Mekong Utility Watch

Out with the old, in with the new: report calls for decentralized electricity generation in Cambodia

Probe International

October 30, 2009

The Cambodian government should shelve its plans to construct massive hydro electric dams, and instead implement and enforce policies that promote decentralized electricity generation, says a new report by Probe International and the NGO Forum on Cambodia. The report’s author, Grainne Ryder says Cambodia’s abundant biomass, hydro, solar, and natural gas resources, and an electricity sector that is already decentralized, place the country in a unique position to accelerate investment in decentralized generating technologies and move away from 20th century central planning models.

In the report, Powering 21st Century Cambodia with Decentralized Generation, Ms. Ryder argues that bringing cheaper and more reliable sources of electricity to residents is necessary to develop their economy. Currently, only 18 percent of the population is connected to an electricity grid, and rural Cambodians pay as much as 50 to 60 US cents per kilowatt-hour—some of highest electricity prices in the world.

The Cambodian government believes the best way to improve access and bring down costs of electricity is to construct a string of massive hydro dams linked to a national transmission system and increase large-scale power imports from neighboring countries. Ms. Ryder argues that there is a much better way.

“Recent technological advances have made it more economical and reliable to generate power on a much smaller scale, closer to where power is needed, using many smaller power plants and building-scale generating technologies,” she says.

She is calling for decentralized electricity generation, which typically includes renewable energy technologies and high-efficiency gas-fired power plants scaled to meet consumers’ needs on-site or within the local distribution network. But, she says, the Cambodian government has yet to consider the benefits of decentralized generation, and instead pursues more large-scale—often environmentally and socially reckless—sources of electricity.

“Cambodia is in an ideal position to develop electricity supply alternatives that are far less destructive than big dams and giant coal plants,” she says. “But vested and incumbent donor and energy industry interests have effectively narrowed Cambodia’s choices to a false choice between big dams, dirty coal, and hazardous nuclear.”

Unlike large-scale power plants that require extraordinary amounts of capital and take years to build before they can deliver a single kilowatt to consumers, decentralized generating technologies can be quickly installed and deliver electricity to consumers for cheaper and far less environmental impact.

In fact, if the Ministry of Industry, Mines and Energy follows through with its plans for 14 large hydropower dams to be in operation by 2020, it will be far more expensive than more local and decentralized sources of power. According to the report, Cambodia’s big hydro projects are expected to cost US$1500 per kW range. This is far higher than the $300 to $700 per kW cost for gas-fired combined cycle plants, which can be installed in as little as three to six months.

Further, Ms. Ryder says, many of the large hydro electric projects being pursued by the Cambodian government would not be possible without huge subsidies from international development banks and donor agencies. As a result, the Ministry of Industry, Mines and Energy—with help from the World Bank—has created a new donor-dependent bureaucracy.

Ms. Ryder suggests a few policy changes to help usher in a decentralized power system: the government should remove import duties on all decentralized generation technologies and equipment, give all power generators non-discriminatory access to local distribution grids and introduce interconnection standards that accommodate all producers, amongst others.

“Decentralized generation,” she says, “can be financed and organized by any number of local organizations and entrepreneurs in ways that create local employment, encourage investment in rural businesses, and boost farmers’ incomes.”

Ms. Ryder says the aim of this report is to start a dialogue, calling for a clear-eyed rethinking of Cambodia’s electricity future. But in order to do so, the government needs to implement a few vital regulatory policies.

“Cambodia’s electricity future ultimately requires changing the legal, regulatory and financial framework for the country’s energy sector,” she says. “I want to lay forth a very simple set of recommendations to get the dialogue going for those who believe the present approach is far too hazardous to the environment, people’s health and the economy.”

Read the full report.

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