Cambodia : National Solar Park Project

Energy / Electricity transmission and distribution

The proposed National Solar Park Project will support the construction of solar photovoltaic (PV) power plants in Cambodia, and address the country's need to: (i) expand low-cost power generation, (ii) diversify the power generation mix and increase the percentage of clean energy in its generation mix in line with its stated greenhouse gas emissions reductions targets, and (iii) expand the use of competitive tenders and other global best practices in the sector. The project is the first of its kind in Cambodia, and builds on lessons learnt from the Asian Development Bank (ADB) Private Sector Operations Department's financing of a 10-megawatt (MW) solar farm at Bavet, Svay Rieng Province in 2016. The project will be included in the country operations business plan (COBP), 2018-2020 to be issued later in 2017, and the Royal Government of Cambodia (RGC) has formally requested financing for the project from ADB. The government has also requested ADB's assistance to access cofinancing for the project through a combination of concessional loan and grant resources from the Strategic Climate Fund (SCF).

The project will support the national electricity utility, EDC, to construct a solar power park near the Phnom Penh demand center (Kampong Speu and Kampong Chhnang Provinces ) and a transmission interconnection system to the nearest grid substation (GS6) selected by EDC. The Park will consist of 150-200 hectares of land, fencing, drainage, roads, and plant buildings, and will be able to accommodate at least 100 MW of PV plant capacity. The transmission interconnection system expansion will include a solar park substation with 2 transformers (one additional for redundancy), switchgear, controls, and supervisory control and data acquisition (SCADA) system compatible with the EDC's SCADA requirements; a dedicated 3,040-kilometer 115-kilovolt transmission line between the solar park and GS6; and a new bay with switchgear at GS6. Further, EDC will tender out the first solar plant to be established within the solar park to the private sector and execute a long-term power purchase agreement. The tender will be for a 3,050 MW solar PV generating plant, to include crystalline-silicon solar arrays and mounting structures, power conversion units (inverters and associated transformers), direct current and alternating current plant cabling, power controls, and SCADA. The development of the 3,050 MW plant will be financed by the private sector through private sector equity and commercial debt.

Under a transaction advisory services (TAS) agreement that has been signed between the two institutions, ADB's Office of Public-Private Partnership (OPPP) will assist EDC to design and conduct a competitive tender for procuring the first power plant (3,050 MW) that would be built by the private sector, and located within the park. As transaction advisor, ADB will perform project due diligence (including legal, technical, financial, environmental and social due diligence) and market sounding, prepare the feasibility study, assist the development of tender documents and power purchase agreements, and support the review and selection process. In this role, ADB will bring to bear its considerable experience with the development of solar parks in India.

The project will have two outputs: (i) solar park, transmission facilities and supporting infrastructure constructed; and (ii) EDC's capacity for integration of renewable energy, including advanced technologies such as energy storage, into the national grid strengthened. These outputs will result in the outcome: solar energy power generation in Cambodia increased. The project is aligned with the following impact: Cost of electricity in Cambodia lowered.

ADB's country partnership strategy (CPS) for 2014-2018, approved in November 2014, reflects the priorities set up in the Rectangular Strategy Phase III, National Development Plan, 2013-2018. The CPS, 2014-2018 identifies two strategic pillars that underpin ADB's forward-looking activities in Cambodia: (i) rural-urban-regional linkages, and (ii) human and social development. Public Sector Management acts as a facilitating cross-cutting strategic pillar. The energy sector directly supports outcomes under the first pillar, but has not been identified as a core sector in the CPS as a pipeline of energy projects, supported by other development partners, has been expected to improve supply and coverage and reduce costs, and as the CPS needs to remain selective in the scope of the strategy and selection of sectors.

Going forward, ADB, under the first strategic pillar of the CPS, 20142018 rural-urban-regional linkages, is adapting to the evolving requirements in the energy sector of Cambodia and is piloting increased access to clean energy, particularly solar power, through on-grid and off-grid applications. A transaction technical assistance (TA), Increased Access to Sustainable Energy, is scheduled for 2018 to take stock of the sector, and examine further investment opportunities in rural and renewable energy under the next CPS. ADB may also support the government to develop a comprehensive energy sector strategy, including greater use of renewable energy and energy efficiency under the transaction TA.

Building on the Bavet project, the National Solar Park Project aims to demonstrate the ability of large-scale solar parks to improve the electricity supply, while also providing technical benefits to the national grid , and substitute for planned fossil-fuel and hydropower generation in the future. This project will build appreciation for the costs, operational requirements, and actual performance of solar PV plants, which will inform further policy development, and give EDC knowledge and experience structuring a transparent, competitive procurement for private sector-led power projects and negotiating with private developers. These early projects will also build experience among grid operators on management of the variable power produced by solar PV projects. Under the regional TA, Demonstration of An Assisted Broker Model for Transfer of Low Carbon Technologies to Asia and the Pacific, a pre-feasibility study of the solar park has been prepared.

Cost of electricity in Cambodia lowered (Cambodia Industrial Development Policy, 20152025: Market Orientation and Enabling Environment for Industrial Development).

Increase in private sector investments in solar photovoltaic plants facilitated

Solar park and transmission interconnection constructed

Capacity of Electricite du Cambodge in solar power plant construction and operation, project design and supervision, grid integration, and competitive procurement strengthened

During the preparation of the feasibility study, the team will review the environmental aspect of the project and will prepare the necessary safeguards documents (EIA/IEE/EMP). The EIA/IEE and EMP will be based on the feasibility study preliminary engineering design and cover all project components, the solar park, transmission line and power plant. The EIA/IEE will address key issues identified during the pre-feasibility study, including flood and climate change risks, biodiversity conservation (in particular potential impacts on bat and bird species and critical habitats), pollution and greenhouse gas prevention and abatement, social assessment, physical cultural resources, community and occupational health and safety. More detailed recommendations on the scope of the EIA/IEE are included in the pre-feasibility study.

The EMP will identify the proposed mitigation and monitoring measures and reporting requirements for all potential impacts and risks identified in the EIA/IEE. It should include contractor specifications and costs for environmental mitigation and management and for independent environment monitoring and evaluation. The EIA/IEE will meet the requirements under the Equator Principles III and comply with the ADB Safeguard Policy Statement (2009) and the Royal Government of Cambodia Sub-decree No. 72 ANRK.BK on Environmental Impact Assessment Process (1999).

The proposed project does not have the potential to directly or indirectly affect the dignity, human rights, livelihood systems, or culture of indigenous peoples. This will be reassessed during the preparation of the feasibility study.

The project's primary stakeholders are Electricite du Cambodge (EDC), Ministry of Mines and Energy, Electricity Authority of Cambodia, Kampong Chhnang and Kampong Speu administration offices, associated districts, communes and villages within the project site and affected households (including those who agree to sell land and/or to exchange for other land or support). The EDC and Ministry of Mines and Energy defined the project through a public-private partnership concession and will ultimately select the project site. Local government officials and local households will participate in project siting through the land sale negotiation process. Other stakeholders will include private sector firms who will bid on the solar generation plants, and will potentially be selected to sell electricity to the grid and provide related services.

To ensure an accurate and participatory due diligence, and to reduce conflicts with affected people and other stakeholders, the project will employ a multi-stakeholder engagement approach involving all concerned groups through local consultations and dialogues as early as possible. Involuntary Resettlement (IR) and Indigenous Peoples (IP) due diligence and preparation of related safeguards instruments as required under ADB Safeguard Policy Statement (2009), will be conducted.