01.30.09Grainne Ryder, Policy Director, Probe International

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In a desperate bid to attract investment in Cambodia's failing power sector, the government is offering guaranteed power revenues to Chinese companies willing to finance and build large hydro dams, and sell their entire output to the financially-strapped state utility, Electricite du Cambodge (EdC). First in line for the new guarantee was Sinohydro, the company that helped build China's Three Gorges dam and is now building dams across Africa, backed by China's state development banks. The Cambodian government approved its guarantee earlier this year, insuring payment to Sinohydro for electricity produced over its 44-year concession to build and operate the 193-MW Kamchay dam.

Then came the Chinese-owned Michelle Corporation. In October, Cambodian Prime Minister Hun Sen advised the National Assembly to ratify 'a guarantee of payment' for electricity produced over Michelle's 30-year concession, Cambodia Daily reported. In return, the company has agreed to finance, build and operate two large hydro dams with a total installed capacity of 338 MW.

In all, the Ministry of Industry, Energy and Mines has identified 14 potential hydro dam sites for development by 2018.

Prime Minister Hun Sen claims the government guarantees are necessary to "make [hydro] investors feel at ease." He also said "the government must aggressively pursue hydropower as a mechanism for growth" given the high cost of diesel and the country's rising demand for electricity.

But the strategy is controversial.

Noone disputes the country's need for cheaper electricity. About 95 percent of the country's power is supplied by diesel generators which can cost 30 to 60 US cents per kilowatt-hour, depending on the price of imported (or smuggled) diesel.

Kamchay and Michelle's two dams will more than double the country's generating capacity but at what cost to government and consumers nobody knows for certain. Some government officials insist prices will come down once Kamchay comes online in 2010. Others say there's no guarantee.

Ho Vann, one opposition politician who reviewed the Kamchay contracts, told the Phnom Penh Post last year the arrangement "is very weird because the profit goes to the company [while] the government pays [in the event of] accidents or natural damages caused by the dam."

EdC will pay Sinohydro eight US cents per kilowatt-hour for its output but the delivered cost to consumers may be more than double that once the cost of long distance transmission lines and backup power during the dry season are factored in. (The dams can only run at full capacity during the rainy season).

As for the dams' environmental liabilities, the guarantees shift responsibility onto the government, which represents a huge cost saving for the Chinese developers, effectively inflating their profits. Local residents, on the other hand, have been offered nothing in the way of guaranteed compensation in the event of a dam collapse or damage to their crops, fisheries, and water supplies. In a recent statement distributed by the Rivers Coalition of Cambodia, villagers threatened by large dams have demanded compensation but they also want electricity and other benefit-sharing arrangements, if the decision to build dams on their rivers is non-negotiable.

Scale is another issue. Ngy San of the Phnom Penh-based NGO Forum on Cambodia doubts the country's electricity demand warrants such large-scale additions of generating capacity. In most provinces, the daily electricity demand is only a couple of megawatts. Even in Phnom Penh, the current power deficit is only about 40 megawatts. This suggests that EdC could have difficulty finding enough customers for the dams' massive output, at least in the short-term.

Because EdC's service has been so unreliable over the last decade, most of the country's largest power consumers, especially hotels, have installed their own generators. The bulk of the country's power is supplied by private businesses, not EdC. In rural areas, where the vast majority of Cambodians live, hundreds of small enterprises supply power to villages using mostly second or third hand diesel generators and battery-charging stations.

According to the country's electricity regulatory authority, which is responsible for licensing private power providers, many are upgrading their distribution service to improve efficiency and lower their customers' costs. These entrepreneurs represent Cambodia's best hope for building a clean and efficient, decentralized power system – one capable of delivering appropriately-scaled power where needed and stimulating economic development. Sadly, they will probably get squelched by EdC and its backward-looking financiers, such as the World Bank and the Asian Development Bank.

Because of the risk that EdC could terminate their licenses and takeover their service territories at any moment, rural electricity enterprises and their urban counterparts have little incentive to invest in more cost effective and cleaner generation technologies (i.e., high efficiency micro turbines, biomass gasifiers, micro hydro and solar PV systems). The risk they could lose their investment is just too high. Sadly, that means Cambodian power consumers are losing out on the growing array of superior alternatives to diesel generators and big hydro dams.

The controversy over Chinese hydro concessions may be just beginning.

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Reader's Comments

Date	Comment
Ferdinand E. Banks 1.31.09	Superior to big hydro dams? Hmm. After I was expelled from engineering school for poor scholarship (i.e. I failed everything except history and english), I spent some time in the (U.S.) army, and before they decided that they too did not want to have any part of my humble self, and posted me to the infantry, I was stationed next to a hydro installation near Atsuigi, Japan. What happened was that I got my hands on a book on hydralics - probably via theft - and began to study that subject. I continued when I returned to engineering school, and took a special interest in it, because had their been a formal course in the subject at IIT (in Chicago), I can assure you that I would have been first in that class. In my humble opinion any country that has the opportunity to build hydro installations, or have them constructed by competent builders, shouldn't hesitate. I get this opinion not from sitting in any library, but knowing what dams have done for this country, Sweden. However I do agree that those renewables/alternatives that you find so interesting probably have a place in Cambodia.
peter legrove 2.3.09	Right now building large scale construction projects like dams is an option with the price of oil as low as it is but if peak oil decides to click in building dams will get more expensive. I can't comment on the situation in Cambodia as I know absolutely nothing about the place but you did mention micro turbines. During the Olympics I read something somewhere that some of the buses in Beijing were powered by micro turbines. Now if China is making micro turbines why don't they sell them across the border. I was in Guangzhou, China for the big Commodities Trade Fair last year but I couldn't find any micro turbines for sale there.
William Connerley 2.4.09	There is a U.S. company that is producing very good micro turbines, Capstone Turbine Corporation out of Chatsworth, CA. They even have a representative office in Shanghai, China.
Ashok Toshniwal 2.4.09	Personally, I feel, developing small hydro power projects of upto 10 MW or so, will be of great help, not only in Cambodia but also in other countries, because (a) Initial investment is lower, particularly due to civil works. (b) Time required to build such a project is lower. (c) Since energy generated in less therefore has to be captively consumed or distributed in a smaller geographical footprint, thereby saving in T&D network cost also. (d) Generally free from any environmental side affects, like shifting of people, submersion of fertile land etc. (e) No special design and development activity is required. Ashok Toshniwal, Bangalore, India
Len Gould 2.13.09	Three things I find interesting about this article. 1) to find Grainne of EnergyProbe, the famous fighter against the three gorges project and several hydro projects in South America, back fighting against another hydro project. What's with the obsession? Couldn't possibly be anything related to your co-worker's sideline publications promoting Natural Gas generation in Ontario, could it? 2) Characterizing the the 193-MW Kamchay" project as "such large-scale additions of generating capacity". It would very nearly qualify as micro-hydro in N America. 3) Fighting (from comfortable Toronto quarters) against a hydro project in a country where "In most provinces, the daily electricity demand is only a couple of megawatts." Whats with the obsession to keep poor Asian people dependent on a) "diesel generators which can cost 30 to 60 US cents per kilowatt-hour, depending on the price of imported (or smuggled) diesel.", esp. when due to peak oil, diesel in future can only become more costly. or b) "more cost effective and cleaner generation technologies (i.e., high efficiency micro turbines, biomass gasifiers, micro hydro and solar PV systems)". On whose figures have you depended to determine that eg. solar PV is "more cost effective" than medium-small size hydro? Strange.
Len Gould 2.13.09	William Connerley: I note from Capstone C30 MicroTurbine - Natural Gas that their C30 turbine is rated 30 kw and 26% efficiency at its ideal operating temp. of 65 degC, but drops to 23 net KW at 23% efficiency at 100 degF. Certainly, given theclimate in Cambodia, one would need to consider very carefully choosing such an inefficient natural gas generator over a hydro project.
Len Gould 2.17.09	Sorry, my "65 degC" should read "65 degF".
William Connerley 3.5.09	I am not advocating the use of small micro-turbines vs. hydro. I am a strong advocate of hydro plants.
john Marsh 5.10.10	I'm not the type of guy to look at my past and wish I could be back there. By and large, I'm happy where I am right now, despite the Minnesota Wild clep practice test continuing to choke in the Stanley Cup Playoffs (something is most certainly rotten in the State of Hockey). However, I do sometimes lament the fact that today's technology wasn't available to me when I had the time, ambition and friends required to compass practice test have myself some good adventures. Add to this list, now, the combination of a MacBook and MacJournal 5, because the two work perfectly for the young Mac user living the type of adventure worthy of documenting.That's not to say MacJournal's not useful for everyone else, of course. I've used it quite effectively for organizing my stories and ideas for a while now, and it's become an important part of my writing process. For each project on which I'm working, I create a journal entry of ideas, snippets of dialogue, etc. I cpa practice test lso have a journal of good bits that don't necessarily have a home yet, and one specifically for where I have used ideas I like. The latter is tremendously helpful for making sure I don't use the same joke twice, for example, or for determining contractor exam practice test whether I can because the first use will fade into oblivion.

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