Cambodia energy sector

By Thomas Chaumont, Romain Joya and Silvia Pergetti August, 2013;
updated by Neeraj Joshi February, 2014;
updated by Silvia Pergetti October, 2014

Access to energy, as an inherent factor of growth, is intertwined with development. Scaling up the availability of affordable and efficient energy services is key to attain Cambodia’s development targets.

In 2012, Cambodia energy consumption amounted at 4.7 Mtoe, mainly attributed to the residential sector: domestic cooking represents 34% of the final energy demand, and household-scale businesses might account for another relevant portion of it. As of now, the industrial and transport sectors represent minor energy consumers, but they are both projected to grow exponentially in the coming years.

In order to meet the demand of Cambodian users, in 2012 Cambodia imported or extracted 5.5 Mtoe of primary energy sources. In particular, the strong need for biomass puts pressure on natural and forest resources.

Cambodia’s total energy consumption is projected to grow in the next decades. Current policies at national and international level aim at addressing energy poverty and creating preconditions for growth. In particular, hopes of policy-makers are set on hydropower. Given its importance, biomass energy remains at the core of policy-making efforts in Cambodia.

Energy access and development

While access to energy does not figure as one of the eight Millennium Development Goals (MDGs), energy access is very important to the achievement of each of these goals. More broadly, it is today widely accepted that access to clean, adequate, affordable and sustained energy services has a multiplier effect on both economic and social growth.

As an inherent factor of growth, energy is strongly interrelated with development. On the one side, a minimum level of development and means to develop infrastructure and legal framework are required to provide universal access to energy. On the other, access to energy is central to improved social and economic well-being and to most industrial and commercial wealth generation [1]. While enhancing the productivity of income-generating activities, access to energy eventually contributes to eradication of poverty and diversification of income sources. More efficient fuels and appliances also reduce the share of income allocated on cooking and lighting, allowing families to increase their spending on food, education, and health services [2].

Nowadays, inequalities in energy access remain glaring: over a quarter of the world’s population lacks access to electricity, while some 3 billion people spend disproportionate amounts of time and resources on traditional biomass for basic energy services, mainly in rural areas of Africa and Asia. Low-income households in Cambodia, for instance, devote 9.2% of their expenditures to energy, energy being the second larger item after food, and representing as much as housing, water, health, ICT and education combined [3].

Conversely, due to better access to energy and technology, high-income households pay lower unit costs for the same energy services, thus exacerbating the gap between rich and poor and fortifying the energy poverty trap [4]. Addressing those inequalities is at the heart of the development challenge.

The ongoing trend of diminishing reserves and rising prices of conventional fuels, however, suggests that a sustainable development cannot rely on conventional energy systems [4]. Addressing energy poverty by scaling up the availability of affordable and more efficient energy services is thus a key to improve social equity and sustainably achieve Cambodia’s development targets.

Energy demand

In 2012, in Cambodia final energy consumption amounted at 4.7 Mtoe (138,625 TJ) [5], to be attributed to five types of users.

Residential sector

By contributing to more than 60% of final energy demand, the residential sector is still the main energy consumer in Cambodia.

Energy is needed for basic energy services such as cooking, lighting, powering home appliances and running formal or informal household-scale businesses (food processing, handcrafting, etc.).

Woodfuels like firewood and charcoal are the main energy forms used by Cambodian households, in both rural and urban areas. The higher cost per energy service of conventional fuel (LPG, for instance) is one of the reasons behind this preference, along with issues on access 4).

Industry

Over the past few years, the industrial sector has become one of Cambodia’s most demanding energy consumers, with 0.9Mtoe (28,516 TJ) being consumed in 2012, or 20.6% of total energy demand [5]. Apparel and textiles, cement and brick making, construction, mining, rice milling, rubber and forest products processing are among Cambodia’s main industrial activities [7].

Transport

Energy is also consumed by transport sector to allow mobility of both goods and persons, exclusively in the form of conventional fuels (LPG and petroleum products). Mobility represents 15% of the final consumption [5], and its share is expected to increase even more as the number of vehicles and transportation services for commercial purposes is soaring [11].

Energy demand for domestic cooking

47,000 TJ are used yearly by Cambodian families for domestic cooking, mainly delivered by wood fuels, with domestic cooking representing 34% of the final energy demand for Cambodia [21]. However, due to the poor efficiency of charcoal processing and cooking technologies, only 12,800 TJ of useful energy(5) are provided compared with a primary energy 6 time greater [21].

The last national census [6] indicates that firewood and charcoal are the main cooking fuels for, respectively, 84% and 7% Cambodian households, while kerosene and electricity accounts for less than 1% of the energy used for cooking. The share of firewood goes up to 94% in rural areas and drops to 35% in urban areas. On the other hand, the share of charcoal in urban areas reaches 26%. In Phnom Penh, where average income is higher and direct access to biomass resources limited, more than half of the households use LPG as main cooking fuel.

The following table provides an overview of what just said and shows the relative change of importance of different cooking fuels since the previous national census (held in 2004).

Is biomass the energy source of the poor?
Wood fuels are often considered the energy source for the poor, to be gradually replaced by LPG. This goes along with concept of energy ladder: households progressively reduce the use of wood biomass as they become wealthier [22] (pp. 116 123).

GERES analysis shows that the share of households using charcoal as a primary fuel does not decrease with increased wealth. This fact is also observed in Phnom Penh, where LPG is most widely available [21], and is in line with observations made in other developing countries [23]. This confirms the modern vision of the energy ladder [23] (pp. 2083 2103), predicting that instead of switching from wood to charcoal, and then from charcoal to LPG or electricity, income impacts the number of fuels used by the household.

Charcoal importance remains unchanged, and no significant reduction in charcoal use should be expected in the short and medium term in the Cambodian domestic cooking energy mix.

Energy supply

In order to meet the demand of Cambodian users, in 2012 Cambodia imported or extracted 5.5 Mtoe (160,664 TJ) [5] of primary energy sources, equivalent to 0.36 toe/capita, the 2nd lowest figure in Southeast Asia after Myanmar. This figure, however, does not imply an efficient use of energy. In fact, in terms of energy intensity 6), in Cambodia 0.57 toe of energy is used to generate 1,000USD of GDP [5].

Biomass

Solid biomass plays an extremely important role for Cambodia to meet its energy needs: the share of biomass in the national primary energy mix amounts at 71%, the highest in the Southeast Asia region. In other words, Cambodia is able to cover 71% of its energy needs with Cambodian-made energy.

Fossil fuels

In a second instance, imported fossil fuels account for more than one fourth of the total mix, and imports are steadily increasing [7], with serious implication on national energy security. Exploitation of offshore fossil fuels reserves recently discovered in national territory seems inevitable, if and when commercial viability is confirmed and border disputes are solved.

Hydropower

Hydropower currently contributes to a minor share of Cambodian primary energy mix; however, this might change in the near future as a result of the ambitious expansion plans at both national and regional level.

How sustainable is biomass as renewable energy source ?

Given the current mix, biomass energy remains the major energy source for Cambodia. The strong need for biomass puts pressure on natural and forest resources, accelerating the process of forest degradation. However, it has to be pointed out that depletion of forest resources occurs not only as a consequence of high demand per se but as a result of a biomass value chain not sustainably managed.

Biomass energy encompasses a broad range of primary energy sources and types of energy generation. In Cambodia, biomass is mainly extracted from wood and agricultural residues. Biomass can be considered renewable as far as its source is able to replenish without increasing pressure on other sources: renewability of woody biomass, for instance, implies that harvested resources can be fully replaced through regrowth. Thus, for carbon stock not to be depleted, harvested amount should not be higher than the biomass annual increment.
In the case of woody biomass, the fraction of non-renewable biomass (fNRB) indicator illustrates the renewability of biomass as it quantifies the share of non-renewable woody biomass in the total biomass consumption for a certain area 7). fNRB for Cambodia is estimated by UNFCCC at 77%: in other words, out of 1kg of extracted wood, 770g are coming from non-renewable resources [12].

Interestingly, for the same useful energy produced, the amount of carbon dioxide (CO2) released when burning biomass can be higher than when burning the equivalent of coal, oil or gas. Yet, fossil fuels contain carbon sequestered thousands of years ago; when burned, their carbon stock cannot be replenished. On the contrary, carbon dioxide emitted when burning biomass can potentially be reabsorbed by newly grown forest resources.

Biomass, however, is not necessarily a carbon-neutral fuel source as extraction, processing and transportation of biomass inevitably have an impact on the environment; on one side, time is needed for the forest to regenerate and CO2 to be absorbed; on the other, removing biomass from the delicately balanced ecosystem of a forest can directly affect biodiversity. Therefore, sustainable forest management practices and conservation measures should be designed to ensure sustainability of biomass as a renewable source.

Cambodia electricity sector

Due to insufficient supply, high prices and limited grid extension, electricity in Cambodia remains one minor energy carrier. In 2013 only 34% of Cambodian households have access to electricity [13]. Rural electrification is far from being achieved, and energy services are mainly delivered through different carriers: in rural areas households rely on the use of fuel-based engines or generators to produce electricity and on batteries to store it, while biomass rather than electricity is used for many industrial processes.

In 2012, the total electricity fed into the grid amounts at 3,527 GWh (12,697 TJ); considering 10% power transmission and distribution losses, during the same year end consumers are sold electricity for 3,266 GWh, 27% more electricity than the previous year [14]. As demand increases, there is a need for investment in power capacity and power transmission and distribution infrastructure, which is though occurring at slow pace. With current supply, reliability remains a concern, and blackouts are routinely reported, especially in Phnom Penh municipality.

Electricity supply

The major sources of power generation within the country are diesel oil and heavy fuel oil, covering up to 24.3% of the total electricity supply to Cambodia in 2012. As grid coverage is still limited, Cambodian people heavily depend on fuel-based generators to produce electricity.

On the rise the power generation through hydro, reaching 517.37 GWh in 2012. Hydropower plants like Kirirom III (18MW), operational since 2012, and the older Kamchay (193.2 MW), add to an installed capacity that amounted at 225MW at the end of 2012 (16 times the capacity in 2010). Very limited role is played by biomass and coal, with insignificant changes over recent years. However, the first coal-fired plant in Sihanoukville is expected to be operational in early 2013.

In 2012, imports from neighboring countries (Vietnam and Thailand mainly) are contributing to 59.7% of the total electricity supply. Comparison with data from 2006 is striking, as at that time import was only 3.8% of the total electricity supply to Cambodia [15]. Despite the population growth, a speeding-up urbanization process and ongoing consolidation of industrial sector, imports might remain stable in the coming years, mainly due to the expansion of hydropower generation capacity.

It may be interesting to note that two captive power plants have been installed to supply power directly to two big industries, setting a trend that might become relevant for industries in Cambodia in the coming years.

Electricity infrastructure

Despite the considerable progress made in recent years, Cambodia’s electricity infrastructure stays vastly fragmented, and only in 4 provinces (namely Phnom Penh, Kandal, Kampot and Takeo) are more than 90% of the villages provided electricity services.

Electricity is supplied to Cambodian households through centralized grid systems, mini-grid systems or isolated systems. Grid systems represent a suitable option for urban and semi-urban areas. In Cambodia, there are seven grid systems, one of them being the national grid. The national grid stretches over almost 65% of the consumers with access to electricity. Remaining consumers are served through mini-grid systems or isolated systems. In semi-urban areas, mini grids represent the most viable alternative, mainly diesel-fueled. Even though only 0.7% of total electricity is sold through isolated systems, mainly in rural areas, consumers being served through these systems make up almost 9% of total electricity users: in other words, these consumers are offered a low-quality service [14].

Given the lack of an integrated high-voltage transmission system, different licensees operate in a semi-monopolistic market structure. As a result, Cambodia’s electricity tariffs are among the most expensive in Southeast Asia, ranging from 0.09-0.23USD/kWh in Phnom Penh to up 1USD/kWh in the provinces and rural areas. The fact that 61% of the electricity generated by licensees in Cambodia is attached to the cost of diesel oil and heavy fuel oil offers another explanation for the high electricity tariffs [14].

Market-driven energy trends

With growth and urbanization, Cambodia’s total energy consumption is projected to grow at an average annual rate of 5.2% for the period 2009 to 2035 [16]. The industrial sector is expected to have the highest growth followed by residential and commercial sectors.

Use of biomass energy

The most blatant trend to be observed is an increase in the use of biomass and, in the second instance, LPG.

As incomes increase, households are progressively switching to LPG: this is the case of Phnom Penh residents, who are able to afford a price per unit of energy generated through LPG higher than the one, for instance, produced through charcoal 8). As the charcoal sector remains informal and producers are not organized, and as long as availability of wood can satisfy demand, prices for charcoal and biomass in general are not expected to increase much. As a result, the share of Cambodian families living in secondary urban centers using charcoal is expanding, while the remaining part of the population, especially in rural areas, still relies on firewood. The described trends imply significant pressure on forest resources.

Use of fossil fuels

Cambodia’s reliance on imported fossil fuels is also likely to increase, driven to a large extent by demand for automotive fuels, as well as by unreliable power supply. The fairly high proportion of imported fossil fuels, today lying around 26% of national energy supply, threatens energy security: using baseline figures from the Institute of Electrical Engineers of Japan, the Asian Development Bank predicted that Cambodia’s energy self-sufficiency would experience a decrease of 20% from 2010 to 2035 [16].

Policy-driven energy trends

Despite the considerable advancements in the electricity sector, with an average of 20% more electricity being sold to final consumers every year since 2002, electricity does and will represent a minor energy carrier for Cambodians in the next decade.

However, efforts of policy-makers and international development partners are mainly focusing on expansion of power capacity and grid systems at national and regional level. Those efforts, mainly intended to provide extended and improved access to electricity and to regulate energy tariffs through a better integrated transmission system, might accelerate the development of this particular energy sector.

Policies at national level

The Royal Government of Cambodia (RGC) recognizes that the high cost of electricity and the inadequate supply significantly limit economic growth and hinders the country from attracting investments and stimulating economic activities. Substantial public and private investment in electricity generation are currently underway.

Granting universal access to electricity of any type by 2020 and giving access to grid-quality electricity for 70% of Cambodian households by 2030 are two main goals of the Electrification Development Program.

Potential of hydropower and other renewable energy sources

In particular, policy-makers emphasize the hydropower potential. Within the 2009-2013 National Strategic Development Plan (NSDP), RGC identifies the exploitation of Cambodia’s coal reserves and hydropower potential as the main answer to a deficient electricity supply, despite the acknowledged lack of good hydrological data.

The Energy Sector Development Plan (ESDP) stresses the importance of hydroelectricity. According to the Ministry of Mines and Energy (MIME), hydropower generation capacity can be scaled up to 10GW. Today, 2% of this potential is used; by 2015 this figure could rise up to 10%, with four new dams currently under construction. After the discovery of a coal deposit, three coal-fired power plants have also been announced.

According to many observers, it is unlikely that Cambodia will be able to meet its energy needs either through coal-fired or hydro generating capacity [7]. As for the latter, notwithstanding the ambitious plans of expanding hydropower generating capacity in the Greater Mekong Sub-region, it is arguable whether this will become the major source of power generation in the long term: besides environmental concerns, hydroelectricity is not fully reliable and subject to seasonal variations 9).

Given current status of grid network, it is improbable that Cambodia will be able to tap renewable energy markets other than traditional biomass. The amount of investment needed to improve the transmission infrastructure for this purpose would leave limited resources for the RGC to set up a feed-in tariff scheme or a green certificates program. In March 2013, the Council of Ministers adopted a policy and strategic plan on green growth [17].

Policies at regional level

RGC is not the only actor exploring solutions to expand Cambodian electricity sector. ASEAN member countries, for instance, and donors, within the framework of the Economic Community, have made great efforts to ensure the connection of national power systems, especially among the Great Mekong Sub-region countries.

Connection of transmission lines between Thailand, Vietnam, Laos and Cambodia have been constructed and are operating to some extent. Increase of co-operation to connect electricity transmission lines and natural gas pipelines is much discussed today, as it is considered by many policy-makers a very important step to make the 10-country ASEAN bloc move forward to a single market by 2015 and to boost overall energy security of the region.

However, many reckon that regionalization is no silver bullet to the issue of energy security: embracing new regulations and prices might erode the market power of the supplier. First and foremost, ASEAN countries are facing a shortage in their own power grids, this remaining the main challenge to face for the years to come. Given the mutating scenario, policy-making efforts to position Cambodian competitive advantage in the region, to diversify national energy mix and to secure national energy security are required to respond to arising opportunities and threats.

Perspectives on Biomass energy

From a low-carbon development perspective, biomass energy is a key to address both Cambodian energy security and energy access for households and household-scale industries, provided that sustainability is ensured. The crucial role to be played by biomass sector in the near future has been acknowledged by the inter-ministerial Cambodia National Wood Energy Working Group (CNWEWG) during the Consultation Workshop on Cambodia Wood and Biomass Energy Strategy, in November 2012.

In 2012, a Cambodia Wood and Biomass Energy Strategy and Plan was drafted by the MIME. The strategy underlines that major contribution of biomass energy to overall energy mix is not likely to change by 2030 and calls for a full-fledged sector strategy initiative. Securing a sustainable supply system of biomass energy can contribute to energy security and represents a long-term development driver for Cambodia.

 

See also
IEA Unit Converter

Links and resources
[1] See, among others: Hystra, 2009. Access to energy for the base of the pyramid. – Modi, V. McDade, S. Lallement, D. Saghir, J. 2005. Energy services for the Millennium Development Goals. UNDP.
[2] IAEA, 2005. Energy indicators for sustainable development: guidelines and methodologies.
[3] Hammond, A.L., Kramer, W.J., Katz, R.S., Tran, J.T. and Walker, C., 2007. The next 4 billion. Market size and business strategy at the base of the pyramid. IFC, WRI.
[4] The Graduate Institute, Geneva, 2011. Dossier “Energy and Development” in International Development Policy Review.
[5] IEA, 2012. Energy balance and renewable energy data for Cambodia. accessed online the 30th of September 2014
[6] NIS, 2008. CAMBODIA General Population Census 2008. CELADE – Population Division, ECLAC, National Institute of Statistics, Cambodia. accessed online the 24th of July 2013
[7] Ellis, K., Keane, J., Lemma, A. and Pichdara, L., 2013. Low carbon competitiveness. Cambodia Policy Brief (draft). ODI.
[8] MOC, 2011. GDP growth and sectoral growth. accessed online the 5th of February 2014
[9] IMF, 2013. World Economic Outlook. Transitions and tensions.
[10] GDI-MIME, 2010. The strategic framework of the General Department of Industry.
[11] ADB, 2011. Cambodia: Transport Sector Assessment, Strategy, and Road Map.
[12] UNFCCC, 2014. Information note. Default value of fraction of non-renewable biomass for Cambodia. in Report of the fourthy-three meeting of the small-scale working group, Annex 04.
[13] IEA, 2013. South East Asia Energy Outlook.
[14] EAC, 2013. Report on power sector of the Kingdom of Cambodia.
[15] EAC, 2007. Report on power sector of the Kingdom of Cambodia.
[16] ADB, 2013. Asian Development Outlook 2013. Asia’s energy challenge.
[17] Royal Government of Cambodia, 2013. National strategic plan on green growth 2013-2030 and National policy on green growth. in GEREStheque: CL-0156, CL-0157.
[18] Bargawi, O., 2005. Cambodia’s garment industry. Origins and future prospects. ESAU Working Paper no. 13. ODI.
[19] Schnitzer, H., 2013. Reduce green house gas emission through improving energy efficiency in industrial sector in Cambodia. UNIDO.
[20] ILO-IFC, 2009. Energy Performance in the Cambodia Garment Sector. A benchmarking survey.
[21] Joya, R. et al., 2014. FloWood Factsheet. Domestic cooking patterns in Cambodia. GERES.
[22] Leach, G., 1992. The energy transition in Energy policy 20/2.
[23] Barnes, D.F., Krutilla, K., Hyde, W.F., 2010. The urban household energy transition. Social and environmental impacts in the developing world. Routledge.
[24] Masera, O.R., Saatkamp, B.D., Kammen, D.M., 2000. From linear fuel switching to multiple cooking strategies. A critique and alternative to the energy ladder model in World development 28/12.
All references can be found on the server.
1) New stakeholder consultations are making up for this ‘oversight’. As a result, the Sustainable Development Goals will represent the post-2015 response to the expiration of the MDGs.
2) A factor whose value is determined by factors or variables inside the causal system under study, i.e. in this case development.
3) Liquefied Petroleum Gas.
4) E.g. the limited access to electricity.
5) Basically, that portion of heat that is usefully converted in boiling water and hot food.
6) An indicator of how efficiently energy is used to produce economic value, calculated as units of energy per unit of GDP.
7) If the stock of biomass can replenish at a faster or equal pace than exploited, biomass is considered renewable, and fNRB is equal to 0%. In the opposite case, a fNRB higher than 0% is indicative of the decreasing carbon stock.
8) According to GERES calculation, the price per unit of energy generated is 260KHR/MJ for LPG compared with 100KHR/MJ for charcoal. Assumptions: calorific values of LPG and charcoal equal respectively 41.6 and 29.5 MJ/kg; efficiency rates of LPG and charcoal amount respectively at 55% and 35%; LPG costs 5,900KHR/kg, whereas charcoal costs 1,000KHR/kg. Please contact Iwan Baskoro for more information.
9) For instance, 2011 saw hydropower installed capacity increasing from 13MW up to 207MW; however, though soaring from 3.7% to more than 36% of the total installed power capacity in Cambodia, the output generated in 2011 by hydropower plants is only slightly bigger than the one of 2010, and no more than 5% of the total electricity supplied.

 

1) New stakeholder consultations are making up for this ‘oversight’. As a result, the Sustainable Development Goals will represent the post-2015 response to the expiration of the MDGs.
2) A factor whose value is determined by factors or variables inside the causal system under study, i.e. in this case development.
3) Liquefied Petroleum Gas.
4) E.g. the limited access to electricity.
5) Basically, that portion of heat that is usefully converted in boiling water and hot food.
6) An indicator of how efficiently energy is used to produce economic value, calculated as units of energy per unit of GDP.
7) If the stock of biomass can replenish at a faster or equal pace than exploited, biomass is considered renewable, and fNRB is equal to 0%. In the opposite case, a fNRB higher than 0% is indicative of the decreasing carbon stock.
8) According to GERES calculation, the price per unit of energy generated is 260KHR/MJ for LPG compared with 100KHR/MJ for charcoal. Assumptions: calorific values of LPG and charcoal equal respectively 41.6 and 29.5 MJ/kg; efficiency rates of LPG and charcoal amount respectively at 55% and 35%; LPG costs 5,900KHR/kg, whereas charcoal costs 1,000KHR/kg. Please contact Iwan Baskoro for more information.
9) For instance, 2011 saw hydropower installed capacity increasing from 13MW up to 207MW; however, though soaring from 3.7% to more than 36% of the total installed power capacity in Cambodia, the output generated in 2011 by hydropower plants is only slightly bigger than the one of 2010, and no more than 5% of the total electricity supplied.