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Cambodia is advancing its renewable energy agenda, as detailed in the Cambodia Power Development Master Plan (PDP) 2022-2040. The plan halts investment in coal-fired power plants after 2024, accelerating the shift to renewables.

Solar power capacity is expected to be boosted from the current 432MW to 3,155MW by 2040, with wind energy set to join the national grid by 2026.

This policy creates promising opportunities for Chinese companies to invest in Cambodia¡¯s renewable energy sector, which is prioritised by the Belt and Road Initiative to help alleviate power shortages and foster sustainable development while reducing dependence on costly imported energy.

However, the development of such projects undergoes intricate approval processes, requiring investors to carefully navigate regulatory requirements to ensure smooth project implementation.

Competent authorities

Cambodia maintains a generally stable policy environment, but its legal framework has yet to be reinforced. However, authorities have been working to strengthen and improve the legal system in recent years. Key agencies overseeing renewable energy project development include the Ministry of Mines and Energy, power sector regulator the Electricity Authority of Cambodia, state-run energy supplier Electricit¨¦ du Cambodge, and the Ministry of Economy and Finance, Ministry of Environment, and Ministry of Land Management, Urban Planning and Construction.

Project identification

Investors planning a renewable energy project should first confirm if the project is listed in the PDP. If it is, project identification will not be needed. Instead, investors are required to submit a tender for the project as authorised by the cabinet and managed by the Ministry of Mines and Energy, with feasibility studies and related documents submitted alongside.

If the potential investment project is not yet included in the PDP, investors must follow required procedures to apply for project identification.

Investors should first conduct a preliminary feasibility study, which forms the basis for project identification. This study provides essential data and insights, enabling both investors and the government to assess the project¡¯s feasibility and potential benefits.

Based on the findings, investors should submit a formal application to the Ministry of Economy and Finance and the Ministry of Mines and Energy, seeking approval for a detailed feasibility study and project identification. A project investment proposal should also be submitted, outlining the project¡¯s key details.

On approval, investors should conduct a detailed feasibility study and submit the report, along with an investment application, to the Ministry of Economy and Finance and the Ministry of Mines and Energy. The investment application should include financial and technical proposals.

Finally, the Ministry of Mines and Energy will forward the investment application and feasibility study report to the cabinet, chaired by the Cambodian prime minister, for review. Once approved, the project will be incorporated into the PDP.

Project implementation

Sor Chor Nor (SCN). Before project implementation, investors must obtain a project investment approval signed by the prime minister and a Sor Chor Nor (SCN) document issued by the cabinet. This serves as official confirmation of the project investment approval and carries public notification validity.

Key agreements. In the early stage of the renewable energy project, key agreements should be signed to specify arrangements of power generation and sales. On project approval, the Ministry of Mines and Energy will issue an approval letter requiring all parties to sign an implementation agreement based on the approved financial and technical terms. The implementation agreement should also include provisions on the tariff.

For power generation projects, investors should also sign a power purchase agreement (PPA) with Electricit¨¦ du Cambodge to establish electricity sales terms. The PPA needs to be approved by the Electricity Authority of Cambodia, otherwise a power generation licence will not be granted.

Land acquisition and environmental impact assessments. Cambodia has detailed requirements for land acquisition and environmental protection. Investors developing renewable energy projects must secure legal land use rights and are advised to finalise land arrangements before commencing the project. As the government does not mandate a specific timeline, investors may plan the process as per project milestones.

Additionally, large-scale power projects are required to undergo preliminary and formal environmental impact assessments before construction. Investors can engage local consultants to prepare these reports in compliance with local laws and submit them to the Ministry of Environment for approval.

Other permits. Cambodian law requires investors to obtain necessary permits before initiating project development and construction.

Following the signing of a PPA, investors must apply to the Electricity Authority of Cambodia for a power generation licence, with its validity typically aligned with the PPA duration. Approved licences are published on the authority¡¯s website for public consultation.

Renewable energy projects must also secure construction-related permits, including construction permits, site commencement permits and site completion permits. These are issued by the Ministry of Land Management, Urban Planning and Construction.

Takeaways

While the rapid expansion of Cambodia¡¯s renewable energy sector presents significant investment opportunities for Chinese enterprises, the complex approval processes require investors to fully understand and strictly adhere to local regulations.

Gaining in-depth knowledge of Cambodia¡¯s renewable energy project development procedures is essential to minimise risks and ensure successful implementation. As Cambodia accelerates its clean energy transition, China-Cambodia collaboration in the renewable energy sector is poised for an even brighter future.

Wang Jihong is a senior counsel and Liu Ying is an equity partner at Zhong Lun Law Firm