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ADB-Supported Solar Project in Cambodia Achieves Lowest-Ever Tariff in ASEAN

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The auction for 60 megawatts (MW) of solar photovoltaic (PV) capacity conducted by Electricite du Cambodge (EDC), Cambodia’s national electricity utility, has led to the lowest bid of 3.877 cents (US dollar) per kilowatt hour by Prime Road Alternative Company Limited. The project, supported by the Asian Development Bank (ADB), drew 26 bidders, including several global companies, and has achieved the lowest power purchase tariff for a solar project so far recorded in Southeast Asia.

The 60 MW project is part of a 100 MW National Solar Park and is structured as a public–private partnership. EDC is providing the land and transmission access, while the private sector  will provide power generation capacity based on a long-term power purchase agreement with EDC. ADB served as the transaction advisor for the project, through the Office of Public–Private Partnerships, while also providing a sovereign loan blended with climate finance funds to finance the transmission line and substation for the solar park. The project preparation work was carried out by ADB with the support of the governments of Canada and Singapore.

“The record low prices show the power of competition. This is a new era for renewable energy development in Cambodia and the region, and particularly for solar power generation. This is good news for EDC and the people of Cambodia,” said the Director of ADB’s Office of Public–Private Partnerships Mr. Siddharta Shah. “We believe more governments in the region will adopt auction as a strategy to procure renewable energy generation capacity, and this structure and tariff will serve as a benchmark for future projects.”

“Expanding solar generation is aligned with the country’s goal of increasing access to affordable and reliable sources of electricity,” said ADB Principal Climate Change Specialist Mr. Pradeep Tharakan. “ADB, as a trusted development partner of the government, is working toward the long-term development of the energy sector in the country.”

ADB’s other ongoing support to the country’s energy sector includes financing for the expansion and strengthening of the national grid; the development of a comprehensive power development plan through 2040; and the piloting of innovative technologies, including energy storage systems.

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Urgent Action Needed for the Energy Transition in Heating and Cooling

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The transition to cleaner, more sustainable heating and cooling solutions can attract investment, create millions of new jobs and help to drive a durable economic recovery in the wake of the global COVID-19 crisis, says a new study by leading energy organisations.

The joint report by the International Renewable Energy Agency (IRENA), the International Energy Agency (IEA) and the Renewable Energy Network for the 21st Century (REN21), highlights the benefits, identifies investment barriers, as well as the policies to drive faster uptake of renewable heating and cooling worldwide. Renewable Energy Policies in a Time of Transition: Heating and Cooling describes five possible transformation pathways, encompassing renewables-based electrification, renewable gases, sustainable biomass, and direct uses of solar thermal and geothermal heat.

“Energy efficient heating and cooling based on renewable sources has emerged as an urgent priority for countries striving to meet climate commitments under the Paris Agreement and to build resilient, sustainable economies,” said IRENA Director-General, Francesco La Camera.

“The transition to cleaner, more efficient and sustainable heating and cooling solutions can attract investments, create millions of new jobs and help to drive a durable economic recovery in the wake of the global COVID-19 crisis. It will make much needed heating and cooling services available to everyone, including to remote islands and least-developed countries of Africa and Asia.”

Heating and cooling demand accounts for around half of global final energy consumption, mostly for industrial processes, followed by residential and agricultural applications. Most of this energy now comes either from fossil fuels or inefficient, unsustainable uses of biomass. Heating and cooling, consequently, is a major source of air pollution and accounts for over 40 per cent of global energy-related carbon dioxide (CO2) emissions. At the same time, around 2.8 billion people currently rely on wood fuel, charcoal, animal dung and other inefficient and polluting fuels for cooking.

The demand for heating and cooling is set to keep growing. Cooling demand has already tripled globally since 1990, and as climate change increases the number and severity of heat waves, so does the urgency for supplying air conditioning and refrigeration to billions of people.

Policy makers have so far given limited attention to the heating and cooling transition. By the end of 2019, only 49 countries – mostly within the European Union – had national targets for renewable heating and cooling, in contrast with 166 having targets for renewable power generation. To decarbonise the energy used for heating and cooling, aggressive and comprehensive policy packages that phase out the use of fossil fuels and prioritise renewable energy and efficiency are even more urgent amid the COVID-19 pandemic, which has cut demand for renewables-based heating and cooling services, including in households and small businesses. The health and economic crisis has also worsened conditions for energy access in many developing countries.

Transitioning to renewable sources will help to increase access to clean, affordable and reliable heating and cooling services, even on remote islands and in some of the least-developed countries of Africa and Asia. At the same time, renewable heating and cooling can create new jobs, stimulate local economies, and improve people’s livelihoods, while strengthening countries’ energy security and independence, the report notes.

Read the full report

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Securing Africa’s Energy Future in the Wake of Covid-19

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African ministers from countries making up 70% of Africa’s total primary energy supply, nearly 70% of its GDP and more than half of the continent’s entire population met with global energy leaders via videoconference on 24 November 2020.

A revitalised energy sector is key to Africa’s economic transformation. Participants agreed on the urgent need to enhance actions to ensure sustainable economic recovery and significantly scale up energy investments in Africa over the next three years in the wake of Covid-19.

Discussions highlighted implementation priorities and innovations key to enabling Africa’s energy sector to power regional economic growth over the three-year period (2020-2023) that coincides with end of the first 10-year Action Plan of the AU Agenda 2063. Africa’s pace of progress towards the realisation of the transformative Agenda 2063 continental vision will be determined by the degree to which it successfully recovers from the evolving impacts of the 2020 global health and socioeconomic crisis. African countries must engage in robust, innovative actions to strengthen energy security, scale up infrastructure investment, and promote the growth of the green economy, making use of all available opportunities to continually accelerate Africa’s clean energy transitions. These interventions can be bolstered by enhanced rates of internal trade in Africa, including in the energy sector, through a speedy implementation of the African Continental Free Trade Area.

Ensuring Sustainable Recovery – Participants noted that achievement of full access to modern energy by 2030 is achievable but will require stable, consistent policies and strong political will. They stressed the need for all global stakeholders to maintain focus on collective action, and also update plans to step up the pace of universal access to electricity and modern cooking in Africa. African governments and other partners must continue to work together to ensure progress towards achievement of SDG7. It was acknowledged that the momentum behind existing policy and investment plans was insufficient to meet the modern energy needs of Africa’s population. It was noted with concern that the initial Covid-19 crisis impact in 2020 had already severely affected recent progress on universal energy access.

Financing and Investment – Participants underscored that Africa is facing major challenges in obtaining the required finance and new investments to meet its immense structural transformation needs. Challenges include reduced financing flows, a lack of fiscal space, a slowdown in new investments in the energy sector and significant increases in the cost of borrowing. Oil and gas producers in Africa have been hit very hard throughout 2020, and many new ones have seen their hope for energy sector transformation dashed by the global economic slowdown this year. Local currencies have weakened against hard currencies and this is translating to higher debt burden. The already weak financial position of many African power utilities has been worsened by declining demand due to the pandemic and a high default rate. This situation is further exacerbated by weakened currencies.

Key conclusions – Participants stressed the following top recommendations going forward:

Partnership for a green and just transition is an essential priority to boost sustainable economic recovery in Africa and ensure progress towards universal access to clean energy, whilst ensuring that no one is left behind. In that context, the need to involve more women and youth throughout the value chain of energy projects was also emphasised.

Support for energy sector institutions and particularly power utilities, which are the fulcrum of the sector, is critical against the financial shocks imposed by the Covid-19 pandemic. Predictable policy environments with innovative market regulations help to attract new investment.

An integrated approach embracing grid, mini-grid and off-grid solutions is required to sustain the momentum for increasing access. In light of the Covid-19 crisis, supportive policies to ensure the sustainability of mini-grid providers need to be replicated across the continent.

Despite the challenges imposed by Covid-19, governments must avoid the temptation to slow down the pace of energy access and provide the right incentives for the private sector to play a part in the recovery process, leveraging on the productive sector and innovative business models and digitalisation.

Enhanced multilateral, regional and international cooperation can play an important role in addressing financing and investmentchallenges in the post Covid-19 era.

Stronger regional integration of electricity markets and infrastructure is a crucial factor in achieving a just energy transition as well as building secure, flexible and reliable power supply in Africa.

The African Continental Free Trade Area (AfCFTA) opens the door to a new era of increased interconnectedness. Continental energy infrastructure programs like PIDA should play significant role to support AfCFTA.

A strong focus on improving power infrastructure, within and across borders, building up regulation and capacity to support Africa’s power pools and further enable regional electricity markets could all play an instrumental role in improving the financing and investment climate on the continent.

AUC, IEA and partners should consider forming a Taskforce on climate financing solutions for the African energy community that could present its recommendations at the COP 26 in 2021.

The outcomes of this Ministerial Forum will be shared with African Union and IEA member state leaders, as well as the leaders of international financial institutions and other global decision-makers, business leaders and key stakeholders. In addition, these outcomes will help guide future activities linked to enhancing the strong AUC-IEA partnership and inform the IEA’s continued deepening of its engagement with key decision-makers from governments, the private sector, investors and other leading regional institutions across the continent. 

As the co-chairs of this event, we would like to thank all participants for their active engagement and constructive contributions.

Signed,

  • Amani Abou-Zeid, Commissioner for Infrastructure and Energy, African Union
  • Fatih Birol, Executive Director, IEA
  • Gwede Mantashe, Minister of Mineral Resources and Energy, South Africa 

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IRENA and Pacific Community Announce Joint Efforts to Boost Recovery

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The International Renewable Energy Agency (IRENA) and the Pacific Community (SPC) will work together to support Pacific island countries transition their energy systems to renewable energy sources as part of a drive support the post-pandemic recovery.

With around 64 per cent of Pacific island residents living without access to reliable energy, and much of the region reliant on expensive and volatile fossil fuel imports, IRENA and SPC will renew their joint focus on reducing energy costs and improving energy security by increasing access to renewables. The partnership will also seek to deliver the broad socioeconomic benefits of the energy transformation for Pacific island communities.

Strengthening policy frameworks, attracting energy transformation investments and supporting project development aimed at driving this shift are of particular focus. IRENA has prioritised energy diversification efforts on Small Island Developing States (SIDS) as part of its UN Climate Action Summit commitment and its SIDS Lighthouses intiative has been recognised by the UN as an important catalyst for SIDS development.

“Pacific Islands are battling the adverse impacts of two major threats to stability and prosperity; the COVID-19 Pandemic and a warming planet,” said IRENA Director-General Francesco La Camera. “We can take meaningful action to address both of these threats if our efforts are coordinated, collaborative, and far-sighted. Central to efforts must be the prioritisation of a decarbonised and decentralised energy system. By working together we can make a sustainable future a reality for the Pacific Islands.”

Pacific economies have been significantly impacted by the pandemic, resulting job loss in the tourism and aviation sectors – primary contributors to regional gross domestic product.

“Through this partnership we are demonstrating our common commitment to supporting low cost, reliable and sustainable energy systems throughout the region,” said SPC’s Director-General Dr Stuart Minchin. “Renewable energy and energy efficiency initiatives will stimulate economic growth, create jobs, and contribute to a brighter future for all Pacific people.”

Recognising renewable energy’s ability to stimulate economic growth, cut energy costs and create local employment, IRENA and SPC have determined three transformative pathways that can catalyse the transition towards a more resilient, renewables-based energy system.

The first pathway will focus on creating effective national and regional energy policies, plans, legislation, and regulations. IRENA and SPC are already working closely with Pacific Island countries to develop renewable energy guidelines, enhance Nationally Determined Contributions (NDCs), and provide implementation support. SPC in collaboration with PRIF and other partners are currently developing the Framework for Energy Security and Resilience in the Pacific (FESRIP) 2021-2030, of which the Pacific SIDS has set a vision of 100 per cent renewable electricity.

SPC and IRENA will also work together to support the development and implementation of renewable energy and energy efficiency projects that have been severely impacted by the COVID-19 pandemic, such as tourism, agriculture-food production, and fisheries. This second transformative pathway will support game-changing renewable energy and energy efficiency projects that create jobs, substitute imported fuels, and add value. Examples include e-mobility and solar PV projects.

The third area of cooperation between the two organisations will focus on attracting investments to the Pacific SIDS. IRENA’s calculations estimate that the Pacific will need to invest approximately USD 5.9 billion in driving this transition through installing an additional 1.8 GW to meet NDC targets. This will be supported through sustainable financing between project developed and investors to drive these priorities throughout this agreement.

SPC will host a dedicated IRENA-Pacific focal point to facilitate implementation of the collaboration.

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