Green Energy

EuroCham Pushes for Switch to Solar and Zero Capacity Charges

The European Chamber of Commerce in Cambodia (EuroCham) is calling on the government to go beyond its renewable energy strategies and shift to solar energy to boost the economy and increase investment opportunities
Workers clean solar panels at a factory in Kampot in 2021. Kiripost/stringer
Workers clean solar panels at a factory in Kampot in 2021. Kiripost/stringer

Cambodia sits at a crossroads when it comes to renewable energy development and is being urged to switch strategy and position itself as a leader in green business if it is to remain competitive in the region.

In a paper released to the media on Friday, EuroCham suggested Cambodia allow solar power infrastructure to be developed in industrial compounds and factories to attract investments and maintain business competitiveness with other countries, especially Vietnam and Thailand.

The paper added that this would enable Cambodian industry to better integrate into fast, modern, and sustainable regional supply chains.

“Cambodia is at a crossroads,” stated the paper, which was supported by international brands including Adidas and H&M.

“Cambodia seems to be taking a different path and risks staying behind development in the regional markets. Thailand too positions itself as a greening manufacturing hub in the region,” it added.

Enabling rooftop solar not only supports the direct beneficiaries to manufacturers, the garment sector, and export companies but also contributes to the creation of new, future-proof industrial sectors in sustainable energy, starting with solar technology, the paper said.

Rooftop solar also contributes to the development of high-skilled jobs and know-how in the industry. It also reduces power infrastructure, grid, and other related costs, the paper added.

This can translate into a cumulative GDP gain, support new companies and service providers to launch in the sector, and contribute to state revenues, the EuroCham paper said. It added that investment in solar panels and peripheral production are attractive to both the local market and exports.

A solar push within industry also contributes to boosting Cambodia’s reputation as a modern, progressive investment destination and subsequently, a premier tourism hub, the paper said.

EuroCham Chairman, Tassilo Brinzer, said that full endorsement of rooftop solar by the government would be a huge step towards modernizing Cambodia’s manufacturing base, green the image of the country, and to become more competitive while better integrating itself into the regional economy.

“It would boost Cambodia as an investment destination, as investment in renewable energy (RE) can be supported as a Qualified Investment Project within the new investment law and thus attract manufactures who have clean energy targets to fulfill,” Brinzer said.

The country's current energy mix stands at 51 percent renewable. RE share is expected to fall to 35 percent by 2030, before climbing back to 43 percent by 2040 overall, EuroCham said, adding this represents an 8.1 percent decrease in RE use during the next two decades.

Rogier van Mansvelt, vice chairman of EuroCham’s green Business Committee, said most garment factories are pressured by buyers to install solar. However, the current tariffs take 50 percent of the solar benefit away, increasing the payback time from about four to eight years.

“If Cambodia wants to stay attractive for garment investors, it should create supportive solar rooftop regulations and tariffs,” van Mansvelt said.

The current situation of the fossil fuel commodity market might push Cambodia towards a series of energy security risks and a tough financial trade balance, the paper said, adding energy demand will likely rapidly increase until 2040.

“Cambodia stands at a crossroads and must choose a path for how to supply and cater reliably to this demand,” the paper said.

Victor Jona, undersecretary of state at the Ministry of Mines and Energy, on Monday referred questions about this topic to other press officials.

Heng Kunleang, a spokesman at the ministry, didn’t immediately reply to Kiripost’s request for comment on Monday.