Cambodia Issues Environmental Code And Guidelines Benefiting Rooftop Solar Projects

• Published date: 11 July 2023
• Subject Matter: Environment, Energy and Natural Resources, Energy Law, Environmental Law, Oil, Gas & Electricity, Renewables
• Law Firm: Tilleke & Gibbins
• Author: Mr David Mol

Cambodia has the potential to be one of the top countries in the world for generating renewable energy through solar, based on the average amount of sunlight hours available per day and the consistent sunshine throughout the year.

The Cambodian government has recognized this potential and has made major updates to its energy policies in recent years. Solar power is now taking over a much larger portion of the total energy mix in Cambodia, especially as a number of utility-scale solar power plants have come online in recent years.

The long-term Power Development Master Plan 2022-2040 sets out the long-term energy policy for Cambodia and requires a bigger role for renewables. The use of solar power will play a key role in this aim to increase the role of renewables, with the plan foreseeing almost 30% of all national power generated through solar technologies by 2040.

Two of the latest legislative and regulatory steps by the government are the Ministry of Mines and Energy's guidelines for rooftop solar systems, and most recently the long-awaited Environment and Natural Resources Code, which was enacted on June 29, 2023.

Rooftop Solar Projects

Many companies, from small startups to multinationals, are exploring the potential for rooftop solar in Cambodia. However, despite the favorable natural factors, the regulatory framework was not always clear or friendly to rooftop solar, hampering investment.

This started slowly changing with the adoption of the first solar energy regulation in 2018, which provided the country's first official guidance on both solar power plants and rooftop solar. It provided some much-needed clarity, but the 2018 solar energy regulation'and especially the subsequent electricity tariff schemes'often kept rooftop projects from being financially viable.

Many players in the industry voiced their doubts about the regulations and tariffs, focusing especially on the capacity charge'a monthly electricity charge based on the total capacity of the rooftop solar project, not on consumption. Another point of contention was capacity restrictions, which limit projects in scale and therefore in profitability.

The restrictions and the capacity charge made rooftop solar much less competitive when compared to other energy sources. In many cases, rooftop solar would make the price of electricity even more expensive than purchasing it from the national grid without having rooftop solar. These factors put a serious damper on investment into rooftop solar...