The Asian Development Bank (ADB) has approved a sector development program that combines a $50 million policy-based loan package with $23 million in project investments to support the energy transition of Cambodia.
The Energy Transition Sector Development Program includes ADB’s first comprehensive policy reform package for the energy sector in Cambodia, which will be funded by a $40 million loan from ADB’s concessional resources and a $10 million loan from the ASEAN Infrastructure Fund under its ASEAN Catalytic Green Finance Facility (ACGF).
For the $23 million in infrastructure investments, the Climate Investment Fund’s Scaling Up Renewable Energy Program for Cambodia will provide a $6 million loan and $5 million grant in concessional climate finance, while the Green Climate Fund will extend a $12 million loan through the ACGF Green Recovery Program, all of which will be administered by ADB.
The program supports the Government of Cambodia’s energy transition agenda to mainstream renewable energy and energy efficiency while shifting away from fossil fuels. It adopts data-driven regulation and planning for the power system to enhance flexibility and resilience, and anchors new infrastructure investments on strategic planning while demonstrating new technologies and business models.
“The program combines policy reforms and project investments that will mutually support each other to maximize gains,” said ADB Unit Head for Sovereign Energy Operations (Greater Mekong Subregion) Pradeep Tharakan. “This is expected to pave the way for public and private sector investments in critical new technologies, such as energy efficiency and storage. It will also help set clean energy targets for the country, and integrate improved power development and energy use planning across sectors, including climate-proofing critical infrastructure.”
The project investments under the program will promote new technologies, including the development of the country’s first grid-connected battery energy storage system, which will enable additional renewable sources to enter the grid and improve electricity grid stability for consumers. Investments also include comprehensive city-level efficient street-lighting systems in Kampot and Kep provinces, which will demonstrate cost savings and benefits for tourism and public safety. Through the policy reforms, renewable electricity generation by 2027 is expected to increase by at least 25% from a baseline of 4,672 gigawatt-hours in 2021.
The program builds on key successes demonstrating the energy transition in action. The country’s first grid-connected solar photovoltaic system was driven by the private sector and financed by ADB in 2016. With further ADB support in 2018, the government prepared a solar master plan and launched Cambodia’s first solar park with a capacity of 100 megawatts in 2019 under a public–private partnership approach, which resulted in the lowest price for solar photovoltaic in the region at the time. Earlier this year, the government initiated the development of a 2-gigawatt solar plus storage procurement program, which is also supported by ADB.