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Could China’s coal call clean Cambodia?

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Project developers have demonstrated that solar and wind can make electricity cheaper than burning coal, oil, gas and often hydro. PIXABAY

Could China’s coal call clean Cambodia?

China stunned the world on Wednesday with its announcement to stop building coal plants in other countries. “China will not build new coal-fired power projects abroad … and will step up support for other developing countries in developing green and low-carbon energy,” President Xi Jinping told assembled world leaders at the UN in New York.

China has supported coal developments around the world, including in Cambodia where most coal power plants have Chinese involvement. So, this announcement leads us to the question: Can Cambodia cope without any new coal? The simple answer is ‘Yes’.

Cambodia already has coal power plants operating and under construction, and certainly doesn’t need any new ones. In 2020, 47 per cent of Cambodia's domestically produced power was supplied by 675MW of coal plants. In the next couple of years, that capacity is expected to more than double to around 1,500MW. This is from two new coal power plants financed and under construction in Preah Sihanouk and Odor Meanchey provinces. Although the largest project (CIIDG 700MW) is financed 50 per cent from ICBC with Chinese partner Huadian, it is not likely to be affected by China's announcement because it's well under construction.

Yet the Chinese announcement may impact coal projects that have not closed finance and started construction -- this includes the 700MW coal project in Koh Kong province and the deal with Laos to import 2,400MW of coal power and the powerlines through Prey Veng province.

The plans for coal in Cambodia can easily, and more quickly, be replaced by solar, wind and storage. In any case, the sevenfold increase of coal power plans announced after the 2019 power shortages was far more than was needed, and now that electricity demand growth has dropped due to Covid-19 (from 20 per cent to just six per cent in 2020) much of that unbuilt coal projects would lead to oversupply. Since the power shortages, Cambodia has relied on increased power import from Laos hydro. In fact, in 2020, the increase in solar power output was higher than the increase in coal output.

Luckily, 1,880MW of solar and wind is already approved in the government’s current Power Plan. And here, inevitability, a few questions arise about using solar and wind -- isn't it more expensive, isn't it unreliable, can we power Cambodia on it?

Let's start with the last one first - stability and reliability. Yes, solar and wind power is variable depending on the weather, but these plants are reliable and output is predictable with monitoring technology. Storage is necessary. But more importantly, solar and wind isn’t intended to replace existing energy sources. The coal, hydro, and oil already in the system will remain, but replacing the unbuilt planned coal with solar, wind and storage will offer far more affordable and sustainable energy needs for the Kingdom.

Electricity systems and cost modelling provides evidence for policy makers for this. Modelling already given to the Ministry of Mines and Energy shows that switching from 1,800MW of coal with 1,880MW of solar and wind, with storage and balancing investment, can achieve a stable and reliable grid.

What is more, replacing this unbuilt coal power with solar, wind and storage would actually lower electricity system costs for Cambodia. It is still cheaper, even after the extra costs of storage and balancing investment are included. Simply because buying electricity from solar and wind plants is already so much cheaper for public utility Electricite du Cambodge (EDC) than buying it from plants powered by coal, gas and even hydro.

It’s also faster to build, and can be built incrementally. Coal power is slow to build, contract and finance, as Vietnam is experiencing already. In contrast, solar plants are fast to contract, finance and build -- Cambodia has tripled its solar capacity since 2018. If the Blue Circle Wind power project had finalised its power purchase agreement when it was approved by the Council of Ministers in May 2019, it would already be operating and producing power by now.

It is also less risky. The Power Plan to 2030 would mean 75 per cent of power is dependent on imports -- of power, coal, oil and gas. Increasing renewable energy means better energy security and independence.

Speaking of risk - have you seen the price of coal lately? Coal, oil and gas have always been highly volatile – ranging from $60 to $150/tonne in the last 15 years. Right now it's $185/tonne, last month it was less than $150. Cambodia takes this hit as the price for coal power is linked to the coal import price -- when global coal prices are high, EDC pays more for coal power. To put it in context, 2016 was a period of low global coal prices, the year EDCs average cost to buy electricity was 9.5c/kWh. Now, EDC can buy solar for less than half that, with prices for solar and wind between 3.88c/kWh to 6.8c/kWh.

So while coal prices are volatile, the price of solar and the price of battery storage has continued to drop significantly over the same period. There are no changes to coal plant technology that makes it cheaper, only extra costs added to make it cleaner (not clean, that is impossible) such as carbon capture or ultra-super critical plants, none of which are specified for projects in Cambodia.

Perhaps we should be thankful of President Xi’s recent announcement, before Cambodia locked into 20 year agreements of oversupply of coal power. Cambodia instead has the opportunity to prioritise the more prudent choice of home-grown powered electricity. It means more investment, green jobs, better energy security and improving balance of trade. Cambodia can take advantage of the Covid-19 economic stimulus solar and wind investment can bring.

As the world prepares for Global Leaders Climate Summit next month at COP26, Cambodia brings a climate ‘commitment’ to reduce renewable electricity supply from 45 per cent today to 25 per cent by 2030. Wouldn’t it look a whole lot better if in fact Cambodia shared a commitment to build no more coal with a target for renewable energy. Given it’s a better economic choice and the unbuilt coal power is unlikely to happen anyway, it could truly be a win-win-win solution.

Bridget McIntosh is country director of EnergyLab in Cambodia – an organisation established to support the growth of the clean energy market in Cambodia. For more information, visit cleanenergycambodia.org

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