Mongolia Energy Situation

1.1 Brief Energy Sector Analysis

Mongolia’s energy sector consists of the Central Energy Grid (CEG), the western and eastern energy network, and diesel power stations and thermo-power stations. Most of the rural population centres are not connected to either grid. In some areas, for example in Tsetsen-Uul, people are supplied by small-scale local diesel stations. Due to lack of funds, difficulties in regular fuel supply and lack of technical and managerial know-how, most of the diesel stations are not in operational condition. The ones remaining are operated during 3-4 hours during 2 months in winter only. The high specific cost and the uncertain supply do not allow productive utilisation of diesel power. In other areas, like Zavkhanmandal, people even don’t have access to this source of modern energy.

In order to ensure a sustainable development of the energy sector, the “Mongolia Sustainable Energy Sector Development Strategy Plan for 2002-2010” has been approved by Government Resolution n° 140 on July, 2002.

Mongolia is rich on renewable energy sources. Depending on the region solar, wind and hydropower can be used for power generation. Due to the absence of a centralized supply system, the low demand and lack of other energy sources, renewable energies are the optimal and (in most areas) the only option for rural electricity supply.

1.2 Introduction

The project concept is based on the assumption that access to power supply should not be limited to lighting, information and communication purposes only, but should provide the possibility to initiate local economic activities to create job and income opportunities. Income can be partially spent for the electricity bills thus sustaining the supply system. Local power generation creates additional skilled jobs and increases cash income in case accompanying measures are considered in order to provide

• Access to technical know how to operate the productive equipment and machinery
• Access to financial sources to finance the initial investments
• Access to business advisory services to check business ideas and to elaborate business plans.

1.3 Experiences with similar approaches in the country and sector

The “access to electricity for productive use” approach has been developed by GTZ and successful implemented in a number of countries. In Mongolia the concept is currently implemented by the GTZ program “Introduction of renewable energies (RE)”. First results indicate that the concept has been well adapted to the specific Mongolian conditions and achieves the expected objectives.