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Salkhit wind farm in Mongolia starts production; EBRD ready to double funding for wind

By Svitlana  Pyrkalo

The first commercial wind farm project in Mongolia – a 50 MW Salkhit wind farm outside of the capital Ulaanbaatar – has been connected to the electricity grid and is now generating electricity. The European Bank for Reconstruction and Development (EBRD), which provided debt and equity funding for the project, has announced that it is ready to invest in further renewable projects in Mongolia.

The site at Salkhit – meaning “Windy Mountain” in Mongolian – will generate about five per cent of the country’s electricity needs. The investment has been hailed as a major step forward in the country’s new green energy strategy.

Mongolia’s President has said that the country aims to become a regional renewables hub, producing a quarter of its energy from renewable sources and potentially exporting both wind- and solar-generated electricity.

The EBRD’s Director for Power and Energy, Nandita Parshad, said: “Salkhit wind farm has awakened interest in wind power in Mongolia from other investors, both local and international. We are now assessing several follow-on wind farm projects, and expect to invest about US$ 50 million in renewable energy generators in Mongolia in the coming years. The demonstration effect from Salkhit, in terms of both project implementation and financing, has been significant.”

Salkhit wind farm was constructed with debt and equity financing of US$ 47.5 million from the EBRD, an amount matched by FMO, the Dutch development bank. The funds were provided to Clean Energy LLC, a company that is 51 per cent owned by Newcom, 14 per cent owned by the EBRD, 14 per cent by FMO, and 21 per cent by General Electric. Newcom is a Mongolian technology holding company, which founded the first mobile operator in the country and owns the largest domestic airline.

Enkh-Amgalan Sengee, CEO of Clean Energy and Chief Investment Officer of Newcom, said: “The Salkhit wind farm is a flagship project for Mongolia’s renewable energy sector and energy sector as a whole. The project has introduced new and advanced technology and know-how to the industry. We are proud to have completed the project to international best quality and safety standards.”

Riccardo Puliti, EBRD’s Managing Director for Energy and Natural Resources, added: “Mongolia, despite sitting on one of the world’s largest reserves of coal, knows first-hand the effect that climate change has on their pasture land and harsh winters. The country has announced a serious renewables agenda. This will allow Mongolia to diversify energy sources (which means more security), adopt the newest technology, and of course tackle climate change. Mongolia is also determined to make its coal – on which it depends for heat during its harsh winters – cleaner, and the EBRD will cooperate on that goal.”

The EBRD has been investing in Mongolia since 2006. The new three-year EBRD Country Strategy for Mongolia will be published next week.

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