Tsetsii Windfarm

Location:

Mongolia

Project number:

47949

Business sector:

Energy

Notice type:

Private

Environmental category:

B

Approval date:

20 Jul 2016

Status:

Repaying

PSD disclosed:

19 Aug 2016

Project Description

The EBRD is providing a senior loan of up to USD 25 million to Clean Energy Asia LLC (the "Company") to support the development, construction and operation of the Tsetsii Wind Farm, a 50MW wind power plant to be located 542 km south from Mongolia's capital Ulaanbaatar in the Gobi desert.

Project Objectives

The Tsetsii Wind Farm will be the second wind energy project developed in Mongolia, following the 50 MW Salkhit Wind Farm project, which the EBRD financed in 2012. The operation will contribute to reducing Mongolia's carbon intensity as well as meeting its increasing power demand. In addition, the project will also strengthen the private sector presence in the energy sector in the country.

Transition Impact

ETI score: 80

The transition impact stems from three factors: (i) as the second private power generation and wind farm project in Mongolia, the Project will be highly visible. Its demonstration effects will be essential in attracting new investors into the sector; (ii) power sector assets in Mongolia are almost entirely state-owned. The Project will result in a new private entrant in the Mongolian power generation sector; and (iii) the Project will assist Mongolia in diversifying its coal-dependent power sector and reducing CO2 emissions by up to 151, 280 tons per year.

Client Information

CLEAN ENERGY ASIA LLC

The borrower is a special purpose limited liability company incorporated in Mongolia. The Company is 51% owned by Newcom LLC, the HoldCo of a Mongolian conglomerate with activities in telecommunications, property and energy. The remaining 49% is owned by a subsidiary of SB Energy Corp., the renewable energy subsidiary of SoftBank Group Corp., the Japanese telecommunications and technology conglomerate. Newcom is the majority-owner of the Salkhit Wind Farm Project, to date the first and only windfarm and private power generator in Mongolia.

EBRD Finance Summary

USD 23,653,118.28

Senior secured loan of up to USD 25.0 million (EUR 21.7 million equivalent) to the Company on a limited-recourse project finance basis.

Total Project Cost

USD 127,014,243.00

Environmental and Social Summary

Category B (2014). The Bank's Environmental and Social Due Diligence (ESDD), which was supplemented with a review from an independent environmental and social consultant (IESC), confirmed that the project has been structured in accordance with EBRD's Performance Requirements and relevant EU Directives.  The ESDD included a site visit by the IESC and a review of the Project's Environmental and Social Impact Assessment (ESIA) for the wind farm and associated transmission line, Non-Technical Summary (NTS), Stakeholder Engagement Plan (SEP), Environmental and Social Management Plans (ESMPs) and Land Acquisition Framework (LAF). These documents, along with an Environmental and Social Action Plan (ESAP) have been disclosed in English and Mongolian on the Company's website: http://newcom.mn/en/company/55, http://newcom.mn/mn/company/55

The 50 MW wind farm project is located in the Tsogttsetsii soum of Umnugovi aimag in the South Gobi. The closest settlement is Tsogttsetsii soum, which is located approximately 22km to the north. The land for the Project is government owned and has been leased by the project company.

In addition to satisfying local environmental requirements, an ESIA was prepared to address potential construction, operations and decommissioning related risks and impacts. Key issues addressed in the ESIA included potential impacts to air (e.g. dust, noise), water, waste management, traffic management, visual landscape (wind turbines and shadow flicker), community health and safety, contractor management, biodiversity, cultural heritage and the potential for economic displacement to local herders (e.g. loss of grazing areas). As part of the ESIA, a supplemental bird survey, including collision risk modelling, was carried out to confirm that the project will not result in adverse impacts to any bird species of conservation importance or critical habitat. Finally, an additional stakeholder mapping survey was completed to better understand potential impacts to herders within the project area (including transmission line corridor), which further concluded that the project will not result in any physical displacement and that the potential for any economic displacement is unlikely.

CEA carried out four public meetings in 2015-2016 during the ESIA scoping phase to explain the project to the local community and to better understand their concerns and expectations of the Company. A fifth meeting will be carried out during EBRD's disclosure period.

In order to ensure implementation and effective management of the planned mitigation measures included in the ESIA during the life of the Project, Environmental and Social Management Plans (ESMPs) have also been prepared. The ESMPs provide a framework for wider environmental management systems (EMS) that will be created during the construction and operation phases by the Engineering, Procurement and Construction (EPC) contractor and site operator respectively. CEA have also employed an environmental and health and safety professional as well as community liaison officer to oversee the implementation of the Project's environmental and social management commitments.

In addition to the ESMPs, an ESAP has been agreed with the Company to ensure compliance with the Bank's PRs and includes various measures such as (i) development of a human resources policy in line with core ILO requirements, (ii) installation of bird flight diverters on overhead transmission lines and (iii) on-going stakeholder engagement with the project affected community and herders. Finally, the company and its activities will be subject to regular monitoring by the Bank's specialists or appointed consultants

Technical Cooperation and Grant Financing

The Project is expected to benefit from a USD 746,125 grant to be provided by the Government of Japan through the "Japan-EBRD Cooperation Fund". The grant would be used to support the state-owned National Transmission Power Grid company (NPTG) to upgrade the Tavan Tolgoi substation. This substation will connect the Tsetsii Wind Farm to the Mongolian central grid.

Company Contact Information

Saruul Damdinbal
saruul@newcom.mn
976-11-313183
http://newcom.mn/en/company/55
Naiman Zovkhis Building, 10th Floor, 21 Seoul Street, Sukhbaatar District, Ulaanbaatar 14251

Implementation summary

The Project became the second utlity scale renewable project in Mongolia by connecting 50MW wind farm to the central energy system in the Tsogttsetsii, Umnugobi province. The Project is managed by an experienced and reputable local developer Newcom and an international investor SoftBank, Japan. The windfarm started supplying energy to the grid in November 2017, well before the expected timeline and with cost savings. It is an example of optimal renewable deployment in the country such as Mongolia with abundant renewable resources.

The Project saved approximately 455,000  TCO2 emission since its operation.

PSD last updated

18 Feb 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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