Constrained by factors such as a weak industrial foundation, low urbanization, a clear wet and dry climate, and insufficient energy extraction, Cambodia's power generation and grid system still cannot meet the increased demand for electricity driven by rapid economic growth. In view of the fact that Cambodia still has the potential for oil extraction and the relatively abundant solar energy resources have not yet been optimally utilized, there is a certain amount of construction space and development potential in the fields of thermal power and solar energy. However, considering that Cambodia’s population is small, its important pillar industries, textiles and clothing, are affected by the epidemic, and its follow-up development is uncertain, as well as the fact that China has achieved a wide range of deployments in the fields of hydropower and thermal power in Cambodia, it is recommended that thermal power He hydropower development takes a wait-and-see attitude, and at the same time pays close attention to the process of the introduction of Cambodian government policy guidelines and regulatory trends in solar energy development. In addition, in view of the current shortcomings in the construction of power transmission and transformation terminals in Cambodia, the lack of power transmission efficiency due to grid laying defects, and the construction of power transmission and transformation is of great significance to the development of the power industry, it is recommended that investors consider investing in upstream and downstream power transmission projects.

Cambodia's electricity market in the post-epidemic era

Benefiting from the assistance of the World Bank and other international financial organizations and the attraction of investment and construction from other countries, Cambodia has launched a number of hydropower and thermal power projects in recent years. Currently, Cambodia is currently presenting electricity with hydropower and thermal power as the mainstay, supplemented by non-aqueous renewable energy such as photovoltaics and biomass. energy structure. According to data released by the Cambodian Electricity Regulatory Authority, as of the end of 2019, the total installed electricity capacity in Cambodia was 2.8GW, which has increased by more than 10 times in the past 15 years. Among them, the main power source type in Cambodia is hydropower, with an installed capacity of 1.3GW, which is concentrated in the western and northeastern regions; the installed capacity of coal power is 675MW, the installed capacity of fuel oil is 227MW, and the installed capacity of biomass and other types of power sources is 524MW. At present, Cambodia's electricity supply is insufficient, and it still needs to import a large amount of electricity. In 2019, Cambodia's electricity imports from Thailand, Vietnam, and Laos accounted for about 25%.

Cambodia is rich in water resources and has good basic conditions for hydroelectric power generation, and the current utilization is less than 20%, which still has a certain potential for utilization. However, hydroelectric power generation is limited by the distinct dry and wet climate, and there are seasonal local power surpluses and local shortages. In 2006, the Cambodian government identified about 60 sites for hydropower plants with development potential in the country, with a total hydropower reserve of about 10 GW. At present, this utilization only accounts for 13% of the total reserves, and still has great development potential. In recent years, the power generation of hydropower dams has increased significantly; in 2010, Cambodia’s hydropower generation was only 0.05 TWh, but in 2019 it has increased by nearly 80 times, reaching 4 TWh. However, the current major dilemma for hydropower in Cambodia is that the maximum power generation is limited to the rainy season. In the dry season, the power generation can only reach 25%. Cambodia currently has a certain potential in fuel oil extraction and relatively rich reserves, but there is still a dilemma in environmental protection. Exploration and research in recent years have shown that Cambodia may be rich in oil resources, but if Cambodia vigorously develops thermal power, it will have a negative impact on the environment and increase the destructive power of drought.

Constrained by multiple factors, Cambodia's non-aqueous renewable energy has not yet been optimally utilized. Despite the accelerated approval of solar projects in the near future, it is expected that during the power shortage period, Cambodia will mainly develop water and thermal power to make up for the power gap. Non-aqueous renewable energy such as solar energy will not develop rapidly in the short term. Although Cambodia is rich in non-aqueous renewable energy, due to the high upfront costs and the country’s lack of clear targets for renewable energy and other barriers, Cambodia’s non-aqueous renewable energy has not actually been optimally utilized. From 2012 to 2020, Cambodia has only two solar pilot projects, both of which are operated in the form of joint ventures. On December 23, 2019, the National Assembly of Cambodia unanimously approved four solar power projects with a total installed capacity of 140MW, highlighting the government's intention to develop solar power generation.

In terms of power grids, Cambodia has not yet formed a complete and complete power grid. Although Cambodia has begun construction of 230kV and 500kV lines in recent years, there are still problems such as small transmission and transformation grid capacity and lagging grid system planning. At the same time, due to the low degree of urbanization in Cambodia, the insufficient laying of rural power grids, and the relatively backward infrastructure, even if the power supply capacity increases, there will still be a situation of local wealth in cities and shortage in rural areas. The current backward construction of Cambodia's power grid is one of the reasons why the power generation capacity of its power generation projects has not reached the installed capacity.

The impact of the epidemic on Cambodia's electricity demand

The spread of the new crown epidemic has caused Cambodia's economic growth to shrink in 2020. It also has a short-term impact on Cambodia's electricity demand, unexpectedly breaking the original upward trend of demand. After the outbreak of the epidemic, the Cambodian government provided factories and enterprises with preferential measures on electricity charges for a period of 5 months[1], which in turn formed a certain buffer on electricity costs. However, due to the epidemic’s impact on Cambodia’s tourism industry and a large number of domestic factories, Cambodia will be affected in 2020. Electricity demand is significantly lower than in previous years.

With the support of garment exports, construction and tourism, Cambodia still has good economic growth potential in the post-epidemic period, and future electricity demand will continue to increase along with the advancement of infrastructure construction. Due to the lack of electricity facilities or backward facilities in Cambodia’s rural areas, with the exception of the capital Phnom Penh, the actual electricity supply is still mainly limited to large cities and major provincial cities, and the rural electricity consumption rate is low. Although Cambodia's economy will decline significantly in 2020 due to the impact of the new crown epidemic, the Cambodian government is actively supporting infrastructure construction and vigorously attracting foreign investment in order to promote economic recovery. Relevant statistics [2] show that from January to September 2020, Cambodia has approved about 136 investment projects, and Cambodia has now completed free trade agreement negotiations with China, and is also gradually advancing with South Korea, India, Mongolia, and Japan. And other free trade agreements in many countries. From this, it can be expected that after the global epidemic eases, with the support of China's Belt and Road Initiative, as the Cambodian economy recovers, Cambodia's electricity demand will resume its original upward trend.

Analysis on the Potential of Medium and Long Term Investment in Cambodian Electricity Market

Driven by the rapid development of Cambodia's economy, Cambodia's electricity demand will continue to grow by 2030. According to the report of Cambodia's power development plan, Cambodia's power demand will reach 11.8 TWh, 15.0 TWh and 19.7 TWh in 2020, 2025 and 2030, respectively. In view of the fact that this plan was released by the government in 2016, combined with Cambodia's rapid economic growth in recent years and the rapid rise in power demand, the future growth rate of power demand may be higher than the 16-year forecast.

According to the Cambodian power development plan, there is still room for development of thermal power and hydropower in Cambodia. The Cambodian power development plan shows that by 2030, the planned total installed capacity of power sources in Cambodia is expected to reach 4.7GW, of which the planned hydropower installed capacity is expected to increase to 1.6GW, concentrated in the northern and western regions of Cambodia; the planned thermal power installed capacity is expected to increase To 2.6GW, mainly concentrated in southern Cambodia; the installed capacity of non-aqueous renewable power sources, including solar and wind energy, is expected to increase to 490MW. From the perspective of the projects to be built listed in the plan, the single installed capacity of thermal power projects is around 200-350MW; the single installed capacity of hydropower projects varies greatly, including 36MW small hydropower projects, and several installed capacity of 600MW. Hydropower projects, among which there are several large-scale water and thermal power projects that have not yet been selected as cooperative companies.

Cambodia is rich in solar energy resources, but its market development is still subject to government policy guidelines and regulatory constraints; as far as solar power development is concerned, there is still a lack of interest signals for investors. About 134,500 square kilometers of land in Cambodia are suitable for the development of solar energy, with an average solar radiation of 5 kWh/m2/day. According to the 2016 Mekong Strategic Partnership Report, Cambodia's solar photovoltaic potential is 700MW, which can be installed on 1,400 hectares of land. Recently, thanks to the oversupply of solar panels in China, which led to the decline in panel prices, the cost of solar power generation has been reduced. However, given that Cambodia does not currently set a clear renewable energy target, there are still uncertainties in its future development. Only the explicit introduction of policies including feed-in tariffs, reduction of import taxes on renewable energy equipment, financing support, and simplified licensing procedures can constitute a clear signal that benefits investors.

Cambodia's foreign investment policy after the epidemic

China-Cambodia relations are one of the most important bilateral relations between China and ASEAN countries. Cambodia and China have close ties in many aspects, and the process of China's economic recovery will also affect Cambodia's development. First, China is Cambodia’s largest foreign investor. In 2019, China’s direct investment in Cambodia accounted for 43% of its total foreign direct investment; secondly, bilateral trade exchanges between the two countries are frequent. In 2019, China’s exports to Cambodia accounted for about Cambodia’s total imports. However, since the global pandemic of the new crown epidemic, travel restrictions on Chinese tourists and the decline in global tourist flow have seriously affected the income of Cambodia’s tourism industry. However, in the current prevailing environment of unilateralism and trade protectionism, 2020 will be “extremely fast” The concluded China-Cambodia free trade agreement may further benefit Chinese companies' investment in Cambodia.

Investment advice and risk warning

At present, Cambodia has certain construction space and development potential in non-aqueous renewable energy power generation such as thermal power and solar energy. However, the Cambodian population base is small and the textile and clothing industry, which is an important pillar industry in Cambodia, has been greatly affected by the epidemic and will continue to develop. There is uncertainty. At the same time, considering that Chinese investment has already achieved extensive deployment in the fields of hydropower and thermal power in Cambodia, it is recommended that investors take a wait-and-see attitude towards the development of subsequent large-scale projects and pay close attention to Cambodia’s developments in solar energy development. In addition, considering the current shortcomings in the construction of power transmission and transformation terminals in Cambodia, it is recommended that investors consider participating in supporting upstream and downstream power transmission and transformation projects. With the successive implementation of power projects approved by the Cambodian government, the installed capacity will continue to grow, and the dependence on the power grid will increase. The gradual improvement of infrastructure construction will further stimulate power demand and increase the return on power grid investment. rate.

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First, Chinese companies need to pay close attention to Cambodian political risks. The dissolution of the key opposition party and Prime Minister Hun Sen’s long-term leadership of the Cambodian political situation may affect the internal checks and balances of the Cambodian political system, while the outside world's doubts about the Cambodian political system may affect Cambodia's preferential trade access and foreign direct investment inflows, thereby weakening Cambodia's economic growth; secondly, We need to be alert to the risks of natural disasters. The results of a study involving the seasonal changes in physical water volume of countries along the Belt and Road show that Cambodia is one of the countries with the most frequent changes in total water resources in a year (seasonal). The past dry seasons have indeed led to a decline in Cambodia’s agricultural output and long-term weakness in income. Therefore, it is necessary to reduce the risk of natural disasters in Cambodia through the reuse of production wastewater and other emission reduction measures in advance; in addition, it is necessary to be alert to the power of "NGOs" in Cambodia. Numerous NGO organizations that currently exist in Cambodia can go deep into Cambodia's policy formulation and specific project development, and many of them are NGOs led by Western countries. Because Cambodia is not perfect in terms of environmental laws and regulations, it is easy to cause disputes due to environmental issues. Editor/Xu Shengpeng