunlight a day, Cambodia possesses one of the best solar resources in the world. Together with high electricity rates, unreliable sources of power and skyrocketing demand for electricity, Cambodia is a very attractive market for investors in the energy sector. The successful completion last year of the country’s first utility-scale solar power project in Bavey City in Svay Rieng Province, which was backed by the Asian Development Bank (ADB), provides further investment impetus.
However, the lack of clarity in Cambodia’s regulatory framework has impeded the inflow of investments in the sector. For instance, there were neither feed-in tariffs nor a net metering system, which credit those who contribute their electricity to the national grid from their solar panels. The lack of incentives could be the reason why investors tend to look into other renewable sources of energy, such as hydropower, and overlook solar energy.
Currently, the primary legislation regarding the use and development of energy in Cambodia is the Law on Electricity (Electricity Law), which was passed in 2001 by the Royal Government of Cambodia. The Electricity Law elaborates on the eight licenses available for investors and consumers, including the generation, transmission and distribution licenses. The Electricity Law does not, however, deal with any specific source of electricity, leaving ample room for subsequent clarifications by the authority in charge, the Electricity Authority of Cambodia (EAC).
Summary
According to Article 5 of the regulations, consumers can install solar PV systems for their own consumption so long as these systems do not require connection and synchronisation with the national grid. These consumers shall also be responsible for the safe operation of the installed systems. Article 5 further provides that only big consumers (medium voltage consumers) and bulk consumers (high voltage consumers) may consume electricity generated from their installed solar PV and also be synchronised with the national grid. Supplied power above 380 volts and up to 22,000 volts is considered medium voltage, and any voltage above 22,000 volts is categorised as high voltage. A two-part tariff system comprising charges for both capacity and energy would be applicable to these consumers.
In accordance with Article 6, Electricité Du Cambodge (EDC), a state-run electricity provider, shall first evaluate whether the proposed solar project could be connected to the national grid. If EDC permits, the permission so granted is valid for one year, and if the project fails to commission within the validity period, the permission will automatically lapse. It is unclear whether the validity of the permission may be extended upon request.
The regulations also make clear (in Article 4) that all electricity generated from the solar PV systems injected into the national grid must be sold to EDC under a power purchase agreement approved by the EAC.
For security reasons and to ensure the reliable supply of electricity at an economical cost, Article 3 of the regulations mandates that solar PV projects must be developed in accordance with the national plan. A project which has not been included in the national plan must first be approved by the Ministry of Mines and Energy (MME) and EDC before electricity generated by these projects may be connected to the national grid. Investors who are allowed to connect the electricity generated from their solar PV projects to the national grid must comply with the technical safety requirements, as outlined in Articles 7 and 8 of the regulations. These requirements include limitations on DC power injections into the national grid, limitations on harmonic current and voltage injections, and anti-islanding standards. Other local and international safety standards may also be applicable.
If a regulation is breached, and the breach continues even after seven days’ notice to remedy the default has been given, Article 10 provides that the licensee (either EDC or private licensees which had been granted special purpose transmission and distribution licences by the EAC) may disconnect the supply to the consumer.
Implementation and further clarification
It is undoubted that these regulations have helpfully clarified the general process for some consumers (big consumers and bulk consumers) to connect to the national grid. However, to the disappointment of many investors, there were no financial or other incentives for other types of consumers to connect to the national grid. The regulations remain conspicuously silent on the subject of feed-in tariffs and only briefly touched on the use of a metering system.
This article has been published by PV Magazine, a monthly trade publication for the international photovoltaics (PV) community. Please click the following link to view: pv-magazine.com.
Client Alert 2018-065
