Cambodia must expand solar power, modernise its electricity grid and strengthen regional power connections to support industrial upgrading ahead of its planned graduation from least developed country (LDC) status in 2029, according to the ASEAN+3 Macroeconomic Research Office (AMRO).
In an analysis released on Thursday, AMRO identified high electricity costs and unreliable power supply as structural barriers to Cambodia’s efforts to diversify beyond labour-intensive manufacturing and attract more investment in higher-value-added industries. The report argues that affordable, reliable electricity will be increasingly important as the Kingdom seeks to strengthen its competitiveness after graduation.
Key Facts
LDC graduation: Cambodia’s planned graduation is in 2029.
Industrial electricity costs: Cambodia’s industrial electricity tariffs were roughly twice Vietnam’s in 2024, according to AMRO.
Manufacturing power outages: 55.7% of Cambodian manufacturing firms experienced outages in the 2023 World Bank Enterprise Survey.
Electricity capacity: Total power-source capacity reached 5,932 megawatts (MW) in 2025, up from 5,183 MW in 2024.
Electricity delivered to the grid: Increased 12% to 22,361 gigawatt-hours (GWh) in 2025.
Solar contribution: Solar accounted for 10.2% of electricity delivered in 2025.
Electricity mix: Coal contributed 47.7% and hydropower 39.7% of domestic electricity delivered in 2025.
AMRO’s main recommendations: Expand solar generation, upgrade transmission networks, increase energy storage and deepen integration with the ASEAN Power Grid.
High Electricity Costs Threaten Industrial Competitiveness
Cambodia’s export economy remains heavily concentrated in garments, footwear and travel goods, while domestic production of higher-value-added products remains limited.
AMRO warned that electricity costs and supply reliability could constrain the country’s ability to attract investment in more sophisticated manufacturing activities.
According to the report, industrial electricity tariffs in Cambodia were approximately twice those in Vietnam in 2024. This cost difference could put Cambodian manufacturers at a disadvantage when competing for investment in industries where electricity represents a significant operating expense.
Reliable power is equally important. The World Bank Enterprise Survey 2023 found that 55.7% of Cambodian manufacturing firms had experienced power outages. Cross-country research cited by AMRO also found that firms exposed to outages had productivity levels around 11% lower than comparable firms.
For manufacturers, interruptions can disrupt production schedules, reduce equipment utilisation and increase operating costs. Businesses may also need backup power systems, adding to capital and maintenance expenses.
Improving electricity affordability and reliability is therefore central to Cambodia’s efforts to attract industrial investment and move into higher-value production.
Solar Power Offers an Opportunity to Expand Supply
AMRO identified solar energy as an important option for easing Cambodia’s electricity constraints.
The report cited the country’s strong solar resources, falling solar panel and battery costs, and shorter development timelines compared with coal-fired and hydropower projects.
Solar power accounted for 10.2% of Cambodia’s total electricity delivered in 2025. Power stations contributed 8.9%, while rooftop installations accounted for another 1.3%.
The figures indicate that solar has become a meaningful part of the electricity mix, although coal and hydropower continued to provide most domestic electricity.
Expanding solar generation could help diversify supply and reduce reliance on conventional sources. Rooftop solar could also offer opportunities for factories and commercial facilities seeking to manage their electricity costs, subject to applicable regulations, grid conditions and commercial arrangements.
However, AMRO emphasised that adding generation capacity alone would not be enough. Solar output varies with weather and daylight, making grid upgrades, storage and improved system management important for maintaining reliable supply.
Grid Upgrades and Energy Storage Are Essential
AMRO recommended strengthening Cambodia’s transmission infrastructure, increasing energy storage capacity, reducing transmission losses and improving connections across domestic electricity networks.
These measures address a central challenge in electricity planning: generating more power does not automatically ensure that electricity can be delivered reliably to industrial users when and where it is needed.
Transmission infrastructure moves electricity from generation facilities to demand centres. Insufficient network capacity or losses can limit the practical value of additional generation, while storage can help balance fluctuations in supply and demand.
For Cambodia, combining renewable energy expansion with stronger grid infrastructure could improve the usefulness of new generation capacity and support more dependable electricity services for manufacturers.
The investment implications extend beyond power generation to transmission equipment, storage systems, grid management technologies and related infrastructure.
Cambodia’s Electricity Capacity Is Growing, but Coal Remains Dominant
Cambodia made progress in expanding its electricity system in 2025.
Total power-source capacity reached 5,932 MW, up from 5,183 MW in 2024. Electricity delivered to the grid rose by 12% to 22,361 GWh.
Despite this growth, coal accounted for 47.7% of domestic electricity delivered in 2025, while hydropower contributed 39.7%. Imported electricity from Vietnam, Thailand and Laos represented 7.9% of total supply.
These figures show that Cambodia’s electricity system relies on a mix of domestic generation and cross-border supply, with coal and hydropower continuing to play major roles.
AMRO highlighted risks associated with this structure. Hydropower generation can be affected by drought and irregular rainfall, while limited energy storage makes seasonal supply fluctuations more difficult to manage.
Imported electricity can diversify supply, but reliance on cross-border transmission also exposes Cambodia to constraints in interconnection infrastructure and conditions in neighbouring electricity systems.
The report’s recommendations focus on making the overall system more diversified, resilient and capable of supplying industry reliably.
ASEAN Power Grid Integration Could Strengthen Energy Security
AMRO called for deeper integration with the ASEAN Power Grid to diversify electricity sources, improve energy security and expand access to potentially lower-cost power.
Regional electricity integration can allow participating countries to exchange electricity through interconnected systems. In principle, stronger connections can provide additional supply options and help countries manage differences in demand and generation availability.
For Cambodia, closer integration could reduce dependence on any single source of imported electricity and provide greater flexibility in balancing domestic supply and demand.
However, the benefits would depend on the availability and capacity of interconnections, cross-border arrangements, market rules and the reliability of neighbouring power systems. Regional integration would complement, rather than replace, investment in Cambodia’s domestic generation and transmission infrastructure.
Reliable Electricity Could Support Higher-Value Manufacturing
AMRO linked electricity improvements directly to Cambodia’s industrial diversification goals.
Moving beyond basic assembly into deeper processing and component manufacturing generally requires more power. Manufacturers in these industries need electricity that is not only affordable but also consistent enough to support complex production processes.
The garment sector illustrates the challenge. Imported fabric accounts for around half the value of clothing exports, while Cambodia does not currently produce this electricity-intensive input domestically, according to the report.
Expanding domestic textile production could create opportunities for greater value addition, but electricity costs and reliability would be important considerations for prospective investors.
Tyre manufacturing offers a different example. Cambodia’s tyre exports nearly quadrupled between 2023 and 2025, supported by factories located in special economic zones with more reliable electricity supplies.
The contrast highlights how dependable infrastructure can influence the viability of manufacturing investment. Electricity is not the only factor affecting industrial location decisions, but it can be a significant component of operating costs and production risk.
What Cambodia’s LDC Graduation Means for Energy Planning?
Cambodia’s planned LDC graduation in 2029 adds urgency to the need to strengthen its industrial competitiveness.
The transition makes it important for the country to build an economy capable of competing through productivity, infrastructure quality, skills and higher-value production, rather than relying primarily on cost advantages in labour-intensive manufacturing.
AMRO’s analysis identifies electricity as one of the structural factors that could influence this transition.
For investors, the availability and cost of power affect decisions about where to establish factories, which products to manufacture and whether to expand production. For policymakers, electricity planning is therefore closely connected to industrial policy, trade competitiveness and economic diversification.
The report recommends expanding solar generation, upgrading grids and strengthening regional power integration to deliver the affordable and reliable electricity needed for long-term industrial development.
Angkor Times Analysis: Energy Infrastructure Will Shape Cambodia’s Next Industrial Phase
Cambodia’s electricity challenge is no longer simply about expanding generation capacity. It is also about delivering power at a competitive cost, maintaining reliability and matching the electricity system to the needs of a more diversified industrial economy.
The rise in installed capacity and electricity delivered in 2025 demonstrates expansion, but the reported prevalence of manufacturing outages and the gap between Cambodian and Vietnamese industrial tariffs indicate that important competitiveness issues remain.
Three priorities stand out.
First, investment must address the whole electricity system. New solar capacity can diversify generation, but its contribution to industrial reliability depends on transmission, storage and effective grid management.
Second, industrial policy and energy planning need to work together. If Cambodia wants to attract more textile production, component manufacturing and other higher-value industries, policymakers and investors need to consider electricity requirements alongside industrial land, logistics, workforce skills and market access.
Third, regional integration should complement domestic resilience. Connections with neighbouring countries can provide additional supply options, but a stronger domestic grid and a diversified generation mix remain important for managing supply risks.
The broader investment opportunity may extend to solar generation, batteries, transmission infrastructure, energy management systems and industrial efficiency. These are potential areas for development rather than confirmed projects or investment commitments announced by AMRO.
As the 2029 graduation target approaches, the key measure of progress will be whether Cambodia can turn electricity-sector expansion into more affordable, dependable power that supports productivity and higher-value economic activity.
Frequently Asked Questions
1. Why does AMRO say Cambodia needs to improve its electricity system?
AMRO identifies high electricity costs and unreliable supply as constraints on industrial upgrading, manufacturing productivity and Cambodia’s ability to attract investment in higher-value-added production.
2. When is Cambodia expected to graduate from LDC status?
Cambodia is scheduled to graduate from least developed country status in 2029.
3. How expensive is industrial electricity in Cambodia compared with Vietnam?
According to AMRO, Cambodia’s industrial electricity tariffs were roughly twice those of Vietnam in 2024.
4. How much electricity capacity did Cambodia have in 2025?
Total power-source capacity reached 5,932 MW in 2025, compared with 5,183 MW in 2024.
5. What share of Cambodia’s electricity came from solar in 2025?
Solar accounted for 10.2% of total electricity delivered, comprising 8.9% from solar power stations and 1.3% from rooftop installations.
6. What are AMRO’s main recommendations?
AMRO recommends expanding solar generation, upgrading transmission infrastructure, increasing energy storage, reducing transmission losses and deepening integration with the ASEAN Power Grid.
7. How could better electricity supply help Cambodian manufacturers?
More affordable and reliable electricity could reduce operating costs and production disruptions, making it easier for businesses to consider higher-value activities such as deeper processing and component manufacturing.
8. Why is regional electricity integration important?
Deeper ASEAN Power Grid integration could diversify electricity sources, strengthen energy security and improve access to potentially lower-cost power, depending on interconnection capacity and regional arrangements.