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Events
Richard Buangan: The United State is ready to help transform Mongolia’s energy system www.gogo.mn
The American Chamber of Commerce in Mongolia hosted a discussion on "Advancing Mongolia's Energy Transition" (October 23, 2024).
This meeting discussed the Government of Mongolia's energy reform program, the goals it seeks to achieve, the opportunities, and the challenges. Specifically, the discussion focused on supporting Mongolia's efforts to advance its energy transition and explored opportunities in the renewable energy sector.
Richard Buangan, the U.S. Ambassador to Mongolia, opened the event by presenting on Mongolia's energy transition efforts and the potential for the country to develop its renewable energy sector. He praised Mongolia for its energy reform initiative and highlighted past energy sector and U.S. assistance. Also he emphasized the importance of increasing private sector involvement in the future.
"ENERGY SECURITY IS NATIONAL SECURITY"
Here are the key points from his speech:
- Overcoming their power crisis will be the new government’s first major test. And as we all know, achieving success will not be easy. The complexity of this problem is why it is so important that the government invite the private sector to take a leading role in facing this monumental challenge. At the end of the day, it will be the private sector, supported by the Mongolian government, that will lead Mongolia to achieve its energy goals and its full potential
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The business community is the key to Mongolia’s success.
- Mongolia finds itself facing its current energy crisis, one that threatens the health, safety, and economic vitality of its people. While I am confident that Mongolia can once again rise above this challenge, the question remains of what exactly must be done? What must be done for Mongolia to achieve meaningful energy reform to not only break this cycle of crisis, but transform Mongolia’s economy and infrastructure so it can power this country well into the future? The truth is, every country, including the United States, has struggled with providing adequate, clean energy for its people.
- First, Mongolia must embrace its incredible renewable energy potential. Second, Mongolia will accomplish little without letting the private sector take an active, leading role in the solution. Only by incorporating these two mindsets do I believe Mongolia can finally achieve energy independence and security. As I have said before, energy security is national security.
- Investing in clean energy allows Mongolia to escape the total dependence on coal and coal-based systems.
- The pioneers, led by innovative private companies, are beginning to implement state-of-the-art technology, such as sand battery storage systems, which provide renewable-generated heat and electricity throughout the winter. These solutions are available for Mongolia to explore, and they must be actively sought out and tested if Mongolia is to successfully achieve its energy transition.
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All it needs is to think boldly and embrace the reforms needed to realize its full potential.
- Clear regulations and a predictable operating environment will attract investors from here and abroad to invest in Mongolia’s renewable energy opportunities.
- In 2021, Uzbekistan began to embrace the private sector by enacting reforms to simplify its tax code, improve bureaucratic transparency, and incentivize foreign investment into renewable energy projects. Just three years later, that Central Asian country has over 1.5 gigawatts of renewable energy generation and has attracted $7.2 billion U.S. dollars in foreign direct investment.
- Raising tariffs is just the first step in achieving this new vision for renewables. Currently, Mongolia can only incorporate half of the renewable energy it produces because of an outdated energy grid with insufficient transmission capabilities.
- The United States and other partners are ready to help transform Mongolia’s energy system and attract the participation of private enterprise.
- The business community is the key to Mongolia’s success.
- If Mongolia can once again embrace these ideas of innovation and reform, they can harness their renewable energy potential to make obsolete the challenge of being landlocked. This dream is not unachievable, the path is open for the Mongolian people. All it needs is to think boldly and embrace the reforms needed to realize its full potential.
"NO ENERGY, NO ECONOMIC GROWTH"
The government has established a national committee led by Minister T. Dorjkhand to address energy sector issues.
At the discussion, Mongolia's Deputy Prime Minister and Chair of the National Committee for Energy Reform, T. Dorjkhand, presented the current state of the energy sector, the need for reform, and future actions. Interestingly, 100 out of 126 members of Parliament supported the formation of the Energy Reform Task Force and Committee. He highlighted Mongolia's advantage of being one of the top five countries in the world in coal reserves and second in renewable energy potential, emphasizing that the country could become an energy exporter.
Here are the key points from his speech:
- Four of the 14 mega projects planned by the Mongolian government are related to the energy sector.
- Over the past decade, due to political priorities focused on social welfare, Mongolia’s economy has stagnated with no major developments since 2012. For example, no reforms or new power plants have been implemented in the energy sector since the 1980s.
- The energy capacity shortfall is 994 MW for electricity and 1,427 MW for heating, and 22% of the country's energy is imported.
- The sector’s short-term debt is 357.2 billion MNT, while long-term debt is 820.8 billion MNT. The Ministry of Energy functions like a “welfare bank,” deeply in debt, lagging behind other sectors that should be leading in development.
- According to the World Bank, Mongolia ranks among the top five countries in coal reserves and second in renewable energy resources (solar and wind). Therefore, the country has the potential to export energy.
- Due to heavy state involvement, investment in the sector is limited, technology is outdated, and there is a constant fear every winter that the capital may freeze. This reflects the sector’s current situation.
- Energy reform aims to shift from shortages to exports, from technological backwardness to modern advancements, and from a state-controlled sector to private sector involvement.
- Key projects such as the Erdeneburen Hydropower Plant, Egiin Gol Hydropower Plant, Tavan Tolgoi Power Plant, and distributed power sources will be implemented within four years. The goal is to achieve energy independence, as energy independence is crucial to the country's overall economic policy.
- The state will not be involved in the energy sector, and only the private sector will participate. In terms of governance, an energy ecosystem will be established to attract investment and promote green financing.
- In developed countries, electricity is a "luxury." In Mongolia, it is cheap, which leads to inefficient consumption. Unlike Japan, the U.S., or the UK, Mongolia is a developing country. Living with cheap electricity and heating is a systemic issue.
- Every MNT invested in the energy sector yields a return of 4 MNT.
- The per capita GDP could reach USD 10,000 by 2028 (compared to USD 6,008 in 2023).
Key energy sector forecasts:
Electricity consumption: 2,671 MW
Ulaanbaatar’s heating consumption: 4,801 MW
The energy reform strategy includes:
Defining policies to support green energy consumption.
Establishing a legal framework that supports investment and smart technologies.
Implementing tariff reforms to eliminate losses.
Promoting transparency and reducing bureaucracy in energy sector organizations.
Improving the governance of state-owned energy companies and reducing costs.
Increasing private sector and renewable energy involvement in the energy market.
Developing an energy export strategy.
Published Date:2024-10-27
