How the country turned a challenge into an advantage
Thousands of miles away from the Western world and in the heart of the Asian continent, lies the vast country of Mongolia, one of the 20 largest countries in the world yet one of the least densely populated.
Long isolated from the world Mongolia eventually experienced the winds of change that had brought down the Iron Curtain. With the adoption of a new political system came the introduction of an economic model that allows the country to address the challenges it faces.
One of the biggest challenges is in the area of energy. Mongolia, famed for its raw beauty and wilderness, for grand sand dunes and vast steppes, also has an extreme climate, with winter temperatures of -40C and summers that often exceed 45C. The era of Soviet economy has left the country with a legacy of severe pollution and dependence on coal-fired power stations.
But there is huge potential and the EBRD is playing a major role in developing and maturing it. By developing wind power Mongolia can take advantage of the winds that sweep across the country’s seemingly endless deserts. It is a wind of change of a different kind.
This journey towards renewables started in 2009 with the first commercial windfarm project. With a capacity of 50 MW, the Salkhit wind farm near the capital, Ulaanbaatar, was constructed with financing of US$ 47.5 million from the EBRD, an amount matched by FMO, the Dutch development bank.
The challenges the project faced were enormous: working out how to build and operate a wind farm in -35C, transporting the wind turbines over 200 km of unpaved road, and creating the commercial and legal conditions for an unprecedented venture in the country.
When the plant at Salkhit – which means “windy mountain” in Mongolian – was connected to the grid in 2013, Nandita Parshad, currently EBRD Managing Director, Energy and Natural Resources, said: “Salkhit’s impact goes far beyond its immediate effects. It makes concrete a vision of Mongolia’s future that takes the benefits of the country’s resources and uses them to create a sustainable and diversified economy.”
And Salkhit was just the beginning. With that one successful project the country realised the potential of renewables and changed its approach to energy sources. Today, under the new energy efficiency strategy, Mongolia is seeking to raise the installed capacity of its renewable energy sources by up to 20 per cent by 2020 and 30 per cent by 2030.
The EBRD remains closely involved as the Bank also demonstrated this week with the visit of its First Vice President Phil Bennett to Mongolia. The Bank signed an agreement to finance the 50 MW Tsetsii wind farm in the south of the country last year. Tsetsii aims to be operational by the end of 2017. A third project, the Sainshand wind farm, with a 55W capacity and located south-east of Ulaanbaatar, was approved by the EBRD Board in June 2017.
As a result, wind currently accounts for 10 per cent of the country’s total installed power generation capacity. This is good for the economy and good for the environment. With the help of the EBRD the winds of change have also provided Mongolia with a breath of fresh air.