Ion Energy Mongolia

[Michael Rosiles]

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Electricity is a good that adds massive value to modern life: from having light at night; to washing clothes; cooking meals; running machinery; or connecting with people across the world. Many would argue that it is a crucial for poverty alleviation, economic growth and improved living standards.1

When looking at longer historical data it can be difficult to see how the energy mix is changing from year-to-year. Are we adding more renewables than fossil fuels? Are we in fact reducing our consumption of coal or oil?

This interactive chart shows the change in primary energy consumption from these sources each year. A positive figure means the country consumed more energy from that source than the previous year; a negative means it consumed less.

Energy intensity can therefore be a useful metric to monitor. Energy intensity measures the amount of energy consumed per unit of gross domestic product. It effectively measures how efficiently a country uses energy to produce a given amount of economic output. A lower energy intensity means it needs less energy per unit of GDP.

This metric monitors the second option. As we transition our energy mix towards lower-carbon sources (such as renewables or nuclear energy), the amount of carbon we emit per unit of energy should fall.

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Mongolia had a total primary energy supply (TPES) of 6.66 Mtoe in 2019. Electricity consumption was 7.71 TWh.[1] Mongolia is a big producer of coal, which is mostly exported.[2] Domestic consumption of coal accounts for about 70% of Mongolia's primary energy and makes up most of the electricity generation, accounting for about 87% of the domestic electricity production in 2019.[1]

In 2018, 7% of Mongolia's electricity came from renewable power sources, mainly wind power.[6] Mongolia has very sunny weather with average insolation above 1,500 W/m2 in most of the country, making solar power highly available. 247 MW of solar power plants have been approved for construction. Guaranteed power purchase agreements and favorable tariff structures promote further growth of the industry.[6]

Wind, solar and hydropower are becoming widespread around the world and for good reason: unlike fossil fuels, renewable energy sources produce little to no local pollution or greenhouse gas emissions, and are instrumental in combating climate change. As Mongolia is one of the countries most impacted by climate change, taking measures to counter the effects of climate change is imperative for the future health of Mongolia. Renewable energy can be used without depleting the earth's precious non-replenishable limited resources.

Renewable energy is increasingly economically competitive and contributes to independence from energy imports.

Mongolia is uniquely positioned to generate renewable energy to provide reliable and affordable electricity for its growing population and beyond. The Gobi Desert for instance, has been identified as having among the highest solar and wind energy potential in the world, with over260 days of bright sunlight and a strong wind corridor.

A growing renewable energy sector in Mongolia can help create employment in new, growing sectors, and attract foreign direct investment if Mongolia takes advantage of its abundant natural resources, and makes the pivot to invest in renewable energy jobs. In the long term, thermal coal imports of other countries are expected to decline as these countries are in the midst of a climate and energy transition. In this situation, Mongolia could establish itself as a leader in mining and export of natural resources that are used to manufacture batteries and other energy technologies. Strengthening a renewable energy market in Mongolia could help to diversify the economy and open the gates for foreign investment in factories to manufacture and export clean technologies to an ever-growing global market. In addition, the use of renewable energy and increase of energy efficiency can also assist the extractive industries sector to become more resource and cost-efficient and therefore help maintain competitiveness.

Renewable energy, such as wind, solar and hydropower may require significant upfront investments and infrastructure development, but these costs will be compensated by the long-term benefits. Some procurement strategies, such as procuring renewable energy from the private sector through competitive tenders, may reduce the need for significant upfront public investments while retaining the environmental and financial benefits of renewable energy.

The good news is that these challenges are manageable and many countries around the world are already operating power systems with high penetrations of variable generation capacity. Ireland is a good example, which already produces over 35% of its power from onshore wind. Like Mongolia, Ireland has very few interconnections with other countries and therefore largely has to balance its grid alone.

Mongolia is now at a crossroads, where it has the opportunity to embrace renewable energy and become an active promoter of sustainable development. Mongolia has ratified international conventions, such as the Paris Agreement, a legally binding international instrument on climate change, and has pledged ambitious goals to reduce its greenhouse gas emissions by 22.7% by 2030. Creating a favourable legal and regulatory framework for investing in renewable energy is a key part of fulfilling these commitments.

All countries are facing the challenge of transitioning to carbon neutrality as a long-term imperative. A transition like this of course does not happen overnight. Coal may remain an essential energy source for Mongolia but has a limited horizon, whereas renewable energy is the future. Embracing renewable energy aligns with Mongolia's traditional values of respect for nature. Mongolia has a unique opportunity to lead the way in sustainable development, attract investments and become a model for other countries in the region to combine respect for nature and combating climate change with investing in the promotion of human prosperity and health.

Through the grant program, USAID will provide grants to eligible think tanks, consulting firms, non-governmental organizations, private companies, research institutions, and other relevant organizations to implement interventions to support energy sector transition.

On International Day of Clean Energy, inaugurated on 26 January 2024, the world is reminded of our climate promise and the need for urgent action for a just and inclusive transition towards clean energy, a necessity for both people and planet.

At COP28, countries agreed to recognize the need for collective progress for transitioning away from fossil fuels, which are responsible for nearly 90% of global carbon dioxide emissions. Transitioning away from fossil fuels in energy systems, in a just, orderly, and equitable manner is crucial. To accelerate action in this critical decade and to achieve net zero by 2050, it would require tripling the renewable energy capacity and doubling the global rate of energy efficiency by 2030.

Mongolia, where the energy sector predominantly relies on coal, contributing over 90% to electricity generation, cannot afford to stay behind in this global shift. The momentum is here and now.

As of 2023, Mongolia has 3 wind farms, 9 solar farms, and small hydropower plants, accounting for 18.3% of the total installed capacity and only 9.6% of total electricity production. Which means that the action has to be accelerated if the ambition of 30% renewable energy share is to be reached in six years period.

However, challenges remain. Mongolia's economy is heavily reliant on the production of coal, which contributed significantly to its export revenue in 2023, and 90% to its power generation needs. The power generation is state owned and highly subsidized.

These present a significant challenge towards economic diversification and shifting towards renewable and clean energy for electricity production and heating, respectively. Furthermore, lack of infrastructure such as access roads, transmission and grid network, and the investment needed along with harsh climate conditions that would enhance battery storages are major hurdles in this regard.

In addition, Mongolia's reliance on energy imports, to meet its increasing excess demand, which is still exceeding of energy capacity and resulting in routine blackouts, highlight the urgency for a robust clean energy infrastructure.

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