ENERGY SECTOR OF MONGOLIA,

POLICY AND CHALLENGES

Bayarbat .S,
Director-General,
Finance and Investment Department

CONTENT

Energy Sector of Mongolia

Energy Endowments in Mongolia
Statistics
Current State of Power Sector

Legal and Institutional Framework of Power Sector

Legal Framework
Current challenges

Mid and Short term policy, Cooperation opportunities

on Energy sector
Near-term objectives
Foreign Investment for Domestic Projects
Resource Based Regional Power Trade

Concession projects on Energy sector

Energy Sector of Mongolia

Energy Endowments in Mongolia

COAL
Coal Basins

Estimated total resources ~ 173 billion ton in 15

coal basins

Over 370 identified occurrence in 85 deposits

Proven Reserves 12 billion ton, of which 2 billion is

coking coal

Around 1/3 in Gobi Region

Around 1/3 in Eastern Region

key Mines

Mines in Gobi area are for export /18 million in 2013/

Nariin Sulhait

Tavan tolgoi

Mines in other region are for power production and

household heating /12 million in 2013/

Baganuur, Shivee-Ovoo, Shariin Gol,

Aduunchuluun etc.,

Energy Sector of Mongolia

Energy Endowments in Mongolia

Oil
OIL EXPLORATION MAP

Total 31 exploration blocks

Current Proven reserve is 332 million ton

Energy Sector of Mongolia

Energy Endowments in Mongolia

Renewable energy
Rich resources of Solar, Wind and Hydro in Mongolia:
Solar: 270-300 sunny days in a year, 4.3-4.7 kWh/meter or higher per day
Wind: 10 % of the total land area can be classified as excellent for utility scale
applications, Power density 400-600 W/m2, the resource could potentially supply
over 1100 GW of installed capacity.

Hydro: Theoretical potential 6.2 GW, more than 1 GW of these ahs been identified

Asia Solar Radiation

Date & Location

Energy Sector of Mongolia

Energy Endowments in Mongolia

Uranium

Mongolia contains six uranium strata

and more than 100 uranium deposits.

Mongolian geologists now believe that

Mongolia has 60,000 metric tons of
uranium reserves, while Russian experts
have much higher estimates, ranging
from 120,000 to 150,000 metric tons.

Main uranium deposits located in the

Western province.

Dornod Deposits-28868 tonne,

Gurvanbulag Deposite- 16073 tonn,

Mardai Deposit 1104 tonne.

Energy Sector of Mongolia

Energy Statistics
Primary Energy Supply and Economic Indicators

((Unit : 1,000 TOE, %) *

Annual average growth, (%)

2000
Total Primary Energy Supply (1,000 TOE)

2005

2010

2012

00-05

05-10

10-12

2,564

2,800

3,545

8,526

1.8%

4.8%

55.1%

1.06

1.09

1.27

2.97

0.5%

3.1%

52.7%

Population (thousand)

2,408

2,562

2,781

2,868

1.3%

1.6%

1.6%

GDP (billion tog, at 2005 constant price)

2,100

2,780

4,154

5,438

5.8%

8.4%

14.4%

Energy/GDP Intensity (TOE/million Tog)

1.22

1.01

0.85

1.57

-3.8%

-3.3%

35.5%

19.4%

21.4%

25.6%

15.5%

1.9%

3.7%

-22.2%

Energy per capita (TOE)

Import Dependency (%)

Domestic Production, Import and Export

((Unit : 1,000 TOE, %) *

Annual average growth, (%)
2000

2005

2010

2012

00-05

05-10

10-12

Indigenous Production

2,019

3,592

11,591

14,038

12.2%

26.4%

10%

Import

497.1

597.9

908.9

1321.7

3.8%

8.7%

20.6%

Export

1,405

9,028

6,227

236%

45.1%

-16.9%

2,564

2,800

3,545

8,526

1.8%

4.8%

55.1%

Total Domestic Energy Supply

Energy Sector of Mongolia

Energy Statistics
Structure of Primary Energy Supply by Source
2000
Coal
Oil
Hydro
Traditional Fuels & Others
Total

(Unit : 1,000 TOE, %)*

2005

2010

2012

1,798

1,895

2,324

6,884

70.2%

67.7%

65.6%

80.7%

472

584

879

1,284

18.4%

20.9%

24.8%

15.1%

0.25

0.28

4.73

8.96

0.01%

0.01%

0.13%

0.11%

293

321

337

348

11.4%

11.5%

9.5%

4.1%

2,564

2,800

3,545

8,526

100.0%

100.0%

100.0%

100.0%

Annual average growth (%)

00-05

05-10

10-12

1.0%

4.2%

72.1%

4.3%

8.5%

20.9%

2.1%

76.0%

37.6%

1.8%

1.0%

1.6%

1.8%

4.8%

55.1%

10 000
8 000
6 000
4 000
2 000
0
1990
Coal

Oil

1995

2000

Hydro

2005

2010

2012

Traditional Fuels & Others

Energy Sector of Mongolia

Current state Power Systems of Mongolia

Western Power System

Eastern Power System

Ulaanbaatar

Altai-Uliastai Power Sytem

Energy Sector of Mongolia

Current state
Energy sector

10

Energy Sector of Mongolia

11

Energy Sector of Mongolia

Recent challenges
Energy sector
1) Capacity shortage on Domestic Power Generation due to:

6 000

Electricity Production & Import, GWh

1600

Electricty Import by Region, GWh

1400

5 000

1200

4 000

1000

3 000

800

2 000

600
400

1 000

200

0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Domestic Production

0
2008

Import

2009
Central

17,0%

2010
Western

2011
Eastern

2012

2013

2014

Oyutolgoi mine

GDP & Electricity Demand Growth rate, %

12,0%

7,0%

2,0%

-3,0%
GDP Growth rate

Electricity Demand Growth rate

12

Energy Sector of Mongolia

Recent challenges
Energy sector
2) Lower Efficiency of Existing Power Plants due to:
Aging of main equipments
Insufficient financial capacity for Rehabilitations
Tariff

3) Higher Loss of Transmission & Distribution Network due to:

Long transmission & distribution lines to lower demand lowest
population density in the world
Social issues for people in remote area

Overload in distribution network in the cities

Low Capacity of State Budget

Time lag on capacity extension on rehabilitation

Lack of investment

Aging of distribution network

Time lag on rehabilitation
Lack of Investment

60

47

44

43

Lenght km

51
50
40
29

30
20

26
12

10

1400

700

1200

600

1000

500

800

400

600

300

400

200

200

100

0
5-10 years

0
CHP2

CHP3

CHP4

Dar CHP Erd CHP Dor CHP Dz CHP

Number of transformers

Aging Situation of Distribution Network in Ulaanbaatar

Aging of Exiting Power Plants

35, 10, 6 kV lines

15-30 years

35-50 years

6, 10 kV cabel lines

above 55

35/10-6, 6-10 kV transformers

13

Energy Sector of Mongolia

State Policy on Energy 2015-2030

SCOPE

STRUCTURE

Current
State
Challenges

Vision,
Fundamental
Principles and Priority
Areas

and

Strategic Goals and its

Objectives

Implementation Stage,
Criteria and Indicator
and Expected Results

TIME FRAME

Primary Energy and

Fuel Supply
Power Sector
Generation
Transmission and
distribution
Supply

1st stage: 2015-2023

Privatization
Restructuring

2nd stage: 2024-2030

Medium-term National
Energy Program 8
years

Human Resource

Tariff

and

Base year - 2015

Vison,
Goals
and
Objectives - 15 years
/2015-2030/
Implementation Stages
- 2015-2030

14

Energy Sector of Mongolia

State Policy on Energy 2015-2030

Priority Areas and Strategic Goals

SAFETY

Transfer the state

dominated energy sector
into private based
competitive market
Support innovation and
advanced technology in
energy sector, and
implement conservation
policy

Ensure energy safety and

reliable supply

Develop mutually beneficial

regional regional

Develop a human resource

STATE POLICY
ON ENERGY

EFFICIENCY

ENVIRONMENT

Increase the production share of renewables and

reduce negative environmental impact from
traditional power generation and greenhouse15gas

Energy Sector of Mongolia

State Policy on Energy 2015-2030

Expected Results
In the 1st stage 2015-2023: The stage to develop energy safety resources and
backup capacity, establish a foundation for the development of renewable,
enhance normal documents and improve legal environment.
The installed power capacity will be doubled, and start using critical
technology with high parameters. Hydro will be taken place at least 10% of the
total installed power capacity and it will increase packup capacity to 10%, and
create fundament for renewable sector to development intensively, enhance
tariff system.
In the 2nd stage 2024-2030: The stage to export secondary energy and
develop sustainably the renewable sector.
The backup capacity of power system will be reach at 20% and share of
renewables will be reach at 30%. Integrated smart energy system will be
created by connecting regions with high capacity transmission lines. State
owned Power companies will be become a public company. Distribution and
supply service will be privatized and energy sector will be worked as a
competitive marked with regulation. Secondary energy will be exported by
connecting with North east Asian countries with high capacity DC lines.

Energy Sector of Mongolia

State Policy on Energy 2015-2030

Expected Results - Criteria

Indicators

Reserve Capacity for Electricity Generation

Reserve Capacity for Heat Generation in Cities
Profit Share on Tariff Structure in Central Region
Own Use of CHPs
Transmission & Distribution Loss /excluding
Oyutolgoi/
Share of Renewables on total Installed Capacity for
Domestic Supply
Greenhouse Gas Emission per 1 Gcal Power
Generation
Reduction of Building Heat Loss

Technological Achievements that have to be

utilized in Energy Sector

2014
/Base year/
-10%
3%
-16.22 %
14.4 %

1st stage
/by 2023 /
10 %
10 %
0%
11.2%

2nd stage
/by 2030/
20%
15 %
5%
9.14 %

13.7%

10.8%

7.8%

7.62%

20%

30%

0.52 ton 2
equivalent

0.49 ton 2
equivalent

0.47 ton 2
equivalent

0%

20%

40%

CFB

Sub Critical
Coal Bed
Methane,
Battery Energy
Storage,
Pumped Storage

Super Critical,
Ultra S/Critical,
Hydrogen,
Concentrated
Solar Plant

Energy Sector of Mongolia

Amendments of Law on Energy

Purpose:
Enhance legal environment for investors in energy sector
of Mongolia
Amendments:
Utilization of Natural gas /coal bed methane/
Definitions
Regulation to relating matters for gas supply infrastructure
Interagency Relationship
Obligation of National Dispatching Center
Independent Power Producer and its regulations
Power Purchase Agreement and its regulations
Interrelationship between supplier and consumer
Obligation

Energy Sector of Mongolia

Amendments of Law on Renewable Energy

Purpose:
Enhance financial situation of single buyer model of Power sector
and ensure feeding tariffs in the Law on Renewable Energy
Amendments:
New term Encouraging tariff /gap between feeding tariff and
consumers tariff /
Definitions
Regulation to relating matters in tariff system
Power Purchase Agreement and its regulations
Regulation to relating matters

Energy Sector of Mongolia

NEAR-TERM OBJECTIVES

In the framework for ensuring safety and reliability of power sector

Commence the power generation projects:
CHP 5 of Ulaanbaatar Project,
Tavan Tolgoi Power Plant Project,
Eg Hydro Power Plant Project

In the framework for improving efficiency:

Reduce loss in transmission and distribution network
Develop demand side management

Improve financial capacity of power sector

Enhance tariff system
Increase private sector share in power sector

20

Energy Sector of Mongolia

COOPERATION OPPORTUNITIES
RESOURCE BASED REGIONAL ENERGY TRADE

Coal Based

Renewable based

On-Site Electricity Production for Purpose

of Export.

Solar and Wind Rich Resources Gobi Area

Gobi Tec and Asia Super Grid Initiative

Abundant thermal coal resources

Shivee-Ovoo brown coal

deposite

Aduunchuluun brown coal

deposite

Tavantolgoi and Gashuun

Sukhait hard coal deposites

China, Korea, Japan lead its

Electricity demand growth in the
region

21

Energy Sector of Mongolia

PLANNED PROJECTS
100 MW Capacity Extention
of Darkhan and Erdenet
Telmen PP 100 MW

Ulaanbaatar:
CHP 5 450 MW
Tuul-Songino Pumped Storage 100
W

Baganuur PP 600 MW

Western
region PP
MW, Hovd
Hydro PP

EG HPP 315 MW
Shuren HPP 300 MW

Capacity Expansion of
Dornod CHP
100 MW

Bayanteeg PP 60 MW

Choir- Sainshand 220 kV, 450

km OHTL and Substations
Ulaanbaatar- Mandalgobi 220
kV, 240 km OHTL and
Substations
Tavan Tolgoi 450 MW

Sainshand Wind Farm

50 MW
22

Energy Sector of Mongolia

Transmission line

PROJECT

Baganuur-Choir transmission line, substatiob

projects

Ulaanbaatar-Mandalgovi 330 kV 2 circuit

transmission line, 220kV 2 substation project

PROJCT COST
ESTIMATION
/Million US.D/

BIDDING
PROCESS

DEVELOP ELECTRIC
POWER LINE AND Finance-build-trasfer
SUBSTATION

39.1

BIDDING

178 km high voltage transmission line

project

DEVELOP ELECTRIC
Develop drawingPOWER LINE AND
Finance-build-transfer
SUBSTATION

87.7

BIDDING

330 kV 2 circuit 260 km high voltage

transmission line project, Mandalgovi,
Tavantolgoi 220 kV substation project

Develop drawingFinance-build-transfer

53.3

BIDDING

220 kV 2 circuit 202.4 km high voltage

transmission line, substation project

Develop drawingFinance-build-transfer

72.1

BIDDING

220 kV 2 circuit 317 km high voltage

transmission line, substation project

Develop drawing and

Feasubility studyFinance-build-transfer

43.1

BIDDING

157 km high voltage transmission line,

substation project

DEVELOP ELECTRIC
Develop drawingPOWER LINE AND
Finance-build-transfer
SUBSTATION

54.5

BIDDING

220 kV 2 circuit 216 km high voltage

transmission line, substation project

DEFINITION

DEVELOP ELECTRIC
POWER LINE AND
SUBSTATION
DEVELOP ELECTRIC
Undurkhaan-Choibalsan 220kV transmission
POWER LINE AND
line, substation project
SUBSTATION
DEVELOP ELECTRIC
Baganuur-Ulaanbaatar transmission line,
POWER LINE AND
substation project
SUBSTATION
Baganuur-Undurkhaan 220kV transmission
line, substation

Choir-Sainshand transmission line, substation

project

DEVELOP
Oyutolgoi-Tsagaan suvraga transmission ELECTRIC POWER
line, substation project
LINE AND
SUBSTATION
DEVELOP
Mandalgovi-Arvaikheer 220kV
ELECTRIC POWER
transmission line, substation project
LINE AND
SUBSTATION
DEVELOP
Nariin sukhait-Tavantolgoi 220kV
ELECTRIC POWER
transmission
LINE AND
6/18/2015 line, substation project
SUBSTATION

CONCESSION
TYPE

BRIEF INTRODUCTION

Build-transfer

45.9

Oyutolgoi-Tsagaansuvraga 220 kV 2
circuit 160 km transmission line,
BIDDING
Oyutolgoi substation expansion, 220/22
kV Tsagaan suvraga substation project

Build-transfer

66.3

BIDDING

280 km transmission line, substation

project

Build-transfer

82.9

BIDDING

220 kV 2 circuit 360 km transmission

line, substation expansion project
23

Date & Location

Energy Sector of Mongolia

Power plant

PROJECT NAME

DEFINITION

CONCESSION
TYPE

CAPACITY

PROJECT
BIDDING
COST /USD PROCESS

PROJECT STATUS

AWARDED PROJECTS
ULAANBAATAR
FITH COMBINED
1
HEAT POWER
PLANT

TELMEN POWER
PLANT PROJECT

DEVELOP COMBINED
HEAT POWER PLANT
FOR ULAANBAATAR
CITY

DEVELOP 100 MWT

CHP PLANT

TUUL-SONGINO
WATER
3
RESOURCE
PROJET

DEVELOP WATER
PURIFY PLANT & 100
MWT WATER LOAD
POWER PLANT

BAGANUUR
4 COMBINED HEAT
POWER PLANT

DEVELOP POWER
PLANT BASED ON
BAGANUUR DISTRICT
AND COAL ORE

CONCESSION AGREEMENT
PPA
SIGNED ON JUNE, 2014
BUILD-OPERATE- 450 MW CAPACITY 1.5 Billion
NEGOTIATIO PPA & OTHER REGUERED
TRANSFER
POWER PLANT
USD
N
AGREEMENTS ARE UNDER
NEGOTIATION
CONCESSION AGREEMENT
ABOUT
BUILD-OPERATE285.0 Million
SIGNED ON JUNE 2013
100 MW CHP PLANT
FINANCIAL
TRANSFER
USD
CONCESSIONAIRE IS WORKING
CLOSE
FOR REACHING FINANCIAL CLOSE
CONCESSION AGREEMENT
ABOUT
BUILD-OWN100 MW POWER 183.0 Million
SIGNED ON APRIL, 2014
FINANCIAL
OPERATE
PLANT
USD
CONCESSIONAIRE IS WORKING
CLOSE
FOR REACHING FINANCIAL CLOSE
CONCESSION AGREEMENT
PPA
SIGNED ON APRIL, 2015
BUILD-OPERATE- 700 MW CAPACITY 950.0 Million
NEGOTIATIO PPA & OTHER REQUERED
TRANSFER
POWER PLANT
USD
N
AGREEMENTS ARE UNDER
NEGOTIATION

24

Energy Sector of Mongolia

Power plant
BIDDING PROJECTS

BIDDING
PROJECT STATUS
PROCESS
DORNOD
DEVELOP CHP POWER
CONTRACT
BUILD-OPERATE- 100 MW CAPACITY 160.0 Million
CONCESSION AGREEMENT IS
COMBINED HEAT PLANT FOR DORNOD
NEGOTIATIO
TRANSFER
POWER PLANT
USD
UNDER NEGOTIATION
POWER PLANT
PROVINCE
N
DEVELOP POWER
CHANDGANA
PLANT BASED ON
POWER PLANT,
600 MW CAPACITY
CHANDGANA COAL
BUILD-OWNPOWER LINE
POWER PLANT AND
ORE AND POWER LINE OPERATE FOR
CONCESSION AGREEMENT
FROM BAGANUUR
POWER LINE FROM 1.6 Billion BIDDING IN
FROM BAGANUUR
POWER PLANT,
NEGOTIATION IS UNDER
TO UNDURKHAAN
BAGANUUR TO
USD
PROGRESS
PROVINECE TO
BUILD TRANSFER
PREPARATON
AND UNDURKHAAN
UNDURKHAAN AND
UNDURKHAAN &
FOR POWER LINE
TO CHOIBALSAN &
SUBSTATION
UNDURKHAAN TO
SUBSTATION
CHOIBALSAN
DEVELOP POWER
CONCESSION AGREEMENT
TEVSHIIN GOVI
PLANT BASED ON
BUILD-OWN600 MW CAPACITY 900.0 Million BIDDING IN
NEGOTIATION IS UNDER
POWER PLANT
TEVSHIIN GOBI COAL
OPERATE
POWER PLANT
USD
PROGRESS
PREPARATON
ORE
EXPANSION ON
"CHOIR"
SUBSTATION
EXPANSION ON
EXISTING CAPACITY
"CHOIR"
"CHOIR" SUBSTATION
OF '220/110/35/6 kV
CONCESSION AGREEMENT
19.0 Million BIDDING IN
SUBSTATION
AND
BUILD-TRANSFER
TO 200 MW,
NEGOTIATION IS UNDER
USD
PROGRESS
EXPANSION
DIFFERENTIATION
EXPANSION ON
PREPARATON.
STATION
EXISTING CAPACITY
OF 220/110/35/6 kV
DIFFERENTIATION
STATION
PROJECT NAME

DEFINITION

CONCESSION
TYPE

CAPACITY

25

Energy Sector of Mongolia

Power plant

PROJECT NAME

DEFINITION

CONCESSION
TYPE

CAPACITY

BIDDING
PROCESS

PROJECT STATUS

PROJECTS NO BIDDING YET

TAVALTAIN
HAVTSAL HYDRO
1
POWER PLANT
PROJECT

DEVELOP HYDRO
POWER PLANT ON BUILD-OPERATEKHOVD RIVER, BAYANTRANSFER
ULGII AIMAG

88.7 MWT HYDRO

POWER PLANT

NO BIDDING

NO BIDDING IN PROGRESS YET

KHOVD IRVER
2 HYDRO POWER
PLANT PROJECT

DEVELOP HYDRO
POWER PLANT ON BUILD-OPERATEKHOVD RIVER, KHOVD
TRANSFER
AIMAG

64 MWT HYDRO
POWER PLANT

NO BIDDING

NO BIDDING IN PROGRESS YET

TOTAL REQUIRED INVESTMENT IN ENERGY SECTOR /Including: Transmission line and power plants/
Total transmission line estimated costs:

544.9 Million US.D

Total power plant estimated costs:

5.5 Billion US.D

-Awarded projects:
-Bidding projects:

2.9 Billion US.D

2.6 Billion US.D

Total investments required in the Energy sector:

6.1 Billion US.D

26

Energy Sector of Mongolia

COOPERATION OPPORTUNITIES

For planned and potential projects of power plant and transmission lines:
As a financier, Contractor, Equipment supplier, Consulting service
Concession agreement: Built-Operate-Transfer, Built-Transfer,
Independent Power Producer
PPP

For existing power projects:

In the Projects of Operational enhancement and Restructuring:
Operator company
Consultant
In the Projects of Rehabilitation and Capacity Extension:

Investor, Contractor, Equipment supplier, Consulting service

27

THANK YOU
FOR YOUR ATTENTION