Distributed PV in Cambodia is about to explode!
Date:
2024-08-23 17:24
Cambodia's distributed PV market is experiencing explosive growth, which is not only an effective way to solve the problem of high electricity prices and unstable power supply in the country, but also brings lucrative return opportunities for investors.
Market Status and Prospects
Electricity prices in Cambodia are among the highest in Southeast Asian countries, at around US$0.148/kWh for commercial electricity and slightly lower, but still around US$0.12/kWh, for industrial electricity. Due to the unstable power supply, enterprises often have to rely on high-cost diesel power generation, which further pushes up the cost of electricity. As a result, photovoltaic power generation has become an ideal choice for enterprises due to its cost advantage and power supply stability.
With a large number of Chinese manufacturing companies entering Phnom Penh and its surrounding areas, the distributed PV market user base is expanding rapidly. Especially in the factory-intensive areas of Phnom Penh and the large parks in Sihanoukville Port, there is a huge potential for the development of PV projects.
Not only the commercial and industrial market, but also household PV has shown significant growth. Cambodian residents' electricity prices are on par with commercial, but with a monthly income of only 200-300 USD, electricity costs account for a large proportion of expenses. Photovoltaic systems can effectively reduce electricity expenses, and thus are gradually favored by ordinary residents. In addition, the installation procedures of household PV projects are relatively simple, and the gradual implementation of policy support will further promote the development of this market.
Returns on Investment
For investors, the return prospect of the Cambodian PV market is quite attractive. Assuming an industrial and commercial PV power plant in Phnom Penh, with an annual effective power generation time of 1,500-1,600 hours, a total EPC price of $3/watt, and an electricity price of $0.9/kWh, the internal rate of return (IRR) on the full investment can be as high as about 30%. Even if the investor reduces the IRR target to 10%, the total EPC price is still expected to be maintained at around RMB 5/watt by simply lowering the sales price of electricity to RMB 0.6/kWh. This provides ample profit margins for investors and companies.
Investment Environment
The Cambodian government has strongly supported the development of new energy in recent years, and has introduced a number of policies to relax the restrictions on PV installation and allow small-scale power plants to be connected to the grid. The tax-free policy and low labor cost provide a good profit base for EPC projects. In addition, Cambodia does not have foreign exchange control and funds can circulate freely, which provides a guarantee for the safety of cross-border investors' funds.
With the gradual improvement of infrastructure, Cambodia's economic vitality will be further enhanced, especially the construction of the Dechon Phu Nam Canal, which is expected to build Cambodia into an important economic hub in Southeast Asia. This will not only enhance the country's regional competitiveness, but also bring more opportunities for the PV market.
Cambodia's distributed PV market shows great potential for development and lucrative return opportunities, both in the industrial and commercial sectors as well as in the household sector. Cambodia is undoubtedly an emerging market that deserves attention for investors seeking high returns.
Jiangsu Juncess Energy Co., Ltd
Office Add: Room 299, Floor 2, Building 1, Xinghai Building, No. 198 Xinghai Street,
Suzhou Industrial Park, Suzhou Area, China (Jiangsu) Pilot Free Trade Zone
Factory Add: No.801, Huagang Road, Wujiang District, Suzhou, Jiangsu, China