EBRD to pioneer investment in Mongolia’s other natural resource - wind
The European Bank for Reconstruction and Development (EBRD) has announced that it is to lend its support to the first ever wind energy project in Mongolia.
The European Bank for Reconstruction and Development (EBRD) has announced that it is to lend its support to the first ever wind energy project in Mongolia.
The 50 MW Salkhit Wind Farm, to be built 70 kilometres form the capital Ulaanbaatar, will provide the Asian democracy with an estimated five percent of its electricity needs, currently served by the country’s numerous coal-fired power plants.
In recent years, Mongolia’s wealth of natural resources, such as coal, has been the focus of many foreign investors. However, the country has adopted a progressive Renewable Energy Law which will give producers preferential rights to sell their output. Mongolia’s National Renewable Energy Programme has targeted a quarter of all of the country’s energy to be generated by renewable resources by the end of the decade, with the Salkhit Wind Farm set to be the first significant investment under the initiative.
“Mongolia is rich not only under the ground but also above the ground: its strong winds can provide a lot of electricity for the growing needs of the country which is hoping to diversify its sources of power supply,” said Nandita Parshad, EBRD's director for power and energy.
“We hope this transaction paves the way for increased private interest in the renewable power sector which can reduce Mongolia’s dependence on coal and its carbon footprint and will contribute to Mongolia’s sustainable development.”
To execute the project the EBRD will extend a loan of US$ 42.4 million to Clean Energy LLC, with the EBRD, as part of the project financing, taking a further US$ 4.4 million equity stake in Clean Energy LLC. This company has been created to build the wind farm, and is currently 25 percent owned by the EBRD and 75 percent owned by Mongolian firm Newcom LLC. As the first private owner of a generator, Clean Energy LLC will facilitate the transition to a more liberalised market.
“The EBRD and FMO (the Netherlands Development Finance Company) have been relentless in developing this project together with Newcom,” said Bayanjargal Byambasaikhan, chief executive of Newcom.
“The Salkhit wind farm is a flagship project for Mongolia’s renewable energy. It marks the dawn for Mongolia’s aspiration to becoming Asia’s renewable energy champion.”
With Ulaanbaatar being one of the most polluted cities in the world, the need for renewable energy has been at the forefront of government policy in Mongolia in recent years. The EBRD-sponsored wind farm is expected to reduce CO2 emissions by approximately 164,000 tonnes annually, enabling the company to sell carbon credits.
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Image 03: Climate Action Stock Photo