Mongolia: Solar District Heating Supply in Rural Remote Areas Project

Sovereign Project | 47185-001

Summary

The proposed grant Solar District Heating Supply Project in Rural Remote Areas will demonstrate central solar heating plants as cleaner and reliable heating system in one or two pilot soum centers.

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Project Name Solar District Heating Supply in Rural Remote Areas Project
Project Number 47185-001
Country Mongolia
Project Status Proposed
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant: Solar District Heating Supply in Rural Remote Areas Project
Japan Fund for Poverty Reduction US$ 2.50 million
Strategic Agendas
Drivers of Change
Sector / Subsector Energy - Energy utility services
Gender Equity and Mainstreaming
Description The proposed grant Solar District Heating Supply Project in Rural Remote Areas will demonstrate central solar heating plants as cleaner and reliable heating system in one or two pilot soum centers.
Project Rationale and Linkage to Country/Regional Strategy

Mongolia has an extremely harsh winter climate, with winter temperatures ranging from negative 10 degrees celsius to negative 40 degrees celsius during the daytime in mid-winter. The long and harsh winter requires a long heating season, of approximately 8 months from the middle of September to the middle of May. Administratively, Mongolia is divided into the capital city (Ulaanbaatar), three autonomous cities, 21 aimags (provinces) and 314 soums (counties). The population of the largest soum center is less than 10,000 and most of them are located far from the main urban centers, which poses serious challenges in providing adequate and affordable basic services to the communities. Although a decade of strong economic growth led by investments in mining sector has substantially boosted average incomes, poverty remains a challenge for Mongolia. Around 30% of the population is still living below the poverty line and poverty ratio in soum centers is 42.6%. Inequality is severe between the urban and rural areas. This is also reflected in poor and unequal access to essential services like adequate and reliable heating supply in peri-urban and rural areas.

The current heating practices in soum centers include (i) individual household stoves for residents living in ger (Mongolian traditional tent); and (ii) centralized or decentralized coal-fired heat-only boilers for some apartments and the public buildings such as schools, dormitories, hospitals, and government offices. Existing coal-fired heat-only boilers are old and inefficient, which operates with low combustion efficiency of less than 50%. These boilers are generally not fitted with emission control equipment. These boilers are a major cause of air pollution in soum centers resulting in increased risks of acquiring respiratory and heart diseases, with particularly higher impact on the sick, children, elderly and poor people. Lack of proper heating services and inadequate coverage in most soum centers result in low room temperature in classrooms, dormitories, and hospitals with serious consequences on school and medical services.

Mongolia is rich in solar resources with an average annual irradiation of about 1,350- 1,850 kilowatt-hour per square meters. Due to its distributed nature, solar power is one of the likely solutions to provide sustainable and cleaner heating services in soum centers. Heat load of soum centers is in the range of 0.5 to 1.0 megawatt-thermal equivalent, which requires a solar field of 714 square meters to 1,429 square meters and costs about $620/square meters. Central solar heating typically comprises central heating and hot water through arrays of solar thermal collectors (CSHP) and distributed through district heating pipe networks. Compared to small household level solar heating, CSHPs have better price performance due to lower installation costs, higher thermal efficiency, and less maintenance. CSHP is a proven technology and is commercially operated in Denmark and Sweden where climate conditions are similar to Mongolia. Availability of vast land combined with near-zero fuel cost during O&M will make such solar installations particularly suitable for remote areas in soum centers. Once a solar heating plant is connected to an existing district heating network, the existing coal-fired heat-only boilers can act as back-up system to be used only as peak-load heat source. This will drastically cut coal consumption, associated fuel costs and emissions. These recurring operation cost savings will free up local government's budget to be used for improving complementary public facilities and other social services.

The proposed grant project will demonstrate CSHPs as cleaner and reliable heating system in one or two pilot soum centers. These pilot soum centers will be selected at the beginning of the project implementation using the proposed selection criteria:

(i) closest possible location from Ulaanbaatar for showcasing;

(ii) high poverty incidence;

(iii) soum centers where centralized heating system is adopted;

(iv) soum centers where residential buildings are connected in the centralized heating system;

(v) commitment letter from aimag and soum administration to provide counterpart (including in-kind) contribution for project implementation, and O&M;

(vi) confirmed financial viability and sustainability;

(vii) exclude soum centers which are close to major mining areas;

(viii) no involuntary land acquisition or resettlement of people required;

(ix) no negative impact on biodiversity, wetland, natural resources, and physical cultural resources;

(x) soum centers where there is sufficient water availability for the project to ensure no changes in water flow regimes caused by the water intake from surface water or underground wells;

(xi) project locations must have adequate distance (at least 100 meters) from any water bodies; and

(xii) project sites must not be located in the areas vulnerable to natural hazards such as earthquakes, floods, landslides, storm surges, and volcanic eruptions.

(xiii) project sites must not cause negative impacts on sensitive areas and habitats such as water-gathering grounds, nature conservation areas, protected ecological habitats, and physical cultural resources.

(xiv) project sites must have adequate distance (at least 500 meters) from residential areas to minimize impacts associated with noise and dust.

The Government of Mongolia requested the Asian Development Bank (ADB) on 24 April 2013 to support implementing the proposed project. The proposed project is in line with Mongolia's country partnership strategy, 2012- 2016 which identifies improving heating access in remote rural areas as an important area of intervention.

Impact Improved quality of life in remote rural areas (soum centers)
Outcome Provided cleaner and efficient heating and hot water services to schools, dormitories, hospitals, and government offices in pilot soum centers
Outputs

CSHPs pilot projects constructed in selected soum centers

Technical and implementation capacity built and knowledge on appropriate CSHPs system shared

Geographical Location Rural
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The pilot project will be selected at the beginning of project implementation based on the selection criteria. It will exclude potential pilot project sites which (i) entail negative impact on biodiversity, wetland, natural resources, and physical cultural resources, (ii) have no sufficient water availability for the project to ensure no changes in water flow regimes caused by the water intake from surface water or underground wells, (iii) are located in the areas vulnerable to natural hazards such as earthquakes, floods, landslides, storm surges, and volcanic eruptions.
Involuntary Resettlement The pilot projects will be selected at the beginning of project implementation based on the selection criteria. The selection criteria will exclude potential pilot project sites which entail involuntary resettlement, land acquisition and economic displacement. Also, abundant vacant state-owned land is available to locate the central solar heating plants in most of the soum center. Heat load of soum centers is ranging from 0.5 to 1 megawatt-thermal equivalent, which required solar field of 714 to 1,429 square meters.
Indigenous Peoples The pilot projects will be selected at the beginning of project implementation based on the selection criteria. Selection criteria will exclude the potential pilot project sites which affect directly or indirectly the dignity, human rights, livelihood systems, or culture of ethnic minorities.
Stakeholder Communication, Participation, and Consultation
During Project Design The Ministry of Energy (MOE), the Ministry of Economic Development, the Embassy of Japan in Mongolia, JICA, and Xac Bank (a local private commercial bank) have been consulted on the project's concept. It is confirmed that the proposed project will not be a duplication, rather it will complement JICA's energy sector intervention in Mongolia which focuses on the rehabilitation of the main power plant in Ulaanbaatar, whereas the proposed project focuses on heating issues in rural areas. Xac Bank expressed interest in the replication of the proposed project once technical and financial viabilities are assured.
During Project Implementation
Business Opportunities
Consulting Services A consulting firm comprising of international (five experts for 21 person-months) and national consultants (four experts for 24 person-months) will be recruited by ADB in accordance with ADB's Guidelines on the Use of Consultants (2013, as amended from time to time) through the quality-and cost-based selection method (with a quality-cost ratio of 90:10) to provide the technical and implementation support to the executing agency of the project.
Responsible ADB Officer Teruhisa Oi
Responsible ADB Department East Asia Department
Responsible ADB Division Energy Division, EARD
Executing Agencies
Ministry of EnergyTovuudorj Purevjav, Director General, Strategic Policy and Planning DepartmentGovernment Building XIV, Chinggis Avenue Khan-Uul District, Ulaanbaatar, 17060
Timetable
Concept Clearance 19 Jul 2013
Fact Finding 25 Jun 2013 to 28 Jun 2013
MRM 13 Sep 2013
Approval 30 Jun 2016
Last Review Mission -
Last PDS Update 18 Mar 2015

Safeguard Documents

See also: Safeguards
Title Document Type Document Date
Solar District Heating Supply in Rural Remote Areas Project Environmental Assessment and Review Framework Aug 2013

Evaluation Documents

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