Interview: Baatar Unenbat
What role can the private sector play in achieving energy self-sufficiency for Mongolia?
BAATAR UNENBAT: The contribution of the private sector is essential for Mongolia to achieve energy self-sufficiency. This is not only true from a technical point of view but also from a financial perspective. Risks cannot be undertaken by the government exclusively, as this would directly affect the taxpayer. Therefore, the contribution of the private sector needs to be encouraged and fostered through the development of more public-private partnership (PPP) projects in the energy sector. Parliament has laid the foundation for PPP projects to flourish with a new law, however, more projects are needed to convince the private and public sectors that this is a good model to pursue. In this regard, the Salkhit wind farm is a great example to look at. It has been developing for over a decade to prove that such projects can work here. It is clear that Mongolia’s private and public sectors need to increase cooperation and collaboration in order to ensure that we are all on the same page, with clear and defined roles for each project, creating a win-win scenario for all parties involved.
How do you evaluate the opportunity for more foreign participation in this sector?
UNENBAT: Mongolia will need $40bn to $60bn in investments in the next decade to unlock its potential across different sectors, including energy. This brings great opportunities for foreign firms in this field. At the same time, the opportunity for local companies to grow with more foreign participation is very real. In general terms, Mongolian firms are not as big as those in other, more developed countries. However, a great deal of time and experience is required to learn the intricacies and peculiarities of this market. One simply cannot come to Mongolia and try to do business as if it were any other country. Local firms can boost collaboration with foreign firms, which would bring a higher level of knowledge, technology, technical know-how and expertise. Having more foreign companies involved will therefore be very important for the overall, long-term development of Mongolia’s energy sector.
Should Mongolia focus on developing alternative means of producing energy, rather than prioritising the completion of coal-fired plants like CHP5?
UNENBAT: The government of Mongolia is prioritising CHP5 as heating demand is predicted to reach 2035 Gcal per hour in 2017, according to the feasibility study.
Although other methods for heating were discussed by the authorities and engineers, they concluded that these were technologically and economically not feasible compared to CHP5. However, the government is supporting and promoting other types of power plants that can help stabilise the energy system. Mongolia’s renewable energy potential is 13,000 TWh per year with about 270-300 sunny days per year and average sunlight duration of 2250-3300 hours in most of the territories of Mongolia. We have good-to-excellent wind resources equivalent to 1100 GW of wind electric potential. Still, renewable energy represents only about 3% of the country’s total electricity generating capacity, but we have plans to reach 20% by 2020.
What are the major challenges Mongolia might encounter prior to the completion of CHP5, and how might these be successfully overcome?
UNENBAT: All of the major coal-fired power plants in Mongolia are over 30 years old and deteriorating. The challenge Mongolia is facing now is the shortage of electricity and heat. According to the Energy Regulatory Authority, energy imports from Russia are projected to increase to 355m KWh, up from 263m KWh in 2010, but the high voltage lines connecting Russia and Mongolia cannot accommodate this. So, CHP3 and CHP4 are being expanded as temporary solutions. This should be sufficient to meet Ulaanbaatar’s growing energy and heating demand for the coming few years, until the new CHP5 is operational. When this happens, Mongolia will have secure, long-term energy availability.
Read More from OBG
