On January 26, 2018, the EAC issued a set of regulations to clarify the general conditions for installing and operating solar photovoltaic (PV) systems in Cambodia. Kohe Hasan, partner at Reed Smith and director of Resource Law LLC (Singapore), and Kaknika Lin, assistant consultant at KPMG Cambodia Ltd provide a summary of the key regulations, in addition to discussing the country’s investment climate.
With approximately 5.8 hours of peak sunlight a day, Cambodia possesses one of the best solar resources in the world. Together with high electricity rates, unreliable sources of power, and skyrocketing demand for electricity, Cambodia is a very attractive market for investors in the energy sector. The successful completion last year of Cambodia’s first utility-scale solar power project in Bavey City in Svay Rieng Province, which was backed by the Asian Development Bank (ADB), provides further investment impetus.
However, the lack of clarity in Cambodia’s regulatory framework has impeded the inflow of investments in the sector. For instance, there were neither feed-in tariffs nor a net metering system, which credit those who contribute their electricity to the National Grid from their solar panels. The lack of incentives could be the reason why investors tend to look to other renewable sources of energy, such as hydropower, and overlook solar energy.