Mongolia’s Private Sector Led Renewable Energy Programme

Mongolia

 

Mongolia has committed to supply 30% of the country’s energy through renewable energy by 2030 as part of its NDC targets. However, financial barriers such as high interest rates and prohibitively short tenors have limited renewable energy investments. As a result, renewable energy projects were more expensive to realise than coal-fired power plants. The development of a 10MW solar photovoltaic (PV) farm located in the Sumber Soum area of Mongolia has been jointly implemented by the XacBank and the Mongolian project developer ESB Solar Energy, following the Green Climate Fund’s (GCF) approval in late 2017. GCF supported the solar power plant project through a long-term concessional loan, co-financed by domestic sources, including project developers. The project started feeding into Mongolia’s main electricity grid in the first quarter of 2019.


The project is forecasted to generate 15,395 megawatt hours (MWh) of electricity each year and thus reduce greenhouse gas (GHG) emissions by 12,270 tonnes of carbon dioxide equivalent (tCO2eq) annually. Moreover, the solar plant comes with significant environmental and social co-benefits. It is projected to save 170,000,000 litres of water, which would otherwise have been required by a coalfired generator. This project is a boon for the worsening air quality conditions of the Mongolian capital
Ulaanbaatar, which has been plagued with problems of air pollution for many years.


This solar farm has paved the way for increased private sector participation, which will ease the financing of future renewable energy projects. It plays a pivotal role in forging a new market in largescale solar energy driven by the country’s domestic private sector. It has already demonstrated the effectiveness of devising customised international climate finance products to suit the specific Needs of national projects, taking into account the country’s economic situation and thus leading to successful
implementation.


This case study is an example of good practice due to its potential for replicability across other regions and countries, its strong political buy-in and the alignment with a number of Sustainable Development Goals.