fbpx 52240-001: Supporting Renewable Energy Development | Asian Development Bank

Mongolia: Supporting Renewable Energy Development

Sovereign (Public) Project | 52240-001 Status: Proposed

This project will have the following four outputs:

Output 1: Transmission strengthened to help evacuate more renewable energy to grid. It is proposed to connect the isolated western and Altai-Uliastai grid systems to the central grid system. In the western region, ADB and the World Bank have been supporting energy infrastructure projects, including 10 MW each of solar and wind generating capacity, but the region is still dependent on power imports from Russia with high electricity prices, and the Altai-Uliastai region is facing a tightening demand and supply gap. Connecting the three transmission systems will allow for transfer of renewable power from private licensees in the central region across the three regions and will reduce the systems losses and stabilize power supply as a whole. It will also enhance energy security through reduced power imports and reduce the demand-supply gap. The renewable energy licensees will also benefit from the grid strengthening.

Project Details

Project Officer
Cowlin, Shannon C. East Asia Department Request for information
Country
  • Mongolia
Sector
  • Energy
 
Project Name Supporting Renewable Energy Development
Project Number 52240-001
Country Mongolia
Project Status Proposed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan: Supporting Renewable Energy Development
Ordinary capital resources US$ 50.00 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Sector / Subsector

Energy / Electricity transmission and distribution - Energy efficiency and conservation - Large hydropower generation - Renewable energy generation - geothermal

Gender Equity and Mainstreaming Some gender elements
Description

This project will have the following four outputs:

Output 1: Transmission strengthened to help evacuate more renewable energy to grid. It is proposed to connect the isolated western and Altai-Uliastai grid systems to the central grid system. In the western region, ADB and the World Bank have been supporting energy infrastructure projects, including 10 MW each of solar and wind generating capacity, but the region is still dependent on power imports from Russia with high electricity prices, and the Altai-Uliastai region is facing a tightening demand and supply gap. Connecting the three transmission systems will allow for transfer of renewable power from private licensees in the central region across the three regions and will reduce the systems losses and stabilize power supply as a whole. It will also enhance energy security through reduced power imports and reduce the demand-supply gap. The renewable energy licensees will also benefit from the grid strengthening.

Output 2: Pilot pumped storage hydropower generation assessed through detailed engineering studies. The government is pursuing energy storage solutions to help with integration and full utilization of variable solar and wind power. ADB has approved a loan for physical battery storage in 2020, which will respond to peak demand needs in the near term. As a long-term solution, the government plans to promote pumped storage hydropower schemes as a larger-scale energy storage technology. The government has identified possible projects, one of which is a 50 MW project at Kherlen-Choir. Though pre-feasibility studies were conducted, further reviews and studies are required. The loan is expected to support detailed engineering design, including geological and hydrological investigation (including boring tests) and safeguard assessments.

Output 3: Pilot geothermal heat and power generation assessed through detailed engineering studies. The Swiss Agency for Development and Cooperation has supported Mongolia in geophysical and geochemical surveys in the Khangai mountain area across five provinces. The result estimates geothermal heat and power production potential up to 30 MW based on estimated reservoir temperatures. Unlike other renewable energy sources such as solar and wind power, geothermal can provide baseload power and can also provide heating to the surrounding areas. As a new source of renewable energy for Mongolia, an initial geothermal heating and power generation project will be designed as a pilot power plant. For this purpose, the loan project is expected to support detailed engineering studies including drilling works and safeguard assessments.

Output 4: Advanced heating technologies deployed. To reduce the use of coal for heating purposes, clean technologies for heat supply are required. The popularity of using renewable sources for heat supply is rapidly increasing worldwide. ADB has studied and implemented district heating in Ulaanbaatar and rural areas and is installing heat pumps in public buildings in the western region. Other international development parties also implemented some similar projects. Heat pumps were assessed as an efficient and clean solution to replace polluting coal stoves with renewable and electric heating systems. Based on the lessons learned from the past projects and ongoing programs, the loan will deploy suitable clean heating technologies to gers (Mongolian traditional dwelling), residential buildings, apartment buildings, public buildings, and/or town districts in urban areas of the capital and other secondary cites.

ADB programmatic support. In 2018, ADB provided a loan and grants for solar and wind power subprojects with battery storage technology in remote areas and heat pumps in public buildings. In 2019, ADB also approved a loan to the private sector to develop a solar power plant. An ADB knowledge and support TA studied energy battery storage options, and the government requested an ADB loan to install large-scale battery storage systems to respond to daily peak demand fluctuations. Another knowledge and support TA was approved to study smart grid operations at the national load dispatch center and potential benefits. A policy-based loan aims to tackle Ulaanbaatar's air pollution through clean heating solutions to ger area households. Collectively, these ongoing interventions aim to increase supply of clean electricity and heat while strengthening and stabilizing the country's energy systems. The proposed loan will complement these efforts by increasing grid stability and advancing renewable energy storage, electricity, and heat in Mongolia's energy mix. System strengthening, deployment of clean heat technologies, and refining knowledge of additional renewable energy options will support Mongolia in its efforts to develop a clean, resilient, and secure energy system.

Project Rationale and Linkage to Country/Regional Strategy

Mongolia has enormous potential for clean and cost-effective renewable energy generation. Solar and wind potential are estimated at 1,500 GW and 1,100 GW, respectively. The electricity that would be generated from full development of these resources far exceeds domestic electricity demand from Mongolia's population of 3 million.

Mongolia's use of its clean energy resources is quite limited. The Government of Mongolia introduced policy incentives for investments in renewable energy, and 10 solar and wind power stations have been commissioned, and several are under construction or preparation by private parties. Nevertheless, installed capacity of renewable energy in Mongolia is modest at 260 megawatts (MW), representing only 0.01% of the potential. Hydropower potential was also assessed at 1.2 GW to 3.8 GW in 3,800 small and big streams and rivers within the country, but there are only two hydropower stations totaling 23 MW.

Instead, the country is highly dependent on coal. Coal-fired thermal power plants provide 93% of total electricity. Mongolia has approximately 10% of the world's known coal reserves, which has supported the build out of the current energy system. However, coal burning generates air pollutants including sulphur dioxide (SO2), nitrogen oxides (NO2), and particulate matter less than 2.5 micrometer in diameter (PM2.5). Ulaanbaatar has been one of the most air-polluted cities in the world, at times worse than Beijing and New Delhi. The United Nations Children Fund (UNICEF) warned of a public health crisis that is caused by indoor and outdoor air pollution. In Mongolia, the energy sector is the major contributor to serious air pollution as well as greenhouse gas emissions.

Despite the known issues with air pollution from coal use, reducing reliance on coal has been difficult, in large part because it is the primary source of fuel for space heating during the winter period. Coal-fired thermal plants in Mongolia are designed as combined heat and power (CHP) systems to supply both heat and electricity to consumers.

In addition to air pollution, Mongloia is also facing a demand and supply gap that is reaching a critical level. During the peak time in winter, actual electricity output is already exceeding 90% of the maximum generation capacity and the shortfall has been overcome through more expensive power import from Russia. Considering growing electricity demand and lack of capacity addition, the domestic capacity reserve is likely to be gone in 2020.

This power shortage risk stems from multiple bottlenecks. First, many CHP plants are aged and inefficient so that the actual generation output is well below rated capacity. Additionally, the low cost of generation from domestic coal has impeded development of alternative generation from renewable energy and hydropower. Second, the four regional transmission grid systems are not integrated, limiting the potential for balancing of supply and demand across the regions and their various resources. This technical constraint has already curtailed renewable energy output. Third, as a collective result from these physical restrictions, actual investments in renewable energy projects have been limited, impeded further by insufficient system planning and regulatory frameworks.

Impact Renewable energy capacity increased to 30% by 2030
Outcome Clean energy supply schemes increased and diversified.
Outputs

Transmission strengthened to help evacuate more renewable energy to grid.

Pilot pumped storage hydropower generation assessed for detailed engineering studies.

Pilot geothermal heat and power generation assessed for detailed engineering studies.

Advance heating technologies deployed.

Geographical Location Nation-wide
Safeguard Categories
Environment B
Involuntary Resettlement B
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Cowlin, Shannon C.
Responsible ADB Department East Asia Department
Responsible ADB Division EASI
Executing Agencies
Ministry of Energy
Government Building 14, Khan-Uul District
Chinggis Avenue, 3-r khoroo
Ulaanbaatar, 17060 Mongolia
Timetable
Concept Clearance 16 Jan 2020
Fact Finding 14 Jun 2021 to 25 Jun 2021
MRM 16 Aug 2021
Approval -
Last Review Mission -
Last PDS Update 28 Aug 2020

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

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Title Document Type Document Date
Supporting Renewable Energy Development: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Jan 2020

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

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Related Publications

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The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

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Tenders

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Procurement Plan

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