By a TMO Reporter
Mongolia’s second, 50MW wind farm, located at Tsogt Tsetsii in the Gobi Desert south of the country, is now commissioned by Clean Energy Asia, along with its shareholders Newcom (Mongolia) and SB Energy of the SoftBank Group (Japan).
The Tsetsii Wind Farm is financed by the JICA and EBRD. It was JICA’s first overseas investment and loan project in renewable energy sector and private sector.
The Tsetsii Wind Farm was commissioned by Clean Energy Asia three months ahead of the previously scheduled launch date of December 2017.
This landmark development in the country’s renewable energy sector comes only 4 years after Mongolia’s first wind farm “Salkhit” near Ulaanbaatar was built and put into operation also by Newcom.
The country faces significant challenges in meeting its growing demand for electricity, almost all of which is currently met by ageing and polluting coal-fired plants. The wind farm will help meet not only Mongolia’s power demand, but is also going to be an important step towards supplying some Asian countries in the region, specifically Japan and South Korea, with clean, energy-efficient electricity by harnessing the country’s vast and inexhaustible wind resources.
To accelerate the deployment of clean, safe, and affordable renewable energy, the SoftBank Group founded the Renewable Energy Institute (REI), and in September 2011, the “Asia Super Grid (ASG)” was conceptualized.
ASG goes beyond Japan and includes other Asia countries to further maximize the usage of renewable energy by taking advantage of diversity in loads and resources.
Said E. Orchlon, CEO of Clean Energy Asia, “the triple-disaster of earthquake, tsunami and nuclear meltdown that hit Fukushima in the northeast of Japan in March 2011 was a wake-up call for many people. This was true for Masayoshi Son, the founder, chairman, and chief executive officer (CEO) of SoftBank Group, a Japanese multinational telecommunications and internet corporation. Having experienced the danger of nuclear power plants in Fukushima, he felt the need to replace nuclear power with safer and cleaner renewable energy for a better future.”
E. Orchlon added that SoftBank looked outside Japan for more abundant renewable energy sources. Given Mongolia’s vast wind resources and out of geopolitical consideration, SoftBank entered into a joint venture with Newcom of Mongolia and invested in the Tsetsii Wind Farm.
The joint company has secured a land-leasing right in the Gobi Desert for the next 100 years to develop and operate 7 GW worth of wind farms.
Masayoshi Son, Chairman & CEO of SoftBank Group Corporation, addressing the launch of the Tsetsii Wind Farm, commented saying: “The SoftBank Group started renewable energy development in Mongolia to realize our multinational power grid plan called the Asia Super Grid, first announced in 2011. I’m very pleased that the commercial launch of the Tsetsii Wind Farm marks the first step for the SoftBank Group to establish a renewable energy business in Mongolia under the Asia Super Grid project, in addition to India and Japan.”
2.0 MW 25 wind turbines for the Tsetsii Wind Farm was supplied by Vestas of Denmark. Being confident in the long-term potential of the Mongolian market, Vestas earlier this year established a subsidiary called Vestas Mongolia.
“Vestas looks forward to supplying world-leading wind power technology to Mongolia and to supporting the country’s efforts in reducing reliance on coal and in realizing its vision to contribute to the sustainable energy demand of Mongolia and the Asia Pacific region”, says Chris Beaufait, President of Vestas Asia Pacific and China.
Mongolia is located in the promising Asia Super Grid but the Tsetsii Wind Farm, to begin with, will supply electricity to the central regions of the country. A 32 km long overhead transmission line connecting a number of soums in the region and to the Central Grid of the country has been also built.
Asked when Mongolia would be supplying power within the Asia Super Grid, Clean Energy Asia CEO Orchlon clarified saying, “Our mid-term goal is to export 2GW electricity to Japan by the year 2020 for the Tokyo Olympic and for this purpose, we are already working on the expansion of our Tsetsii project. This is a huge work. Laying cables to China is not that difficult as we could use Chinese transmission lines, through which we can transmit power to Japan by laying high-transmission cables under the sea from South Korea.”
The cost of bringing wind energy generated in Mongolia via China and then South Korea to Japan is also estimated to be below 10.5 cents/kWh, which according to Orchlon is feasible given the enormous inexhaustible wind resources of Mongolia.
Mongolia, as one of the world’s most sparsely populated countries with very harsh winters, faces considerable challenges in providing sufficient heat and electricity for its people, especially in rural areas. However, Mongolia has been identified as having the potential to be a major wind power producer and it is estimated to have more than 1,100 GW of installed generating capacity (source: Ministry of Energy, Mongolia, 2016), distributed largely in the southern and eastern regions.
Today, Mongolia has a power-supply capacity of 1130MW, consisting of 88% coal, 6% diesel, 6% renewable energy, and 2% hydropower sources (according to the Department of Energy, Mongolia, 2015). While being the world’s eighth country most susceptible to climate change (according to Germanwatch’s “Global Climate Risk Index 2014”), electricity supply-demand balanced with its economic growth is an urgent issue for Mongolia. Accordingly, Mongolia is a country that particularly requires safe and secure power sources such as renewable energy.
The Mongolian Parliament in 2015 approved a national power policy that sets Mongolia’s mid-to-long term target and plan for 2015-2030 in the energy sector. The policy aims to increase the power generation share of renewable energy to 20% by 2020 and to 30% by 2030, and it stipulates the promotion of investment in the energy industry in cooperation with international financial institutions and donor countries, utilizing the abundant wind and solar resources in the Gobi region. These objectives are in conjunction with the SDGs specifically Goal 7 – Affordable and Clean Energy, which calls to ensure access to affordable, reliable, sustainable and modern energy for all and Goal 13 on Climate Action that commits nations to take urgent action to combat climate change and its impacts by regulating emissions and promoting developments in renewable energy.
Given the enormous solar and wind resources of the country, the only challenge now is to add value to these natural resources so they become value-added products. And the examples of Salkhit and Tsetsii provide solid evidence that natural wind can be transformed into a valuable product and that too, which can prove competitive on the global market. For this to happen, there has to be government understanding and support, involvement and preparedness of the local inhabitants to embrace the idea of renewable energy, the ability of the country to raise project financing and the availability of professional human resources.
The very fact that millions were invested in the Tsetsii Wind Farm (JICA and EBRD) bear evidence to, according to CEO Orchlon, the stability of the policy of the Mongolian Government and its commitment to honor the letter and spirit of contracts and agreements signed, especially the agreement on sale and purchase of energy, specifically with reference to the Salkhit Wind Farm, although the power industry is the most regulated sector in the country. Apart from this, an important pre-condition for more investment is the need for the Government to lower the country’s investment risk factors, which are relatively high as compared to many countries and this in turn increases investment and operation costs of a project.
Almost 95 percent of the 500 people who worked on the Tsetsii Wind Farm were Mongolian and one of the most significant achievement has been that the project reached 900,000 man-hours without any lost time in industrial accident.
Clean Energy Asia takes pride in what its Mongolian workers have accomplished at Tsogt Tsetii, which opens up broad opportunities before Mongolia to become a leading country in developing renewable energy.
“The fact that by producing cheap and clean energy our country is making an invaluable contribution to the Global Goals of the United Nations,” said Orchlon.
He continued that Mongolia has the resources, land and geopolitically, Mongolia can bring cheap and clean energy to other countries in the region with high power demand such as China, Japan and South Korea.
Orchlon is confident that renewable energy is undoubtedly the energy of the future.
“Perhaps 20 years from the term renewable will no longer be used as the source of energy by then would be a fait accompli,” says Orchlon “because the technology is improving rapidly, the price is going down and most important there are the resources and humankind need not worry that the win energy resource will be depleted as would say fossil fuel.”
In this respect, given enormous wind energy resources of the country, one of the most important questions that we need to answer at this point is “Will we be able to tap into and harness these resources on our own?”
This means, is Mongolia prepared to focus on training future professional human resources for the sector? Will the country be able to raise the funds necessary for the investment? What would be the involvement of the public especially members of the local communities and if we are able to answer all these questions then there are all prerequisites for Mongolia to become, if not the, at the least, one of the leading nations to transform wind and solar energy into wealth.
“200 years ago, Saudi Arab had oil under its territory but then no one saw it as a wealth. Similarly, we have the resources, we have the markets which are close to the country and with all this my dream is to make Mongolia number one country in the world for renewable energy generation,” said E. Orchlon, the CEO of Clean Energy Asia LLC, an affiliate of Newcom of Mongolia, the pioneer in developing renewable energy in the country.
If Mongolia is able to further develop renewable energy, then the country would be making an enormous contribution to mitigating the impacts of climate change and to reducing green-house effects.
“It would be indeed a pity if we fail to tap into and harness this natural resource,” said E. Orchlon in conclusion.