The Asian Development Bank (ADB) has approved a landmark $82.5 million loan to support Cambodia’s energy transition from coal to renewable sources. This funding is a cornerstone of the second phase of Cambodia’s Energy Transition Sector Development Program (ETSDP) and will help develop the country’s first utility-scale solar park as part of the ADB’s broader Accelerating Coal Transition (ACT) program.
ACT Program to Boost Cambodia energy transition
The ACT program is a major initiative by the ADB to assist its members in reducing their reliance on coal-fired power plants by retiring or repurposing them and accelerating the shift to clean energy. For Cambodia, this program, bolstered by the new ETSDP funding, is set to modernize the country’s power system, making it more sustainable and environmentally friendly. This second phase is a collaborative effort, co-financed by partners including the ASEAN Infrastructure Fund, the Green Climate Fund, and the UK.
Cambodia’s energy mix has traditionally been dominated by coal and hydropower, with coal-fired plants accounting for nearly a third of total installed capacity. The country is also heavily reliant on electricity imports, which make up about 15% of its energy needs.
The ADB’s financing will play a crucial role in a flagship project: decommissioning a 150-megawatt coal-fired power plant and replacing it with a 200-megawatt solar power plant. This new solar facility will be a landmark renewable energy project, marking a significant step towards diversifying the nation’s energy sources and building on the growth of the solar production industry in Cambodia.
Cambodia’s Shift to Solar Power for Cambodia energy transition
The new solar power plant will be developed by Electricite du Cambodge (EDC), the state-owned utility company, under a public-private partnership (PPP) model. This arrangement is designed to attract private-sector expertise and investment, ensuring the project is implemented efficiently. The development is part of a growing trend, with other projects like a 60-megawatt project already contributing to the grid.
The solar park will be located in Kampong Chhnang province, approximately 90 kilometers northwest of Phnom Penh. It will be connected to the national grid, providing clean energy to meet the growing demand for electricity in Cambodia. The successful implementation of large-scale projects like this relies on a sophisticated solar panel manufacturing process to supply the necessary high-quality components.
The ADB’s support extends beyond financial assistance. The bank will also provide technical expertise to ensure the successful implementation of the project. This includes guidance on project design, procurement, and contract management, as well as capacity building for EDC. The program also introduces regulatory reforms to clarify policies and establishes an Energy Efficiency Revolving Fund to help small and medium-sized enterprises adopt green technologies. This builds on previous ADB support, such as the funding for a 100-MW solar park.
Cambodia’s Renewable Energy Goals for Cambodia energy transition
This project is part of Cambodia’s broader strategy to dramatically increase its share of renewable energy. The country’s updated energy master plan now aims for a bold target of 70% renewable energy in its power mix by 2030. This initiative is a significant step up, building on progress toward enhancing solar energy capacity in the short term.
The solar park is expected to generate around 400 gigawatt-hours (GWh) of electricity annually, enough to power approximately 150,000 households. It will also help reduce Cambodia’s carbon emissions by an estimated 130,000 tons per year, supporting the country’s commitments under the Paris Agreement. A key part of this strategy also involves demand-side management, with the program introducing Cambodia’s first Minimum Energy Performance Standards (MEPS) for electrical appliances, starting with air conditioners.
The ADB’s investment in Cambodia’s energy transition is part of a broader regional effort to promote clean energy and reduce carbon emissions. The bank’s Accelerating Coal Transition program is also supporting similar projects in other Southeast Asian countries, including Indonesia, the Philippines, and Vietnam. This initiative aligns with the ADB’s Strategy 2030, which prioritizes climate change mitigation, sustainable infrastructure, and inclusive economic growth.
The ADB’s $82.5 million loan for Cambodia’s energy transition program marks a significant milestone. By combining policy reform with flagship projects like replacing a coal-fired power plant with a solar facility, Cambodia is taking a major step towards a cleaner and more sustainable energy future.
To learn more about the fundamentals of solar energy projects, consider enrolling in our Free E-Course.
