EBRD investment in renewal energy in Mongolia

By Ina Coretchi

The EBRD is promoting the development of renewable energy in Mongolia with a $700,000 equity investment in the first wind farm project in the country. About 60 wind turbines with a total capacity of 50MW are planned to be installed on the Salkhit Mountain, 70 km outside the capital Ulaanbaatar.

This will be the first such project in Mongolia and also the first private power generator in a sector where generation is otherwise dominated by state-owned companies. It is being developed by Clean Energy LLC, a local company wholly owned by the Mongolian Newcom group, in close consultation and co-operation with the Mongolian authorities.

As a result of economic growth and increased urbanisation, Mongolia is facing growing demand for electricity. To date this demand has been met by coal-fired combined heat and power plants but these plants are ageing and contribute to Ulaanbaatar's poor air quality, especially in winter. They also place increasing stress on the capital's supplies of drinking water.

Mongolia has great potential for the generation of renewable energy due to its vast, sparsely inhabited and windy territory. Recognising this, the Mongolian parliament has endorsed a renewable energy programme which mandates an increase of the share of renewable energy in the country's electricity supply from less than 1 per cent currently to 25 per cent by 2020.

The Salkhit wind farm itself is expected to result in a reduction of CO2 emissions by approximately 125,000 tonnes annually.

The EBRD's and Newcom's investments will be used to finance the completion of the wind farm’s development up to the point where construction can begin. The EBRD will purchase 25 per cent stake of Clean Energy LLC initially and will fund 25 per cent of development costs as the project progresses.

The EBRD investment is complemented by an additional €366,000 in grant funds from the governments of Japan and Luxembourg, which have been used to support the development of the regulatory framework for renewable energy in Mongolia and to assess the environmental and social impacts of the project.

"The current discussions on climate change in Copenhagen have drawn the world's attention to the critical issue of supporting developing nations in their transition to a low carbon power sector. As part of that effort supporting green energy is one of the key priorities of the EBRD and we are pleased to play a part, working with Newcom, on the first such project in Mongolia. The EBRD investment will help address the country’s increasing need for energy and at the same time support the liberalisation and diversification of Mongolia's energy sector," said Nandita Parshad, Director of EBRD's Power and Energy team.

"Newcom is committed to playing its part in helping Mongolia make the transition to a high technology, green future and the development of renewable energy is central to that. We have been working closely with the EBRD for several years on this project and we are pleased to strengthen our partnership further through this investment", said Bold Baatar, CEO of the Newcom Group.

Since the beginning of the EBRD’s operations in Mongolia in 2006, the Bank has committed over €125 million across 28 projects in various sectors of the Mongolian economy, with total project cost of €337 million.

The Newcom Group is a privately held Mongolian conglomerate which has been operating since 1993 with investments across the telecommunications, technology, airlines, property and energy sectors.  www.newcom.mn