Friday, February 10, 2012

UBPost: Could Mongolia Make the Transition from Coal to Wind?

Originally posted in the UB Post, Monday, Feb 6, 2012
by D. Munkhchimeg

The increasing minding of Mongolia's ample mineral resources has driven rapid economic growth in the country. In 2011 its GDP growth reached 17.3 percent. But we should keep in mind that Mongolia's mineral resources will run out someday. On the other hand, renewable energy sources such as the sun, wind and water are practically limitless. So not only mining, but also renewable energy may be a key part of Mongolia's development, providing future energy security.

Today, coal, the fossil fuel that has the highest emissions of greenhouse gasses, comprises the bulk of Mongolia's energy production, generating more than 80 percent of the country's power and heat.

"All forms of energy are expensive, but as time progresses, renewable energy generally gets cheaper, while fossil fuels generally get more expensive," said researcher Kh.Batsuuri during a recent presentation on wind energy. According to the 2011 IEA report, a portfolio of renewable energy technologies is becoming cost-competitive. "Wind power is one of the fastest growing sources of power generation," he added.

With its wide, windswept high plains, Mongolia has large untapped wind energy resources. It was determined that 10 percent of the total land of Mongolia has sufficient sources to be used for wind power production.

"Mongolia has the wind capacity to generate enough electricity to supply all of China's electric needs," says B.Byambasaikhan, CEO of Newcom Group's subsidiary Clean Energy, during the discussion "The Green Solution: Coal or wind?" which held on last Friday.

"There is no doubt that most of Mongolia's energy needs will be supplied by coal," admits G.Purevdorj, scientist at Mongolian Academy of Sciences. But with mounting environmental problems in Mongolia, it is vital to take full advantage of its renewable resources, as renewable energy could help mitigate the increased greenhouse gas emissions, he added. There is an urgent need to look to cleaner energy solutions than coal.

The Government signed the United Nations Framework Convention on Climate Change (UNFCCC) in 1992 and ratified the Kyoto Protocol in 1999. But how can we stave off the potentially calamitous effects of climate change? It is encouraging that the Government claims to support and promote actions and initiatives towards green energy sources.

In 2005, Mongolia's parliament approved the National Renewable Energy Program, which aims to increase the country's renewable energy share to 20 to 25 percent by 2020. And in 2007, a Law on Renewable Energy waa adopted.

Hydro electrical plants have been built at Durguun and Taishir and the national program 100,000 Sun Lights has been implemented.

As a result, it is now common to see a nomad's ger fitted with solar panels powering satellite receivers. Despite this progress, renewable energy still only generates a tiny fraction of the country's electricity.

The Government needs to reconsider the fact that no concrete results of massive investments can be seen in the country's green energy sector.

In the private sector large scale activities have been initiated towards the development of Mongolia's first wind energy park.

Newcom Group is working to put into operation a Wind farm in Tuv aimag's Salkhit Mountain with the capacity of 50 MW. According to Byambasaikhan, Salkhit the wind farm would supply almost 5 percent of the country's electricty when it starts operating in November of 2012.

If Newcom completes its wind power plant project successfully, it shall lead many other projects for renewable energy.

However, experts warn that there might be more barriers to the private sector than opportunities. Lack of infrastructure and uncertainty in the regulations remain major problems.

General Electric signed a deal with Newcom to supply 31 turbines to its wind farm project. But it's not just a matter of getting the necessary equipments it's also a question of transporting them. "Wind fans and turbines are very big. Transporting them by dirt road is extremely difficult, as the road from Zamin Uud to Choir is not completed yet" says B.Byambasaikhan. Just imagine, each wind turbine weighs 240 tons and its base weights 1000 tons.

The fact that Government regulates energy prices also scares investors. "State monopoly, strong regulations, and fixed price hinder the private sector initiatives" explained Ch.Otgonchuluu, a director of Economic Policy and Competitiveness Research Center.

Newcom has already signed a power-purchase agreement with the Government for the proposed wind power plant project. Each year it would produce 160 million kWh of electricity that would supply the energy demands of 70,000 households, reduce the emissions of greenhouse gases by 150,000 tons and save 1,2 million tons of clean water.

The project costs USD 115 million or 165 MNT and within the law sets purchase cost at 9.5 cents per kWh, it requires 11 years to justify the investment.

"The cost had been set at 9.5 cents when the Law on Renewable Energy was adopted in 2007 and is likely to remain for another 5 years. Since inflation has been rising, it is important to amend the law and increase the power purchase cost in order to create favorable conditions for investments" said Purevdorj.

"Of course, it would be more attractive for investors if the cost is set, for example, at 15 cents," says B. Byambasaikhan, "But we are not looking at short term goals. It's not going to be easy, but we need to get building."

Word List:

  • GDP = gross domestic product: the total value of the goods and services that a country produces in a year, not including income received from money invested in other countries
  • bulk = the majority or largest part of something
  • portfolio = used about other sets of things that belong to someone
  • windswept = a windswept place has a lot of wind and not many buildings or trees to protect it
  • untapped = not being used yet, but existing in large amounts that could bring profits or benefits
  • sufficient = as much as is needed
  • mounting = increasing, especially in a way that makes a situation worse
  • to mitigate = to reduce the harmful effects of something
  • to stave off = to stop something from happening
  • calamitous = causing serious damage, or causing a lot of people to suffer
  • concrete = based on facts and information
  • massive = very large in amount or degree
  • lack =  situation in which you do not have any, or enough, of something that you need or want
  • energy demand = Amount of energy required