Private sector urges solar policy reform
THREE leading private sector representatives have called on the government to reconsider the capacity charge for rooftop solar installations, aiming to position Cambodia as a premier green investment destination in the region.
A delegation from the Textile, Apparel, Footwear and Travel Goods Association in Cambodia (TAFTAC), the European Chamber of Commerce in Cambodia (EuroCham) and the Cambodia Tourism Federation (CTF) have provided feedback on the draft regulation concerning the “Installation and Use of Rooftop Solar Photovoltaic (PV)” and the “Draft Procedures for Rooftop Solar PV Installation Service”.
The delegation was led by TAFTAC secretary-general Ken Loo, EuroCham chair Tassilo Brinzer and CTF secretary-general Nak Chanoline.
The signatories, representing a broad range of industries including garment manufacturing, tourism, solar energy, education, real estate and construction, are eager to rapidly adopt rooftop solar solutions.
They see this as a means to reduce costs, achieve sustainability goals and enhance the country’s reputation as an eco-friendly investment hub.
“The initiative is crucial for sectors employing hundreds of thousands of Cambodians, including the 850,000strong garment industry. We are delighted with the Ministry of Mines and Energy’s announcement, which exceeds our expectations with a target of 71% renewable energy by 2030,” they emphasised.
In a response letter dated January 26, Yim Viseth, chairman of the Electricity Authority of Cambodia (EAC), referenced section 6.4 of the “Principles for Permitting the Use of Rooftop Solar Power in Cambodia,” issued by the ministry.
He said the clause outlines the formula for calculating the compensation tariff.
“The formula considers the general tariff for grid supply applicable to the consumer and the cost of solar generation for the solar installation, as
determined by EAC periodically. The draft regulations state that EAC should update the cost of solar generation for different sizes of rooftop installations every six months or annually,” he explained.
Viseth clarified that the cost varies based on the size and location of the array and the tax varies with the type of consumer.
“This means the compensation tariff will differ in each case. Consumers with solar installations will pay EDC for electricity supplied from their rooftop solar at the compensation tariff rate,” he detailed, using the French acronym for the Electricity of Cambodia.
“A consumer with a solar installation must pay the compensation tariff on solar generation and the electricity charge for grid consumption at the applicable tariff, including the Time of Use [TOU] tariff. The categorisation of rooftop solar installations into small, medium and large sizes will be determined by the ministry, which we hope will be done promptly,” Viseth said.
“EAC is currently reviewing the process for calculating the Levelised Cost of Electricity [LCOE] and is examining cost data from rooftop solar installers. We will provide feedback on your queries once the issues are finalised,” he added.
TAFTAC’s Loo expressed concerns to The Post on January 31, noting that the current regulations do not favour investment in solar installations, posing significant challenges.
“Many factories are keen to install solar, but under the existing regulations, companies investing in rooftop solar see no financial benefits, as there are no energy cost savings. This means they cannot recoup their investments,” he said.
He explained that under the proposed new regulation, a consumer with a solar installation would pay both the compensation tariff on solar generation and the electricity charges for grid consumption, including the TOU tariff, meaning that the change would allow solar users to access the TOU tariff as well.
In a September 2022 report, EuroCham highlighted the issues for international manufacturers and investors targeting high-quality production and carbon neutrality.
“Capacity charges are excessively high. The penalty for solar electricity is about $0.07 per kilowatt hour [kWh] for larger systems and $0.84/ kWh for smaller ones. This undermines the intent of the solar regulation, making investments economically unattractive and nonviable,” it said.
“Full endorsement and support of rooftop solar by the government would significantly modernise the country’s manufacturing base, enhance its green image and improve competitiveness while facilitating better integration into regional economies,” said Brinzer.
“It would elevate Cambodia as an investment destination. Investments in renewable energy can be supported as a qualified investment project [QIP] within the new investment law, attracting manufacturers with clean energy targets,” he added.