Mongolia : Supporting Renewable Energy Development

Sovereign Project | 52240-001

The project will support increased contributions of clean energy in Mongolia's energy mix while also supporting energy security, efficiency, and resilience. The project will finance the construction of a new 220 kilovolt (kV) transmission line to connect to the 90-megawatt (MW) Erdeneburen hydropower plant (HPP) to the existing grid network, which will increase supply in the Western Energy System (WES), eliminate costly and high-emission imports from the Russian Federation, and facilitate maximized utilization of wind and solar generating capacity. The project also includes a demonstration medium-depth ground source heat pump (MDGSHP) technology connected to the central district heating network in Kharkhorin to increase awareness and acceptance of this as a technically viable alternative to coal-fired heat only boilers in smaller district heating networks.

Project Details

Related Projects

Project Name
Supporting Renewable Energy Development
Project Number
52240-001
Country / Economy
  • Mongolia
Project Status
Proposed
Project Type / Modality of Assistance
  • Grant
  • Loan
Source of Funding / Amount
Loan: Supporting Renewable Energy Development
Source Amount
Ordinary capital resources US$ 39.00 million
Concessional ordinary capital resources lending US$ 5.00 million
Operational Priorities
  • OP2: Accelerating progress in gender equality
  • OP3: Tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability
  • OP6: Strengthening governance and institutional capacity
Sector / Subsector
  • Energy / Electricity transmission and distribution - Energy efficiency and conservation - Large hydropower generation - Renewable energy generation - geothermal

Gender
Some gender elements
Description
The project will support increased contributions of clean energy in Mongolia's energy mix while also supporting energy security, efficiency, and resilience. The project will finance the construction of a new 220 kilovolt (kV) transmission line to connect to the 90-megawatt (MW) Erdeneburen hydropower plant (HPP) to the existing grid network, which will increase supply in the Western Energy System (WES), eliminate costly and high-emission imports from the Russian Federation, and facilitate maximized utilization of wind and solar generating capacity. The project also includes a demonstration medium-depth ground source heat pump (MDGSHP) technology connected to the central district heating network in Kharkhorin to increase awareness and acceptance of this as a technically viable alternative to coal-fired heat only boilers in smaller district heating networks. The project will also strengthen institutional capacity across planning and operation of energy assets and in the potential role of cleaner technologies to support a transition to a cleaner energy mix in Mongolia.
Project Rationale and Linkage to Country/Regional Strategy

Several aspects affect the development and scaling up of renewable energy capacity in Mongolia.

Power System Constraints. Mongolia's power system has insufficient capacity to meet existing power demand. Mongolia currently imports around 19% of its electricity requirement from the Russian Federation and the People's Republic of China (PRC), but there is no spare transmission capacity to allow increased imports. Mongolia requires 800 MW of new electricity generating capacity and build associated transmission and distribution network capacity by 2028 to reliably meet forecast power demand.

Domestic Power Supply Profile. Total installed power generating capacity in Mongolia was 1,549 megawatts (MW) in 2021. Generation capacity is dominated by old and inefficient coal-fired combined heat and power plants (CHPs), representing 89% of domestic supply. Despite Mongolia's vast potential for wind and solar power, estimated at 2,600 gigawatts (GW), installed capacity of wind and solar reached only 247 MW in 2021. The operational inflexibility of the CHPs, particularly the need to maintain heat supply, inhibits growth in variable renewable energy generating capacity. To support grids flexibility and manage the peak load ADB financed an 80 MW (2.5 hour duration) battery energy storage system planned for commissioning in late 2023.

Western Energy System (WES). The WES is currently supplied by the 12 MW Durgun HPP, the 10 MW Myangad solar system, and a 180km 110 kV interconnection line from the Siberian grid in the Russian Federation, with high transmission losses. Current imports from Russia reach up to 43.8 MW (about 2/3 of total system capacity) but supply is not assured, and the system also experiences outages. Additional power generation needs to be added to the WES urgently.

Heat Supply Profile. Heat is vital in Mongolia, which can experience extreme low temperatures of 40 degrees Celsius or below. Coal dominates Mongolian heat supply, with the CHPs providing heat to large district heating systems, coal-fired heat only boilers connected to smaller district heating systems and used in individual buildings, and household coal burning stoves. This approach to heating results in high levels of ground-level pollution in cities, towns, and villages and high levels of health-harming pollution in indoor environments where the coal is burned. In addition, current heat supply and delivery systems have low efficiency, suffer high losses, and often deliver inadequate heat supply. However, clean heating solutions such as ground-based heat pumps (successfully deployed in other countries) are not yet mainstreamed in Mongolia, with only small scale pilots financed by donor grants. Demonstrating advanced clean heating technologies in Mongolia would be transformational for the country's economy.

Impact

Greenhouse gas emissions reduced

Energy supply reliability and security increased

Outcome

Renewable, efficient, and secure electricity supply increased.

Acceptance of cleaner heat supply technologies increased.

Outputs

Transmission system capacity to evacuate renewable power constructed.

Medium depth ground-source heat pump viability demonstrated.

Institutional capacity enhanced

Geographical Location
Nation-wide

Safeguard Categories

Environment
A
Involuntary Resettlement
C
Indigenous Peoples
C

Summary of Environmental and Social Aspects

Environmental Aspects
The project is classified as category A for environment due to the potential impacts of output 1. An environmental impact assessment (EIA) and an initial environmental examination (IEE), including environmental management plans (EMPs) were prepared for output 1 and output 2, respectively, following ADBs Safeguard Policy Statement 2009. Safeguards gap analysis of the Erdeneburen HPP, an associated facility to the project, was conducted and ADB has prepared a Corrective Action Plan (CAP) and provided it to MoE to take the corrective actions proposed. Following additional due diligence, the CAP and the EIA is being revised and updated. Potential climate risks were identified as moderate based on the climate risk assessment (CRA). Findings of the CRA, including recommended mitigation and adaptation measures will be incorporated in the project design. The project is not expected to have involuntary resettlement impacts. All civil works will be implemented on vacant unencumbered state-owned lands without involving acquisition of nonstate land, physical or economic displacement, or restriction on land use. A due diligence report (DDR) confirming the category C on involuntary resettlement was prepared during project preparation. During the detailed design phase, the DDR will be updated prior to commencement of civil works. A gap analysis of land acquisition planning and implementation for the associated facility Erdeneburen HPP was conducted, and ADB has provided the CAP and guidance to MOE to take the corrective actions proposed. MOE committed to prepare an acceptable resettlement plan compliant with ADB Safeguard Policy Statement prior to loan approval./
Involuntary Resettlement
The project is not expected to have involuntary resettlement impacts. All civil works will be implemented on vacant unencumbered state-owned lands without involving acquisition of nonstate land, physical or economic displacement, or restriction on land use. A due diligence report (DDR) confirming the category C on involuntary resettlement was prepared during project preparation. During the detailed design phase, the DDR will be updated prior to commencement of civil works. A gap analysis of land acquisition planning and implementation for the associated facility Erdeneburen HPP was conducted, and ADB has provided the CAP and guidance to MOE to take the corrective actions proposed. MOE committed to prepare an acceptable resettlement plan compliant with ADB Safeguard Policy Statement prior to loan approval./
Indigenous Peoples
Due diligence undertaken for project preparation confirmed that the project is not expected to have any impacts on distinct and vulnerable communities of ethnic minorities that would trigger the requirements of ADBs SPS on indigenous people.

Stakeholder Communication, Participation, and Consultation

During Project Design
Meaningful public consultations were conducted with relevant stakeholders on the project in accordance with ADBs requirements. The associated facility's project implementation unit will carry out consultations related to the agreed safeguards Corrective Action Plan for the Erdeneburen HPP.
During Project Implementation
Further consultations will be held during implementation as needed. The executing agency will provide hardcopies of the executive summary of the EIA and the EMPs in Mongolian upon request. The EIA was disclosed in May 2023 and the IEE in April 2023 on ADB website. MoE is committed to allocating sufficient budget to implement the EMPs. A grievance redress mechanism has been developed to receive and facilitate resolution of complaints on social and environmental issues during construction and operation phases of the project. Project is expected to be approved by December 2024.

Contact

Responsible ADB Officer
Bano, Alfredo
Responsible ADB Department
Sectors Group
Responsible ADB Division
Energy Sector Office (SG-ENE)
Executing Agencies
Ministry of Energy

Timetable

Concept Clearance
16 Jan 2020
Fact Finding
13 Feb 2023 to 17 Feb 2023
MRM
06 Sep 2024
Approval
-
Last Review Mission
-
Last PDS Update
03 May 2024

Funding

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.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

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.


Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


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.

Requests for information may also be directed to the InfoUnit.

Tenders

No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.