The Council of Ministers of Cambodia has recently approved the long-awaited project for the construction of a 60MW solar power plant. This is the first part of a 100MW project to be financed by the Asian Development Bank (“ADB”), which, according to the pre-feasibility study, proves to be not only viable, but will also contribute to national grid stability and an increase in energy access.
After the success of the first industrial-scale 10MW solar power plant in Bavet, Electricite du Cambodge (“EDC”) has been working closely with the ADB to move to the next stage of including renewable energy in the country’s power generation mix. Under the new project, we understand that a build-own-operate contract will be awarded under a public-private partnership (“PPP”) scheme. EDC would purchase the electricity under a Power Purchase Agreement at an expected tariff of seven to nine cents per kWh.
The Council of Ministers’ approval of the solar power project is key to moving Cambodia forward with increased renewable energy production.
The German firm that is conducting the detailed feasibility study for the solar power project is expected to report by August of this year. In the meantime, the ADB is developing a bankable PPP framework, which will be tested under this project, with a view to using it as a template for future PPPs in Cambodia. Subsequently, we understand EDC will open a tender to select the most viable independent private producer. We now anticipate that bidding will start by the third quarter of 2018.
The chosen location of the project has been receiving increasing interest from potential bidders in anticipation of possible land acquisitions (we understand that the plant will be located in Kampong Speu Province, less than two hours away from Phnom Penh), and on about 200 hectares of land.
As the legal advisers for ADB on the first 10 MW solar power plant in Bavet, we encountered numerous challenges due to the lack of regulations and precedent. The experience gained by all the parties involved, and the recent guidelines developed by the Electricity Authority of Cambodia, should surely provide a smoother path for the new project.
If you have any questions, or would like more information about investing in this sector, please contact me.
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Alex Larkin | Senior Adviser
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Phnom Penh 12301
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