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Wednesday, July 6, 2011

Mongolia Briefing is a magazine and daily news service about doing business in Mongolia. We cover topics relating to the Mongolian economy, the market in Mongolia, foreign direct investment and Mongolian law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates

Mongolia to Set Up its First Wind Farm

Jan. 11 – The landlocked Mongolia – mostly known for being rich in coal and copper and for the mining industry driving national growth – will set its very first wind farm this year.

Mongolia has the potential to generate 2.6 million megawatts of wind, solar, geothermal and hydropower according to jointly collected data from the U.S. National Renewable Energy Laboratory and the Mongolian National Renewable Energy Center.

The landlocked country with its high and wide windswept plains has a great resource in wind power, but is not using it. On average, wind blows at least 25 feet a second in the Gobi Desert, which also ranks third globally in terms of solar generation potential. The Gobi Desert is a vast region of sand and desert steppe covering almost 30 percent of the Mongolian territory.

According to world nuclear association data, the potential of 2.6 million megawatts of renewable energy generated is seven times the capacity of all the world’s operable nuclear reactors combined. Meanwhile, Mongolia’s current power capacity is just 878 megawatts, which is less than that of one large coal plant.

According to local experts’ estimations, energy demand in Mongolia is increasing by 8 percent to 10 percent a year, while international observers expect the demand for power to double by 2015.

The only project of a 50-megawatt wind park in the Gobi Desert may annually save the burning of 160,500 metric tons of coal and thus 200,000 tons of carbon dioxide emissions, and preserve about 370 million gallons of clean water, the Mongolian National Renewable Energy Center says.

But the resource-rich Asian nation sandwiched between China and Russia with a population of roughly 3.3 million has already attracted big international investment, and may choose China’s “quick and dirty” way to solve its energy problem.

In 2005, Mongolia’s parliament approved the National Renewable Energy Program, which aims to increase the country’s renewable energy share to between 20 percent and 25 percent by 2020.

In November 2011, Mongolia became a new General Electric market with a deal valued at about US$50 million. According to the contract signed with Mongolia’s private Newcom company, GE will provide technical assistance in the country’s first wind farm for five years and train Mongolian engineers as interns.

GE will supply Mongolia with turbines for its wind farm, a renewable energy source that will generate 5 percent of the country’s electricity output. The US$100 million project will be located on a windswept steppe in Salkhit, some 43 miles southeast of Mongolia’s capital city Ulaanbaatar, and is set to open later in 2012.

The Newcom group has six wind-power plant projects that are due to bring 1,000 megawatts online in the country by 2020.

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