IEEJ：August 2016 © IEEJ2016

ENERGY REGULATORY COMMISSIONIEEJ:August 2016

ENERGY DEVELOPMENT CENTER

MONGOLIA
COUNTRY REPORT

Prepared by JICA trainee ERDENEBULGAN Bazarvaani
SHIJIRBAT Sharaa

JUNE 2016

IEEJ：August 2016 © IEEJ2016

GENERAL INFORMATION••••••••••

Geography: Mongolia is situated in northern Asia,bordering China and Russia.
Population: 3.1 million
Ethnic groups: Mongols 95%, Kazakhs 5%
The total land area: 1.56 million squarekilometers.
Lowest annual average: -33°C (-50°C)
Highest annual average: +23°C (+35.8°C)
GDP nominal: Total USD 12.5 billion, Per capita
USD 4,353
Natural resources: Coal (thermal & metallurgical),copper, molybdenum, silver, iron, phosphates, tin,nickel, zinc, wolfram, flourspar, gold, uranium andpetrolium
Currency: MNT togrog, USD1=MNT2000
Major industries: Mining, cashmere andagriculture

IEEJ：August 2016 © IEEJ2016

ENERGY ENDOWMENTS IN MONGOLIA
COAL
Coal Basins

key Mines•

Estimated total resources ~ 173 billion ton in 15
coal basins•

Over 370 identified occurrence in 85 deposits•Nariin Sulhait•

Proven Reserves 12 billion ton, of which 2billion is coking coal•Tavan tolgoi•

Around 1/3 in Gobi Region•

Around 1/3 in Eastern Region••

Mines in Gobi area are for export /18 million in2013/

Mines in other region are for power production andhousehold heating /12 million in 2013/•

Baganuur, Shivee-Ovoo, Shariin Gol,Aduunchuluun etc.,

IEEJ：August 2016 © IEEJ2016

ENERGY ENDOWMENTS IN MONGOLIARENEWABLES• 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 scaleapplications, Power density 400-600 W/m2, the resource could potentially supply over1100 GW of installed capacity.
– Hydro: Theoretical potential 6.2 GW, more than 1 GW of these ahs been identified

Asia Solar Radiation

IEEJ：August 2016 © IEEJ2016

ENERGY ENDOWMENTS IN MONGOLIAURANIUM

Uranium Resources in Mongolia•Mongolia contains six uranium strata
and more than 100 uranium deposits.

•Mongolian geologists now believe thatMongolia has 60,000 metric tons ofuranium reserves, while Russian experts
have much higher estimates, ranging
from 120,000 to 150,000 metric tons.

•Main uranium deposits located in theWestern province.

•Dornod Deposits-28868 tonne,•Gurvanbulag Deposite- 16073 tonn,•Mardai Deposit 1104 tonne.

IEEJ：August 2016 © IEEJ2016

ENERGY SECTOR OF MONGOLIACURRENT STATE
Central Power System
Western Power System

Eastern Power System

Ulaanbaatar

Altai-Uliastai Power Sytem

IEEJ：August 2016 © IEEJ2016

ORGANIZATIONAL STRUCTURE IN ENERGY SECTOR

CHPs -8TransmissionCompanies -3

Electricity
Distribution
Companies - 4

Heat Plants -2

POWER
SECTOR

National
DispatchingCenter

EnergyDevelopment
CenterHeat
Distribution
Companies -2
EnergyRegulatory
Authority

Ministry ofEnergy

NationalRenewable
Energy Center

Energy Economic
Institute
7

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ENERGY SECTOR OF MONGOLIA
CURRENT STATE
Total Installed Capacity of Power Plants-1235 MW,
by type
CHP/Coal/85%

Renewables, 0.62%
Diesel7%
Wind Farm
5%

Electrcity Prodcution + Import, 2013
by type of sources, total 6.3 bln.kWh,

Import18.8%

Diesel0.1%
Wind Farm
0.8%

Hydro
0.9%

CHP/Coal/79.3%

Hydro
2%

Structure of Electricity Consumption by Sector IndustryandConstruction
47%

Export0%
Station Own
Use
12%

Transmission&Distribution
losses12%

Transport&Communica
tion
3%

Agriculture
1%
Others7%

Houshold &Comunal
housing
18%

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ENERGY SECTOR OF MONGOLIA
CURRENT STATECentral energy system (CES): 94.6%
There are 5 CHPs and 1 wind park are generating electricity;220 kV double lines connect to Russia;

Western energy system (WES): 2.5%
25% of power supply is from 1 small hydro power plant;

WES is connected at 110 kV to Russia

Eastern energy system (EES): 3.5%Southern energy system (SES): 0.8%




Most of electricity supply is from China and also very small CHP is generating

Altai-Uliastai energy system (AUES): 1.1%



1 CHP is generating and supplying this area

3 small hydro power plants and 2 diesel power plant generating 80% of electricity
supply and 20% is supplied by CES

Considering the seasonal variation in electricity demand, imported electricity isrequired to meet demand especially during peak demand times in the winterIEEJ：August 2016 © IEEJ2016

ENERGY SECTOR OF MONGOLIA
CURRENT STATE

Electricity market- Single buyer model in CES
Producers: 5 of CHP plants, 1 of WP

Transmitter: 1National dispatching center: 1Distributors & suppliers: 12All Mongolian CHP plants are state-owned, equally divided among the Ministry ofEnergy, the Ministry of Finance and the State Property Committee by one thirdeach.
Several operating companies are in charge of operating and managing the power
plants and the transmission and distribution grids. Most operating companies arestate-owned and others are based on public-private partnerships.

IEEJ：August 2016 © IEEJ2016

CURRENT ENERGY POLICY AND MEASURES
Past energy demand and supply

Electricity generation and imported, GWh/year

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CURRENT ENERGY POLICY AND MEASURES
Past energy demand and supply
1,860 kWh/Capita

Electricity consumption, GWh/year
1,575 kWh/Capita

IEEJ：August 2016 © IEEJ2016

OUTLOOK OF ENERGY DEMAND AND SUPPLY
Outlook of energy demand and supply
Electricity consumption, GWh/year
Between 2015 and 2030 the country’s
electricity consumption rate will reach
1,600 – 3,000 MW

As Energy Sector Development Plan of Mongolia, 2013
Average growth is 9.3%

Average annual added capacity - 174 MW

Mining projects: OyuTolgoi- cupper mineand TavanTolgoi - coking coal mineIEEJ：August 2016 © IEEJ2016

ENERGY SECTOR OF MONGOLIA– STATISTICS

Primary Energy Supply and Economic Indicators((Unit : 1,000 TOE, %) *Жилийн дундаж өсөлт, (%)

2000

2005

2010

2012

’00-‘05’05-’10’10-’12

Total Primary Energy Supply (1,000 TOE)

2,564

2,800

3,545

8,526

1.8%4.8%

55.1%

Energy per capita (TOE)

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%

Import Dependency (%)

Domestic Production, Import and Export((Unit : 1,000 TOE, %) *Жилийн дундаж өсөлт, (%)

2000

20052010

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

3

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* 1,000 TOE- 1,000 Tonnes of Oil EquivalentIEEJ：August 2016 © IEEJ2016

ENERGY SECTOR OF MONGOLIA– STATISTICS

Structure of Primary Energy Supply by Source
20002010Жилийн дундаж өсөлт (%)

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%

Coal
Oil
Hydro
Traditional Fuels & Others
Total

2005

(Unit : 1,000 TOE, %)*’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%

* 1,000 TOE- 1,000 Tonnes of Oil Equivalent
10,000Trend in Supply Share

8,000(200020052010 2012, %)

6,000
4,000

• Coal : 70.2 67.7 65.6  80.7

2,000• Petroleum Products : 18.4 20.9 24.8 15.1

01990
CoalOil

1995

2000

Hydro

2005

2010

2012

Traditional Fuels & Others•Hydro  : 0.010.01 0.13 0.11•Traditional Fuels & Others : 11.4 11.5 9.5 4.1

IEEJ：August 2016 © IEEJ2016

LEGAL FRAMEWORK & POLICY DOCUMENTS IN POWER SECTOR

NoDocument

Approved/UpdateТовч агуулга & гол заалтууд

Legal Framework
1Energy Law of Mongolia

2001/2011

Regulate matters relating to energy generation, transmission, distribution,dispatching and supply activities, construction of energy facilities and energy
consumption that involve utilization of energy resources & Tariff, License2

Renewable Energy Law ofMongolia

2007

Regulate generation and supply of energy utilizing renewable energy sources &tariff

2010

Establish the framework for granting concessions to private investors to use
existing infrastructure facilities owned by the state, and to construct new
infrastructure facilities for the purpose of providing services to the general public

2013Protect the legal rights and interests of investors in the territory of Mongolia, toestablish a common legislative guarantee for investment, to encourage
investment, to stabilize the tax environment, to determine the rights andobligations of investors

2002/2007

Development plan of power sources and transmission lines in Power sector andits implementation plans and actions

34Concession Law

Investment Law

Policy Documents
5Integrated Energy SystemProgram

6National Renewable
Energy Program

2005

Plans and actions to improve renewable share in structure of energy supply, andwidely using renewable energy in providing power to rural areas

9Infrastructure Development
Program of Southern Gobi

2010

Plans and actions to develop infrastructure for strategic mineral deposits in Gobiarea

IEEJ：August 2016 © IEEJ2016

CURRENT ENERGY POLICY AND MEASURESState of the Energy Sector“State Policy on Energy” 2015-2030

SAFETYTransfer the state
dominated energy sector
into private based
competitive market
Support innovation andadvanced technology inenergy sector, andimplement conservation
policyEnsure energy safety andreliable supply
Develop mutually
beneficial cooperation
with regional countries
Develop human resource

STATE
POLICY ON
ENERGYEFFICIENCYENVIRONMENT

Increase the production share ofrenewables and reduce negativeenvironmental impact from traditional
power generation and greenhouse-gas

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CURRENT ENERGY POLICY AND MEASURESState of the Energy Sector“State Policy on Energy” 2015-2030
2014/Base year/

1st stage /by2023/

2nd stage /by
2030/

Reserve Capacity for Electricity Generation

-10%

10%≤

20%≤

Reserve Capacity for Heat Generation in Cities

3%10%≤

15%≤

Profit Share on Tariff Structure in Central Region-16.2%

0.0%5.0%

Own use of CHP’s

14.4%

11.2%

9.14%

Transmission & Distribution Loss

13.7%

10.8%

7.8%

Share of Renewable on Total Installed Capacity
for Domestic Supply

7.6%

20%

30%

0.52 ton
CO2
equivalent

0.49 ton CO2
equivalent

0.47 ton CO2
equivalent

Reduction of Building Heat Loss

0%

20%

40%

Technological Achievements that have to be
utilized in Energy Sector

CFB

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

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

Indicators

Greenhouse Gas Emission per Gcal Power
GenerationIEEJ：August 2016 © IEEJ2016

CURRENT ENERGY POLICY AND MEASURESState of the Energy Sector“State Policy on Energy” 2015-2030
In the 1st stage 2015-2023: The stage to develop energy resources and backup
capacity, establish a foundation for the development of renewable, and commencelarge scale power plant and DC line projects cooperating with neighboring countries.
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 backup capacity to 10%, and create fundament
for renewable sector to development intensively.

In the 2nd stage 2024-2030: The stage to export secondary energy and develop
sustainably the renewable sector.
Integrated smart energy system will be created by connecting regions with highcapacity transmission lines. State owned Power companies will be become apublic 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.

IEEJ：August 2016 © IEEJ2016

OUTLOOK OF ENERGY DEMAND AND SUPPLY
Outlook of energy demand and supply

THE PLANNED PROJECTS IN THE SHORT AND MID-TERM PERIODS
100 MW Capacity Extentionof Darkhan and Erdenet
Telmen PP 100 MW

Ulaanbaatar:•CHP 5 450 MW•Tuul-Songino Pumped Storage 100
МW
Baganuur PP 600 MW

Westernregion PP
MW
EG HPP 315 MW
Shuren HPP 300 MW

Capacity Expansion ofDornod CHP
100 MW

Bayanteeg PP 60 MW
Choir- Sainshand 220 kV, 450km OHTL and Substations
Ulaanbaatar- Mandalgobi 220kV, 240 km OHTL andSubstations
Tavan Tolgoi 450 MWSainshand Wind Farm50 MW

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LEGAL FRAMEWORK & POLICY DOCUMENTS IN POWER SECTOR- SHORT TERM GOALS•In the framework for ensuring safety and reliability of power sector
Commence the projects:•••

CHP 5 of Ulaanbaatar Project,•Tavan Tolgoi Electricity only Power Plant Project,•Eg Hydro Power Plant ProjectIn the framework for improving efficiency:•Reduce loss in transmission and distribution network•Develop demand side management

In the framework for developing renewable and environmental protection:••

Strengthen the renewable energy fund and its activities

Improve financial capacity of power sector•

Renew tariff system•Increase private sector share in power sector

IEEJ：August 2016 © IEEJ2016

INTERNATIONAL COOPERATION POLICY ON POWER SECTORRESOURCE BASED REGIONAL POWER TRADE

Coal Based•

On-Site Electricity Production for Purpose of Export.
–Abundant thermal coal resources• Shivee-Ovoo brown coal deposite• Aduunchuluun brown coal deposite• Tavantolgoi and Gashuun Sukhait hard coal deposites–China leads its Electricity demand growth in the region

Renewable based•Solar and Wind Rich Resources Gobi Area–Gobi Tec and Asia Super Grid InitiativeIEEJ：August 2016 © IEEJ2016

Major difficulties and bottlenecks currently faced informulating energy policies•In recent years, electric consumption has being raised so national electrical factories
capacity is lacking and lifetime of equipment is being higher. These matters areaffecting ongoing and reliability of electric supply contrarily.

•Currently, power station with high capability should be established in order to provide
development of mining sector, and policy to export power should be implemented
instantly in connection with commissioning bigger mining deposits in Mongolia. If
these activities are not carried out in short time, energy shortage will be occurred andfurthermore it may be one of the factors that slow down country’s development.

•To liberalize price of power, to shift this sector market relations completely, and toprovide convenient condition that attracts investment.

•Mission of the energy sector is to develop new structure based on technique andtechnology that are not harmful against nature and environment. In addition,requirements, such as increasing renewable energy share in such sector, as well as
establishing large hydro power plants to adjust power system operation using hydroenergy, are being faced.

•Electric insufficiency is still high; interest to improve performance of electric
consumption is not arisen because of legal framework to encourage and support
electric saving is not provided completely.

•Moreover, lack of local areas’ heat supply and necessity hot water affectdevelopment of rural areas and its citizens’ stabilized living condition contrarily.

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SUBJECTS TO STUDY•

Energy demand and supply forecating (energy balance);••In state policy on energy, electricity consumption will raise high, therefore thegovernment issued licences to quite number of IPP and RE projects. But
performance hasn’t reached forecasted demand yet. If this demand will notchange, the government or single-buyer will pay large number of capacity
payment to IPPs

Liberalization of energy sector (electricity market and tariff);•Since 2010, the government has been considering liberalization of energy
sector. But now electricity market is still monopol market and energy tariff iscontrolled and main companies in energy sector are owned by state. There is
not any development.

•Experience of energy market from other countries;•Energy and other resource data management;•Mongolia is mainly considering electricity, heat and resources of them in energy
sector. Since updated law on energy from 2015, natural gas for households isadded.

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Thank you
Contact : report@tky.ieej.or.jp