The new project focuses on improving the reliability and sustainability of electricity services in Mongolia, in the face of the country’s rising energy demand.
The Second Energy Sector Project was approved by the World Bank’s Board of Executive Directors last week, and will provide $54.4 million to address bottlenecks in Mongolia’s electricity supply by upgrading ageing assets and expanding distribution capacity.
Obsolete and inefficient distribution networks have led to significant distribution losses, which are as much as 25 per cent in many networks.
The World Bank detailed that regional distribution systems have reached their capacity limit and are in critical need of renovation and expansion.
The project will finance efforts to upgrade and expand the capacity of power distribution infrastructure in the Baganuur-Southeast and the Erdenet-Bulgan distribution network – which provide electricity to nine of Mongolia’s 21 provinces.
The project will also support the development of renewable energy through the installation of the nation’s first large-scale solar photovoltaic (PV) 10 megawatt (MW) power plant outside the Central Energy System.
The solar energy plant will generate affordable and clean energy to the country’s western region, which currently imports 70 per cent of its power supply.
The project will be funded by a $42 million loan on concessional terms from the World Bank’s International Development Association and a $12.4 million grant from the Scaling-Up Renewable Energy Program under the Strategic Climate Fund.
James Anderson, World Bank Country Manager for Mongolia, said: “More reliable access to electricity will improve the lives of families and help businesses thrive. The World Bank is committed to continuing our partnership with Mongolia to strengthen the power sector and explore options for renewable energy to help the country pursue sustainable development.”
Peter Johansen, senior energy specialist of the World Bank, said: “We are encouraged by the government’s target to increase the share of renewables to 30 per cent by 2030. With its abundant solar and wind power resources, the country is now considering to more effectively and efficiently incentivize renewable energy investment to fully use its potential.”