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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.

China looks to further boost its footprint in neighboring Asian markets as the energy crisis is straining fuel supply to Southeast Asia.

As the region became the first victim of the fuel crunch due to the Middle East war, Cambodia broke ground on its first gigawatt-scale hydropower project to boost its renewable energy output and reduce dependence on imported fossil fuels.

The start of construction at the Upper Tatay pumped storage hydropower BOT project could not be timelier as the Iran war is reducing fuel supplies to Cambodia and other Southeast Asian nations that have been hit the hardest by the crisis.

The project broke ground earlier this month, helped by Chinese investment of $1 billion, in a further sign that China is boosting its influence across Southeast Asia.

The Upper Tatay pumped storage hydropower station is a key China-Cambodia cooperation project, expected to be completed by 2029. The project is the core of the integrated wind-solar-hydro-storage base in the Tatay River basin, Chinese news agency Xinhua reported, citing the Chinese investors.

The pumped storage hydropower project will function as a “green power bank,” expected to significantly improve grid peak shaving and renewable energy consumption, said Xiao Ping, chairman of China National Heavy Machinery Corporation, which is building the station.

When power demand is low, excess power from the project will pump water from a lower reservoir to an upper one. At times of peak demand, water will be sent down through turbines to generate electricity.

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The pumped hydro project in Cambodia is one of China’s latest initiatives to assert influence in Southeast Asia and boost overseas revenues for its engineering and renewable energy companies.

“This project will play a pivotal role in strengthening grid stability and enabling the scale-up of renewable energy across Cambodia,” Mines and Energy Minister Keo Rottanak said, as carried by Khmer Times.

“Energy is the key sector of pragmatic cooperation between China and Cambodia,” China’s Ambassador to Cambodia, Wang Wenbin, said at the groundbreaking ceremony.

“Many hydropower stations, invested and built by Chinese enterprises, have become a vigorous catalyst for the stable supply of electricity and the development of renewable energy in Cambodia,” the Chinese official added.

Cambodia has significantly raised its renewable energy capacity over the past decade and a half, mostly thanks to Chinese companies investing and building projects in the Southeast Asian country.

Power access rates have soared to 96% from 50%, while the share of renewable energy in the power mix has jumped to more than 63%.

By 2030, projects including the Upper Tatay pumped storage hydropower station are expected to further lift Cambodia’s renewable capacity to over 70% of the country’s total energy mix.

Hydropower stations built by Chinese companies with Chinese investment have helped reduce reliance on imported energy, stabilize tariffs, and support industrial growth, said Thong Mengdavid, deputy director at the China-ASEAN Studies Center of the Cambodia University of Technology and Science.

The current energy crisis is a big opportunity for Chinese clean energy companies to accelerate their outreach overseas.

The first signs became evident as early as the first weeks of the Iran war.

For example, China saw its lithium battery exports jump by 50% in the first quarter from a year earlier as global demand for green technologies surged amid the worst disruption to oil and gas supply due to the war in the Middle East.

In March alone, Chinese electric vehicle exports soared by 140% to a record high as the fuel price shock drove consumers back to EVs.

Exports of all green technologies manufactured in China surged in March and in the first quarter, making Chinese clean energy manufacturers winners in the war-induced oil shock.

By Tsvetana Paraskova for Oilprice.com

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