Cambodia recently issued a new policy to abolish the capacity fee for rooftop photovoltaics and introduce a new calculation method for electricity bills to promote the development of solar energy. The change is in response to demands from international buyers to reduce the carbon footprint and improve electricity prices and grid stability for all consumers. The government has also introduced a quota system to facilitate the installation of rooftop PV. The specific implementation time has not been disclosed.
In the past, Cambodia has imposed strict restrictions on rooftop PV systems, limiting the capacity of solar arrays to no more than 50% of the contracted load and charging monthly capacity fees. However, according to a newly released document titled “Principles for Permitting the Use of Rooftop Solar Electricity in Cambodia”, this policy will be abolished and replaced by a new tariff system based on complex formulas.
The policy change was driven by Cambodia's apparel industry initiative to reduce the carbon footprint of goods and products, catering to international buyers. The government has emphasized that large-scale solar power generation is the best way to reduce electricity prices and reduce grid instability problems, and has introduced "rooftop solar variable energy compensation tariffs" to achieve "fairness in electricity prices for all relevant parties".
new tariff system
The new tariff system is based on a complex formula consisting of three parts. The first is to pay electricity distributors for exporting electricity from the national grid. This is followed by the equivalent grid loss price paid to the state-owned company Electricite du Cambodge (EDC). Finally, an electricity bill is calculated based on the levelized cost of electricity (LCOE) per installation.
Impact and Challenges
There are some positive aspects to this policy change. First, previous restrictions that prohibited feeding excess electricity into the grid were removed, allowing owners of rooftop PV systems to feed power into the grid. Second, the new electricity tariff system will be fairer, with billing based on actual usage, instead of a 50% cap on capacity and a capacity fee to be paid regardless of whether it is used or not. However, this policy also raises some questions and concerns. Net metering and net billing are currently not permitted in Cambodia, although the injection of rooftop PV systems into the grid is permitted. In addition, the specific cost calculation formula of the new electricity tariff system has not yet been clarified, and the private sector has expressed concerns about the actual cost that will eventually be paid.
Policy Implementation and Future Prospects
The policy document was signed and published on April 25, 2023, but its official status is currently unclear. It is understood that the policy is expected to take effect in the next few weeks, but the specific timetable for implementation has not been made public.
The document also introduces a quota system for rooftop PV installations, allocated on a first-come, first-served basis for each provincial capital and territory. However, the document does not clarify the specific amount of quotas, how to define quotas and the status of existing photovoltaic systems within the quota scheme.
Although there are still many questions to be answered, this policy change is a positive development for solar energy development in Cambodia. In April, the Cambodian government approved five renewable energy projects totaling 520 MW, including four photovoltaic projects. Cambodia also released a power development plan for 2022-2024 in December 2022, and plans to increase photovoltaic capacity to 3,155 megawatts by 2040. Cambodia has installed 456 MW of solar capacity by the end of 2022.
This policy change will bring new opportunities and challenges to Cambodia's solar industry. It is hoped that Cambodia can further promote the development of renewable energy and achieve the goals of energy sustainability and environmental protection.