Through the months of May to July, we at Khmer Energy Solution have been working with REANGLE, our business development partner whose team has been assisting our company with digitalization and strategies for obtaining green finance.
The market in Cambodia is ripe for renewable energy due to many factors, including a rapidly developing economy, digitalization spearheaded by young Internet-savvy Cambodians, and a dire need to push high electricity costs down.
Part of the process working with the team at REANGLE involved them putting together for us a brand new pitchbook to explain these market trends and more. On our very first article on our blog at Khmer Energy, we are excited to share some slides from this pitchbook with you and explain why the renewable energy market in Cambodia is going to grow.
Introducing Khmer Energy Solution
Khmer Energy Solution is headquartered in Phnom Penh, the bustling metropolis that is Cambodia’s capital city. Our company provides solar power solutions to residential, commercial, and agricultural sectors, and is prepared to scale with an injection of green finance in the coming months.
Meet the Team
CEO San Bunthan and Founder Dr Masao Tomizawa started Khmer Energy in 2017, and have put together over 20 years of combined engineering experience to create solar power solutions for customers.
Before leading Khmer Energy as its CEO, San Bunthan held the role of B2B Technical Trainer at companies like Samsung and Picosol Cambodia, specializing in technical consulting, sales, and commercial engineering solutions. He graduated from Preah Kossomak Polytechnic Institute with an Associates Degree in Electrical Engineering and holds a Professional’s Certificate from the Don Bosco Technical School.
Meanwhile, Dr Masao Tomizawa brings both research and managerial experience in engineering to Khmer Energy, from his positions at organizations like KOE Environment Business and the Mizuho Information and Research Institute. Dr Tomizawa earned his Ph.D in Mechanical Engineering from Waseda University in 2006, where he studied engineering technology such as advanced cogeneration systems powered by gas, steam, and ammonia-water mixture turbines.
Business Overview
Our company’s dreams are not small, with our corporate vision driving our day-to-day activities to bring solar energy to Cambodia: “A world where everyone has access to electricity while sustainability, quality of life, and progress are balanced in harmony”.
To that end, over the past 3 years since our company’s inception, our team has undertaken solar energy projects for both homes and businesses. Some key growth areas include the agriculture and manufacturing industries, which could both benefit from the long-term cost reductions that can be reaped from solar power, and to cater to the rising global demand for sustainable goods including farmed crops and clothing.
Business Model
Our business model is simple, and can be generally identified by two key pillars for generating revenue.
First, engineering, procurement, and construction (EPC) involves the construction and sale of complete solar energy systems to customers. Our customers purchase these systems with the expectation of getting a return on their investment, which typically happens within 5 to 8 years due to the high cost of electricity in Cambodia.
Second, power purchase agreements (PPA) involves leasing solar power to customers for a fee. This allows customers to reap the benefits of lower electricity costs right away while our team undertakes the responsibility of maintaining and operating the solar energy systems. This is also called the third-party ownership (TPO) model.
Cambodia: A Haven for Solar Power
The World Economic Forum has identified solar energy to be the most promising form of renewable energy for the country owing to four key factors:
Cambodia has 6 to 9 hours of sunshine a day, making it incredibly well-suited for capturing solar irradiation.
Solar energy is much more scalable and less environmentally destructive than hydroelectric dams, which was previously Cambodia’s renewable energy source of choice.
Solar energy is comparatively reliable in Cambodia; yearly dry seasons regularly stop hydroelectric dams from working, which can take the electricity grid offline.
The monetary savings from solar energy are large, due to Cambodia’s high electricity costs.
Solar energy is now the second to highest contributor of renewable energy in Cambodia after hydroelectric, with the country looking to expand solar energy investment by 12% by the end of 2022, increasing its share of energy production up to 20% over the next three years.
We at Khmer Energy are ready to embark on this journey as an early player in Cambodia’s solar power sector, and we will not settle for anything less than being the top trusted solar power provider in the country.
Cambodia’s Business Landscape
Here are some additional trends in our country related to its economy and demographics:
Cambodia is one of the fastest-growing economies in the world, with the World Bank recording an average real growth rate of 7.7% between 1998 and 2019.
Cambodia’s population is still booming, with an expected addition of 1 million to the population by 2025.
Due to increasing commercial activity, the country’s energy usage will be expected to increase by 46% to reach 15 terawatt-hours by 2025.
Cambodians are young, averaging at 25.6 years old. They are highly tech-savvy, and their use of smartphones is expected to drive up energy usage related to digital infrastructure.
With this increasing hunger for electricity, Cambodia is a prime target for renewable energy infrastructure, particularly because it is not a fully developed nation yet. This gives Cambodia a huge advantage many wealthier, more developed nations do not have – the ability to design renewable energy into its public infrastructure from day one.
We can also already see some sectors adopting renewable energy, particularly in the residential, commercial, and industrial sectors.
Top GDP-contributing sectors like agriculture and manufacturing are both economically and environmentally impactful, and so are prime targets for commercial solar power solutions from us; for example, there is already pressure from international fashion brands on Cambodian manufacturers to produce goods more sustainably with lower carbon footprints.
Off-grid solar energy systems are another critical piece of the puzzle in Cambodia, being one of the only realistic ways to bring energy to rural areas due to high electricity costs.
This is a key target customer we at Khmer Energy have already been serving, bringing affordable power to many homes and businesses off the grid.
Business Expansion Strategy
The three prongs of our business strategy for growth lie in: market positioning, customer acquisition, and digital transformation.
Starting with market positioning, the first market that our company will be targeting for solar energy solutions will be the agriculture sector. Agriculture is one of the most important industries in Cambodia, making up over 20% of the country’s annual GDP. Irrigation systems in particular are extremely useful for larger farms to water huge areas of crops all at once, but for many farms off the grid, there is no option to power such automated mechanisms; this is where solar-powered irrigation systems can solve the problem many farmers in Cambodia are facing today and help them achieve larger-scale operations.
The second key market would be the garment manufacturing sector, an industry that contributes to 65% of Cambodia’s total exports. Garment factories use very large amounts of electricity for both producing goods and cooling equipment, and with pressures from international fashion brands for more sustainable manufacturing practices from Cambodian manufacturers, our company has an opportunity to offer both the ability to offset energy costs and the platform to decrease the carbon footprint of garment manufacturers.
The housing and real estate market is a key market we expect would see rise in demand for solar energy in the coming years. Given the young median age of Cambodians (25.6 years old), many people in the country will become homeowners soon. Particularly, for the nearly 30% of Cambodians who need to rely on off-grid power to receive electricity in their homes, solar energy will be a prime choice for lower long-term costs and more reliable sources of power. Commercial real estate is another area our company will be targeting to bring solar energy to, with offices, water treatment plants, shopping malls, and hotels being some examples of commercial buildings that could offset high energy costs with solar power.
Finally, infocommunication networks and data centers will also be crucial target markets for our commercial solar energy systems. Cambodia is experiencing rapid digitalization, powered by high smartphone adoption from the country’s young population. In Cambodia, there are more mobile connections than there are people, and 71.3% of people in the country are active social media users. These trends mean infocommunication networks and data centers will need to be built, and these digital infrastructure are huge energy consumers. Cooling is a particular energy problem. Up to 40% of a data center’s power usage can be dedicated to cooling alone when in hot, tropical Southeast Asian climates. This is a golden opportunity for our solutions to not only offset the high electricity costs associated with digital infrastructure, but also reduce its carbon footprint.
A sound customer acquisition strategy is essential for any business, and ours hinges on five key avenues:
Channel partners within the supply chain to serve the maximum number of customers
Targeted marketing on advertizing platforms, especially online
Consulting customers based on our in-house engineering expertise
Referral based on word-of-mouth
Strategic partners, such as agriculture banks that can provide financing for agriculture customers to obtain solar panels
Over the coming years, our company will also be building out a sales team to perform more customer outreach and nurture long-term customer relationships.
Finally, digital transformation for our company is a long-term investment that will generally be focused on two key areas:
Communication: For both B2C and B2B sectors, online platforms will be used to reach out to engage with potential customers and partners.
Streamlining processes: Particularly for areas such as resource management and data analytics for decision-making on how to analyze and deploy projects.
Portfolio
Finally, we have taken some brand new photographs of our project portfolio for this pitchbook, and we would love to share them here.
Since 2017, our company has undertaken projects of varying sizes, from small-scale solar power solutions for homes, to a commercial-grade 40 kilowatt system for a water plant company.
Conclusion
Cambodia is a highly exciting market for the adoption of renewable energy, and we at Khmer Energy are proud to be embarking on this journey.
With a booming economy, rising need for electricity, and many other unique conditions that make Cambodia a prime choice for solar power, we can only say we have high hopes for the future path ahead of us, and we would like to thank REANGLE for their partnership in helping us take one more step forward.
About Khmer Energy
Our mission is to power Cambodia in a more sustainable fashion with the power of solar energy. Contact us to start a consultation and discover how you can run your home or business with solar energy today.