Solar Photovoltaic (PV) Systems
Solar Photovoltaic (PV) Systems
Business Model Description
Construct and maintain solar systems for industrial and commercial sectors
Cleantech Solar (Cleantech) finances, constructs, owns and operates solar photovoltaic projects by focusing on long-term investments within the commercial and industrial segments. In 2018, Cleantech raised USD 50 mn from Climate Fund Managers (CFM), to grow its portfolio to >450 MW, generating >600 GWh of clean electricity per annum and reducing carbon emissions by ~500,000 tons per year. (5)
In 2019, Cleantech set-up an on-site solar PV system for Chip Mong Insee Cement Corporation (2.8 MW floating solar power plant and 7 MW rooftop solar). The project is expected to generate 297 GWh of clean energy, avoiding 197,000 tons of CO2 emissions across the system’s lifetime. (6)
Khmer Solar, registered in 1997, in engaged in installation of solar systems in Cambodia, including solar home systems for rural electrification, solar hot water, water pumping, industrial batteries, navigational lighting, or grid tied systems.
GreenYellow began its operation in 2017 in Cambodia. It specializes in energy management services, notably in Solar Solutions and Energy Efficiency Solutions, and develops turnkey projects including EPC (Engineering, Procurement and Construction) and O&M and can offer financing solutions covering up to 100% of the required investment.
Kamworks Solar Ltd. (Kamworks), founded in 2006, is a solar energy company that designs and manufactures solar energy systems for commercial and residential use. It develops innovative products for off-grid populations in Cambodia and beyond. In 2013, Kamworks raised an undisclosed amount in seed funding from Opes Impact Fund. (2)
Expected Impact
Increase solar power's share in Cambodia's energy portfolio; improve access to power and contribute to energy security while reducing CO2 emissions.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
Sector Classification
Renewable Resources and Alternative Energy
With growing economic growth, energy demand grew ~20% per year since 2010 (except in 2020 and 2021 demand declined due to COVID-19), energy supply of 9,255.7 GWh in 2021.(1) ~10 mn people are without access to the grid, spending ~USD 170 mn per year on fossil fuels for energy needs to power lights, phones and TVs.(2)
National Energy Efficiency Policy 2021-2030
aims to create a favorable environment for increasing investment opportunities in energy efficiency. (3)
Electricite du Cambodge (EDC), a utilities company in Cambodia, grants licenses to investors to build transmission and distribution lines in rural areas.
Despite Cambodia’s recent growth and development, 1 out of 5 households in rural areas remain off-grid, lack access to power provided by utilities, and are unable to access reliable and affordable electricity.
Electricity has traditionally been expensive in Cambodia, than in neighboring countries, and prices historically have been higher in rural areas than in towns and cities. Moreover, about 10% of grid-connected households cannot afford the electricity tariff.(1)
Energy access for women contributes to poverty reduction, saving time by substituting manual-labour, and reduces drudgery of fetching fuel wood and water, tasks that typically women are responsible for in households and communities.
Cambodia is already a leader in the renewables space compared to its ASEAN counterparts. In 2021, Cambodia submitted a long-term strategy to be carbon neutral by 2050. RE plays an important role in this strategy offering many opportunities for investment in the future. RGC has announced that RE sources could ultimately account for ~59% of the total installed power capacity.(1)
Significant financial resources are required for investing in power stations, the national grid, substations, and power management technology, to provide rural areas access to clean energy. Reliance on electricity imports, technical losses and weak supply infrastructure are challenges that need to be addressed.
Alternative Energy
Cambodia’s electrification rate is the 2nd lowest in Southeast Asia, after Myanmar. Electricity supply is dominated by coal (41%) and hydropower (44%), while solar is at 6% and growing. Solar is the cheapest way for EDC to buy electricity. Low-cost electricity, widespread solar potential, and reduced usage of carbon-emitting fossil fuels, can contribute to the growth of solar power. (1)
Program for the Development of Rural Electrification of Electricité Du Cambodge (EDC) through Department of Rural Electrification Fund (REF) 2020 aims to address this energy demand through alternative energy production.(4) 2050 Carbon Neutral Long-term Strategy emphasizes on the role of solar, hydro, biomass and other renewables.
Electricity is a key ingredient for any modern production infrastructure. Thus, gaps in energy supply often act as a barrier to productive investments in rural and semi-urban areas.
The number of households living off-grid in Cambodia amount to ~0.5 mn. People living off-grid in rural areas depend on basic lighting and electricity from greenhouse gas-emitting kerosene, time-consuming charge battery systems, and high-cost diesel generators.
Only ~13% or 287,000 households of rural households use solar as a source of electricity. Rural Electrification Fund, supported by the World Bank, provided solar home systems to >60,000 rural households between 2013 and 2017.(1)
Distributed renewable energy and cleantech solutions can effectively bridge such energy gaps in an environment-friendly way. This facilitates local value addition by creating more productive investment opportunities, specifically in micro enterprises, while also creating demand for skilled and semi-skilled manpower.
Cambodia receives ~6-8 hours of sunshine per day, producing ~5 kWh/m2 per day (average sunlight available per unit of land to produce electricity). In 2020, access to solar energy was ~11x higher than in 2010. 8.4% of all households benefit from off- or micro-grid solar. In 2021, Cambodia had 7 solar plants compared to 0 in 2016 connected to the national grid, and capable of producing ~305 MW.(1)
Key concerns about scaling up solar include cost of equipment and grid stability. Many utilities are also affected by variable solar and wind disrupting the electricity supply’s stability. Underinvestment, lack of policy and insufficient energy infrastructure also slow the development of solar based projects.
Solar Technology and Project Developers
Pipeline Opportunity
Solar Photovoltaic (PV) Systems
Construct and maintain solar systems for industrial and commercial sectors
Cleantech Solar (Cleantech) finances, constructs, owns and operates solar photovoltaic projects by focusing on long-term investments within the commercial and industrial segments. In 2018, Cleantech raised USD 50 mn from Climate Fund Managers (CFM), to grow its portfolio to >450 MW, generating >600 GWh of clean electricity per annum and reducing carbon emissions by ~500,000 tons per year. (5)
In 2019, Cleantech set-up an on-site solar PV system for Chip Mong Insee Cement Corporation (2.8 MW floating solar power plant and 7 MW rooftop solar). The project is expected to generate 297 GWh of clean energy, avoiding 197,000 tons of CO2 emissions across the system’s lifetime. (6)
Khmer Solar, registered in 1997, in engaged in installation of solar systems in Cambodia, including solar home systems for rural electrification, solar hot water, water pumping, industrial batteries, navigational lighting, or grid tied systems.
GreenYellow began its operation in 2017 in Cambodia. It specializes in energy management services, notably in Solar Solutions and Energy Efficiency Solutions, and develops turnkey projects including EPC (Engineering, Procurement and Construction) and O&M and can offer financing solutions covering up to 100% of the required investment.
Kamworks Solar Ltd. (Kamworks), founded in 2006, is a solar energy company that designs and manufactures solar energy systems for commercial and residential use. It develops innovative products for off-grid populations in Cambodia and beyond. In 2013, Kamworks raised an undisclosed amount in seed funding from Opes Impact Fund. (2)
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
Installed Solar Capacity:2.2MW-2010; 208.5MW-2020 (1) Required power generation:>2000MW per year (7)
As per UNDP analysis, Solar PV of 350-400MWp is needed for commercial and industrial sectors. Based on an average infrastructure cost of 600,000/MWp, this represents a market size ~USD 300 mn. Factors leading to growing investor interest: (1) >frequent blackouts >high electricity costs (especially in commercial zones) >~80% reduction in cost of Solar PV modules (since 2010)
As the market continues to evolve and prices are projected to drop for both solar and energy storage technologies, the economic rationale for shifting towards solar is likely to grow stronger. Cambodia aims to generate additional 495 MW from 7 solar power plants (expected to be put into operation), representing 20% of total energy supply by 2023. (1)
Demand for clean energy from corporations has been increasing due to a combination of increased focus on emission reduction, minimizing risk exposure to volatile energy markets, and a unique opportunity to replace grid supplied power with lower cost solar electricity.(5) Asia Development Bank (ADB) supported the launch of Cambodia's first 10 MW solar power plant in 2017.(1)
Indicative Return
10% - 15%
As per experts, the current regulation restricts IRRs to 10-15%. Amendment in regulations could result in higher IRRs: 15-18% for small utility and off-grid panels of 0.5 MW; 14-17% for higher capacity panels.
National Solar Power Project (60MW) opened for private bidding, resulting in transparency in price discovery, and in lowering electricity prices as shown below: Phase I: 3.89 US-cents/KWh, lowest procurement price (across ASEAN) for grid-connected solar; Phase II: even lower undisclosed price (1)
Access to solar power has helped reduce the amount of money villagers (from Steung Chrov or Chanlita) spent on power sources from USD 7.41 per month, to USD 2.47 per month. (1)
Investment Timeframe
Medium Term (5–10 years)
As per UNDP analysis, installation of 100 kW solar power plant, producing energy for self-consumption would generate returns in ~6 years.
With no public procurement process or incentive, solar energy facilities for commercial use, without energy storage systems, provide financial returns in 7 years. (8) However, contracts are usually long term, i.e. 20 years.
Investment of ~USD 600,000 is required per MWp (megawatt peak) based on the cost of installation for industrial rooftop panels, and ~USD 890,000 per MWp is required for developing a solar power plant.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - Highly Regulated
Market - Highly Regulated
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Solar power usage can help reduce the carbon footprint of national electricity grid. Currently, electricity supply is dominated by coal (41%) and hydropower (44%), while solar is at 6% and growing. (1)
Electricity costs in Cambodia should be at par with other countries in the region. Although, due to a number of challenges including, limited sources of power, a limited network connection, lack of financial support and energy loss, electricity costs in Cambodia are the highest.(9)
Environmentally responsible methods of energy generation can be promoted by deployment of floating solar system can have multiple effects by helping shield the reservoir from wind and the direct hot midday sun leading to a reduction in water loss through evaporation, contributing to water conservation efforts.(6)
Electricity generation through solar can help reduce the pressure on the national grid which is prone to load shedding, power cuts and instability, affecting processes requiring constant power supply (increasing dependence on diesel generators) and productivity.
Gender & Marginalisation
Gaps in energy supply often act as a barrier to productive investments in rural and semi-urban areas. Distributed renewable energy and cleantech solutions can effectively bridge such energy gaps in an environment-friendly way.
Cambodia has immense amount of untapped sunlight which can be used to generate energy. 1 of every 5 households in rural areas remains off-grid, and does not have access to power provided by utilities, and are unable to access reliable and affordable electricity. (1)
Low-cost energy solutions can benefit MSMEs and other local businesses in rural and semi-urban regions. Only ~13% or 287,000 households of rural households use solar as a source of electricity. (1)
Expected Development Outcome
Contribute to sustainability efforts by substituting a portion of electricity consumption with solar PV, thereby reducing operating costs (associated with electricity charges) in the long-term. (6)
Promote environmentally and socially responsible operations by adopting solar to meet energy requirements whilst at the same time reduce our CO2 emissions.(6)
Support Cambodia to switch focus from hydropower generation and non-renewable resources such as oil, natural gas and coal to green energy. Floating solar can support with dry-season electricity production during the times when hydropower production is down due to low water levels. (1)
Gender & Marginalisation
Provide employment opportunities by engaging local communities, including women, in the operations of on-grid and off-grid solar rooftop projects across all regions, thereby ensuring inclusiveness.
Assist in sustainable economic development across all regions by providing customers with reliable, high quality solar electric systems at a reasonable price with excellent customer and technical services.(10) Currently electricity prices are higher in rural areas.(1)
Improve integration of renewable energies into Cambodia's national grid. Current provisions which favour an increase in import of fuel oil as part of the energy mix, worsen GHG emissions. 1 of every 5 households in rural areas remains off-grid, lacks access to power provided by utilities.(1)
Improved electricity can also help women with care-work at home and children with their educational pursuits.
Primary SDGs addressed
7.2.1 Renewable energy share in the total final energy consumption
2375.4 Mtoe in 2015 (11)
5066.2 Mtoe in 2030 (11)
11.6.2 Annual mean levels of fine particulate matter (e.g. PM2.5 and PM10) in cities (population weighted)
4.0 % in 2015 (11)
10% in 2030 (11)
13.2.2 Total greenhouse gas emissions per year
Percentage of greenhouse gas emission through reduced activities when comparing to the projection of usual gas emission 3.5% in 2015.
Percentage of greenhouse gas emission through reduced activities when comparing to the projection of usual gas emission 18% in 2026 (11)
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
High capital costs of solar installation or challenges in accessing financing may limit the realization of large installations and minimize its impact at scale.
Lack of adequate safeguards in the growing solar energy industry can lead to hazardous exposure to a variety of risks, such as arc flashes, electric shocks, falls, and thermal burn hazards, that can cause injury and death of workers.
Lack of commensurate efforts made by the government to extend its national grid, and to build transmission and distribution lines has hampered the growth of the sector and may lead to slower impact than what is required. (1)
While the potential for rooftop solar installations is immense, factors such as lack of building ownership and unsuitable roof structures can limit the ability to install solar.
Gender inequality and/or marginalization risk: If solar power turns expensive and increases electricity tariff, it'll limit power access for poor communities. ~10% grid-connected households currently can't afford electricity tariff.(1)
Impact Risks
Lack of recycling lines for batteries might cause harm to the environment if batteries are thrown in landfills. Improper disposal of solar cells may also lead to environmental degradation.
If RGC does not secure purchasing agreements with solar power investors, operate transparent investment bidding to attract investors, and invest in upgrading energy infrastructure and battery storage, desired scale and depth of impact to communities and environment will be affected.(1)
Inadequate energy storage infrastructure will render this IOA unsuccessful. However, solar plants can be corroborated with hydropower or gas engines, to maintain grid reliability and stability.(1)
Gender inequality and/or marginalization risk: Without provision of financials support, working capital of MSMEs will be stretched with additional costs of maintenance of solar panel installations thereby limiting uptake and adoption of such technologies.
Impact Classification
What
Offer cost-effective energy solutions and improve enterprise and individual productivity, as well as increase the share of renewable energy resources in electricity generation.
Who
Underserved; Commercial and industrial users benefit from savings in energy costs generated from installation of solar PV systems.
Risk
Current regulations don't favor solar power including a gap in stating standards of operations that should include the recycling process of solar panels that can otherwise be environmentally hazardous
Contribution
As of 2018, Cleantech generated >600 GWh of clean electricity per annum and reducing carbon emissions by ~500,000 tons per year. (5)
How Much
Installed solar capacity increased from 2.2MW in 2010 to 208.5MW in 2020.(1) Required power generation is >2000MW annually.(7) In 2021, 8.4% of total households benefit from off- / micro-grid solar.(1)
Impact Thesis
Increase solar power's share in Cambodia's energy portfolio; improve access to power and contribute to energy security while reducing CO2 emissions.
Enabling Environment
Policy Environment
Program for the Development of Rural Electrification of Electricité Du Cambodge (EDC) through Department of Rural Electrification Fund 2020 provides an overview of the fund programmes for transferring the benefits resulting from the development of electricity to the population in rural areas. (4)
Energy Efficiency and Conservation Master Plan of Cambodia, set up in 2020 and with a roadmap until 2025.
Cambodia Basic Energy Plan: aims to set numerical targets for each energy issue covered by the plan, and the targets that should be achievable. (12) National Energy Efficiency Policy 2021-2030: aims to create a favorable environment for increasing investment opportunities in energy efficiency (3)
National Strategic Plan on Green Growth 2013-2030: sets the guidelines for long-term sustainable energy development. (13)
Power Development Plan 2021-2040 (PDP) [to be published]: shall set the roadmap for the power sector up to 2040. (14) 2050 Carbon Neutral Long-term Strategy emphasizes on the role of solar, hydro, biomass and other renewables.
Financial Environment
Investment Law: Under article 24, green energy technology contributing to climate change adaptation and mitigation is entitled to investment incentives described under article 26 such as income tax exemption for 3 to 9 years, prepayment tax exemption and minimum tax exemption.
Investment Law: Under article 27, besides the basic incentives above, QIP will receive additional incentives such as VAT exemption for the purchase of locally made inputs, deduction of 150 % from tax base for activities such as research development and innovation.
Regulatory Environment
Regulation On General Conditions for connecting Solar PV Generation sources to the Electricity Supply System of National Grid or to the Electrical System of a Consumer connected to the Electricity Supply System of National Grid, issued in 2018 (15)
Prakas No. 0040: on implementation of the plan to reduce the price of electricity for consumers and plan to reform the payment of electricity for consumers. (16)
Marketplace Participants
Private Sector
Corporates / Operators: Cleantech Solar, Khmer Solar, GreenYellow, Kamworks Solar Ltd., Solar Green Energy (Cambodia) Co.,Ltd., Okra Solar Investors: Climate Fund Managers (CFM), Opes Impact Fund
Government
Ministry of Mines and Energy, Ministry of Environment, Electricité du Cambodge, Electricity Authority of Cambodia
Multilaterals
United Nations Development Programme, Gesellschaft für Internationale Zusammenarbeit (GIZ) , Garment Manufacturer Association of Cambodia, Asian Development Bank, French Development Agency
Non-Profit
Energy Lab, Solar Energy Association Cambodia, Picosol, Yejj Training Cambodia, This Life Cambodia
Public-Private Partnership
National Solar Park Project, Aoral Eco-City
Target Locations
References
- (1) Hean, S. (2021). Cambodia's Mismatch of Solar Potentials and Energy Harvesting. https://earthjournalism.net/stories/cambodias-mismatch-of-solar-potential-and-energy-harvesting
- (2) Kamworks. (2022). About Kamworks. https://www.crunchbase.com/organization/kamwork
- (3) Ministry of Mines and Energy of Cambodia. (2020). https://think-asia.org/bitstream/handle/11540/12326/Energy-Efficiency-and-Conservation-Master-Plan-of-Cambodia.pdf?sequence=1
- (4) Electricite Du Combodge. (2018). Program for the Development of Rural Electrification of Electricite Du Cambodge (EDC) through Department of REF 2018. https://policy.asiapacificenergy.org/node/4112
- (5) Bajaj, S. (2018). Cleantech Solar Raises $50 Million from Climate Fund Managers. https://mercomindia.com/cleantech-solar-50-million-funding-cfm/
- (6) Clean Tech Solar. (2016). Cleantech Solar commissions Chip Mong Insee Cement Corporation’s 9.8 MW on-site solar PV system. Cleantech Solar commissions Chip Mong Insee Cement Corporation’s 9.8 MW on-site solar PV system. https://cleantechsolar.com/chip-mong-insee-cement-solar-project/
- (7) Chea, V. (2021). Japan to Invest in Cambodia's Renewable Energy Sector. https://www.khmertimeskh.com/50996623/japan-to-invest-in-cambodias-renewable-energy-sector/
- (8) Suntrace. (2017). Solar Market Brief: Cambodia. https://www.suntrace.de/app/uploads/sites/5/2019/09/Market_Brief_Cambodia-1.pdf
- (9) Global Petrol Price. (2022). Cambodia Electricity Prices. https://www.globalpetrolprices.com/Cambodia/electricity_prices/
- (10) Khmer Solar. (2018). Cambodia's First Solar Company. http://www.khmersolar.com/
- (11) Royal Government of Cambodia. (2018). Cambodian Sustainable Development Goals (CSDGs) Framework (2016-2030). https://data.opendevelopmentmekong.net/dataset/3aacd312-3b1e-429c-ac1e-33b90949607d/resource/d340c835-e705-40a4-8fb3-66f957670072/download/csdg_framework_2016-2030_english_last_final-1.pdf
- (12) Economic Research Institute for ASEAN and East Asia. (2019). https://policy.asiapacificenergy.org/node/4106
- (13) Royal Government of Cambodia. (2013). National Strategic Plan on Green Growth 2013-2030. https://www.greengrowthknowledge.org/national-documents/cambodia-national-strategic-plan-green-growth-2013-2030#:~:text=National%20Strategic%20Plan%20on%20Green%20Growth%202013%2D2030%20has%20been,incentives%2C%20such%20as%20green%20tax%2C
- (14) Heng, P. & Boyle, M. (2021). Energy. Cambodia 2040. https://www.kas.de/documents/264850/9494350/Chapter+7.pdf/35a3c3c4-616f-a476-ecce-ce1c14aafc40?version=1.0&t=1593966386624
- (15) Electricity Authority of Cambodia. (2018). Regulation on General Conditions for Connecting Solar PV Generation Sources. https://policy.thinkbluedata.com/node/3294
- (16) Open Development Cambodia. (2020). Prakas No. 0040 on implementation of the Plan to Reduce the Price of Electricity for Consumers and Plan to Reform the Payment of Electricity for Consumers. https://data.opendevelopmentcambodia.net/en/laws_record/prakas-no-0040-on-implementation-of-the-plan-to-reduce-the-price-of-electricity-for-consumers-and-p