The project will develop and upgrade associated downstream facilities for electricity and heat evacuation for the combined heat and power plant number 5 (CHP 5), which is being developed through a public-private partnership modality. Together with the proposed CHP 5, it ensures reliable electricity and heat delivery not only to existing customers but also to as-yet unserved communities and entities in Ulaanbaatar, the capital city of Mongolia.
The proposed project comprises of (i) 220 kilovolt electricity transmission system development, (ii) electricity distribution system rehabilitation and upgrading which include an installation of advanced transformer technology for effective energy loss reduction, and (iii) heat transmission system development. The project will construct the essential electricity and heat transmission infrastructure to connect CHP to existing electricity grid and heating network to ensure full electricity and heat evacuation for CHP 5 in an efficient and reliable manner. Upon successful completion together with CHP 5 in 2020, it annually delivers up to 4,424 kilo giga calorie (kGcal) of heat to the densely populated central business district and the eastern districts having no access to central heating system, and up to 3,301 gigawatt hour (GWh) of electricity to central energy system including Ulaanbaatar.
|Project Rationale and Linkage to Country/Regional Strategy
The winter climate in Mongolia is extremely harsh with daytime temperatures ranging from -10 degrees celsius to -30 degree celsius (late December and January). Temperatures can drop to as low as -40 degree celsius at night. The heating season is also long lasting usually for 8 months a year. Consequently, energy demand for heat is more than twice that for electricity. In such harsh winter, a reliable heating service is a basic human need for the population in the country. Coal is a dominant source for electricity and heat generation in Mongolia because the country has impressive coal reserves but limited access to alternative energy resources. Due to such climatic and energy resource endowment, CHP is the most suitable, efficient, and economical choice to provide both electricity and heat in Mongolia. Total capacity of CHP plants in operation is 878 megawatt (MW) which is about 91% of the country's total installed electricity generation capacity in 2014.
Mongolia is the most sparsely populated country in the world with an average of only 1.87 persons per square kilometer. Moreover, within Mongolia, population and economic activities are concentrated in Ulaanbaatar. In 2014, Ulaanbaatar accounted for 42% of the population and generated 64% of the country's gross domestic product. Due to such spatial concentration, Ulaanbaatar is the largest energy demand center accounting for nearly half of the total energy needs in the country. Increasing population influx and further economic concentration is likely to continue demand pressure on electricity and heat in Ulaanbaatar. Heat load demand in Ulaanbaatar grew by 35% between 2004 and 2014, and is projected to grow to 7,554 kGcal in 2020 from 5,574 kGcal in 2014. The central electricity grid system, which covers Ulaanbaatar and other major cities, also experienced 42% demand growth during the same period. The demand is projected to grow to 12,844 GWh by 2020 from 6,775 GWh in 2014. However, this rapid growth in electricity and heat demand in Ulaanbaatar was not matched by investments in new power and heat plants. Moreover, due to the aging of existing plants, the country''s obsolete power system is no longer able to meet growing heat and electricity demand. The reserve margin of electricity supply has become zero in 2013 and 10% of total electricity demand in 2014 was met by electricity import from Siberian grid in Russia. The heat supply reserve margin also diminished in 2014. While additional capacity addition in electricity and heat supply is underway, it is not sufficient to meet the growing demand in 2020 and beyond.
Existing facilities for providing heating and electricity (power plants, transmission and distribution lines) are also energy-inefficient and vulnerable because they are old and outdated. In Ulaanbaatar and surrounding districts, electricity distribution losses totaled 14.3% in 2014, which is much higher than the international best practice of 5.0%. The average outage duration of the distribution network in Ulaanbaatar was 300 minutes per customer with more than 14 interruptions per customer in 2014, which is unacceptably high for any modern electricity distribution network.
CHP 5 to be constructed in the outskirt of Ulaanbaatar with 450 MW of electricity and 587 MW of thermal capacities is urgent and an essential investment to avoid heat and electricity supply shortage in 2020 and beyond. It will be the most energy efficient and least pollutant emitter CHP in the country. The government is currently finalizing concession agreement and associated contracts which are scheduled to be concluded in March 2016. Asian Development Bank''s (ADB) policy and advisory technical assistance projects have been supporting CHP 5 through a preparation of feasibility study and advisory services to the government on public-private partnership transactions.