Cambodia: Coal outgrows hydropower

Cambodia: Coal outgrows hydropower

As Cambodia's demand for electricity grows and domestic energy production
increases, new data released from the Ministry of Mines and Energy yesterday
show that coal-fired energy generation surpassed hydroelectricity for the
first time last year.

According to the Cambodia National Energy Statistics 2016, a joint
publication issued by the Ministry of Mines and Energy (MME) and The
Economic Research Institute for ASEAN and East Asia (ERIA) - a regional
think tank - coal-fired power generation eclipsed hydroelectricity as the
dominant source for the Kingdom's domestic energy supply.

Fuelled by two coal-fired plants, the CIIDG Erdos Hongjun Electric Power
270-megawatt facility, which is co-owned by Cambodian People's Party Senator
Lao Meng Khin, and the neighbouring 100-megawatt plant owned by Malaysia's
Leader Universal Holdings in Preah Sihanouk province, coal produced a total
of 2,376 gigawatt hours last year. This is nearly a three-fold increase from
the 863 gigawatt hours produced in 2014.

Meanwhile, hydropower produced nearly 2,000 gigawatt hours last year, a
slight increase from 1,851 gigawatt hours in 2014. The report noted that
while the Kingdom still imported nearly 1,541 gigawatt hours of electricity
from neighbouring countries last year, the overall trend was that the
Kingdom was weaning itself off of foreign power. The Kingdom as a whole
produced 6,186 gigawatt hours in 2015.

Han Phoumin, an energy economist for the ERIA, said that while the Cambodian
government was still pursuing hydropower for core energy production, the
rise of coal was to fulfil short-term demand and to backup underperforming
hydropower plants in the future.

"Hydropower and coal will be the major sources of energy for Cambodian
electricity for now and in the future," he said. "Coal will be largely used
to cover the load demand during the dry season because hydropower
electricity production is expected to reduce due to seasonal fluctuations."

He added that coal-fired power plants are cheap and easy to build.
"Coal-fired power generation is economically feasible and is affordable and
provides stable energy supply in terms of energy security," he said.

However, with increased domestic production, he said the government needs to
focus on strengthening and expanding its national grid.

"The challenges are to speed up the national grid expansion and investment
in this sector. So the coordination of national grids and power plants are
needed to ensure that all completed power plants can transmit electricity to
final users," he said.

Kung Phoak, co-founder and president of the Cambodian Institution for
Strategic Studies (CISS), said that the government needed to do everything
it could to shore up energy security, regardless of the power source, to
keep the economy competitive.

"Electricity is one of the key factors that define the price of goods that
are produced in Cambodia," he said. "More electricity produced locally and
less dependency on imports is a great movement for the country."

He added that coal-fired plants would play a crucial role in the future and
that coal was both cheap and a reasonable option for a developing country.

However, Stephen Higgins, managing partner of investment firm Mekong
Strategic Partners, said that while coal plants can be built more quickly
than hydropower dams, the government needs to take into account the amount
of air pollution they emit.

"From an environmental perspective, does Cambodia really want its beach
destinations suffering from the pollution from coal-fired power stations?"
he asked, adding that from an economic perspective coal is struggling to
compete with the diminishing investment costs of renewable energy.

"Admittedly Cambodia is coming from a low base in terms of existing
generation assets, but it still seems a little odd that it would put so much
emphasis on coal generation," he said, adding that the government could
easily roll out an extensive solar generation strategy providing it put the
proper regulatory framework in place.

Tun Lean, undersecretary of state for the Electricity Authority of Cambodia
(EAC), previously told the Post that a third 135-megawatt unit would come
online this month at the CIIDG plant. Additionally, Kith Meng's Royal Group
submitted a feasibility study for a 500-megawatt coal-fired plant to the
government in June of this year.

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com