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Pitfalls of the Mid-term Energy Program of Mongolia

6 December 2018 Topics:

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The new Mid-term Energy Program of Mongolia disregards financial, environmental and climate commitments – may increase significantly Mongolia’s debt and carbon footprint.

For a country that just narrowly escaped financial default[1], the new energy mid—term program of Mongolia (2018- 2023) suggesting to increase current debt burden by borrowing USD 4.0 billion to expedite development of 8000 megawatts of coal-thermal energy production capacity is a reckless plan to say the least.

With current electricity generation system of Mongolia totaling around 1200 MW this is a bold increase, which will have consequences for global climate, local environment, human health and country’s political and financial independence.

The Mid-term Program contains many politically correct statements about reducing energy losses, promoting private energy generation, developing renewable energy, including solar-roof systems.

However, it puts above all objectives  the rapid development of coal-thermal power plants (CHPs) at the same time does not reflect in its budget costs for the implementation of crucial systemic measures. The Program and its budget (see Table 1) appear to be a product of lobbying by various energy firms not only from Mongolia but also from Russia and China, each securing their own line items in this highly compartmentalized and thus incoherent document.

Table 1: Mongolia’s Midterm Energy Program intends to increase carbon footprint 9-fold adding over 3 billion USD to national debt. It also slows down expansion of solar and wind energy.

Purpose

Projects

MW

USD M

USD/kW installed

State Loan USD M

Export to China

Shivee Ovoo without grid

5800

7000

1206

0? Foreign investment

Mine expansion

Baganuur & Shivee-Ovoo

30+ million ton/annum

300

 

200 (Estimate)

and Coal-thermal plants upgrade (till 2023)

15 projects

900

1200

1300

1300

Hydro

Egiin &Erdeneburen

400

1000 (under estimated)

2500 (likely 70% more)

1000

Transmission

10 projects

2000+ km

570

 

570

Solar

1

60

48

800

only private

Wind

1

100

190

1900

0 only private

Battery/Storage

1

100

285

2850

285

New CHPs (Tavan Tolgoi, Baganuur, etc)

3-5 projects

1500

2180

1500

700 (Est.) + private invest.

TOTAL

8760 (2960 domestic)

12780 (5780 domestic)

4055

Coal

8000 (2200 domestic)

10650 (3650 domestic)

2700 with transmission

Other measures: policy implementation, IT, efficiency, innovation, etc

includes 30 MW of "renewables"

160

Source: Aggregation of data from Mongolia Law Portal https://www.legalinfo.mn/annex/details/8750?lawid=13738

Main program components raise major doubts, such as the 700 MW Baganuur Coal-thermal power plant built by the China Nuclear Industry 22 Corporation for "domestic needs" or the 5800MW Shivee Ovoo coal-energy base planned by the China State-Grid Corporation solely for imports of energy from Mongolia. Recent pledges made by China’s Government to avoid negative environmental and climate impacts in its Belt and Road Initiative, especially in the context of Paris Agreement, look unconvincing if Sino-Mongolian energy cooperation will be implementing such unsustainable colonial-style projects.

All non-fossil-based energy sources to be developed compose only 8% or 690 MW out of 8760 MW of planned new generation. With these plans it is highly unlikely that Mongolia will fulfill its pledge (reiterated in the Program) to achieve 30% share of renewables by 2030. Mongolia will, however, achieve its 2020 promise to install 20% of renewable capacity, which will come solely from wind and solar farms and not from development of large hydropower as initially planned by Mongolian officials.

Mongolia’s potential for solar and wind energy is at least 2000 greater than its hydropower and can be utilized much faster at lower cost. There is no surprise that construction of the Egiin Gol Hydropower Project planned since the early 1990s has not even started, while up to 200 MW of wind and solar parks sprang up in less than a decade. Long and often arduous planning and construction periods of hydropower projects, with installation costs well exceeding USD 2500 per kW (against USD 8000/kw for solar and 1850/kw for wind energy), resulting in extremely high environmental and social footprint as well as in tensions with the neighbors are few of many reasons of why hydropower should not be pursued on water-scarce rivers of Mongolia.

Completely unabashed by all obvious positive and negative experience, the Program authors restricted to 190 MW development of renewables (using mostly private funds) and suggested to borrow at least USD 1 billion to develop 400MW of large hydropower in the same locations where it sparked controversy for last decades. Hydropower is justified by proponents as way to stabilize the whole energy system.

It should be noted, that traditional hydropower is seen now as only one of possible options to add much needed maneuvering capacity to national energy system. The Program justly lists other solutions such as supply of coal-bed methane gas for gas-turbines, large battery storage, pumped-storage hydropower, improvement in transmission and dispatching, etc. However, from all those measures only high-capacity storage 100 MW battery with a price tag of USD 285 million and the ADB as the source of loan is listed in the budget, while for the rest no funding is envisioned and thus those proposals likely not to be implemented.

At today’s COP24 meeting the Mongolian delegation is likely to be pursuing commitment for soft loans and grants to support its controversial energy policies. We hope that international community will abstain from financial support from climate funds for green-washed coal and hydropower projects that will increase Mongolia’s emissions 9-fold as well as sink it into a next debt-trap. There are better energy initiatives that could be supported in Mongolia, which has enormous resources of wind and sunshine,

For more information see http://www.transrivers.org/2018/2472/ and contact:

Rivers without Boundaries International Coalition www.transrivers.org

Mongolia: Sukhgerel Dugersuren sukhgereld@yahoo.com Mobile: 976-99185828

International: Eugene Simonov. Tel. 86-13942868942, email: simonov@riverswithoutboundaries.org, skype esimonov1968


[1] http://pubdocs.worldbank.org/en/582841530843734119/pdf/Report-ENG-2.pdf

Source of illustration : Presentation "Role and expectation of Mongolia in promoting energy cooperation" by Yeren-Ulzii Batmunkh at the North-East Asia Power Interconnection and Cooperation (NEARPIC) Forum

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