Context
Mongolia has an extreme climate, with short summers and long, very cold winters. Urbanisation and the boom in the mining industry are increasing the demand for energy, which is still essentially coal-fired. The old Russian power stations will soon no longer be able to meet the energy needs, which could lead to electricity blackouts and heating shortages.
There is a lot of energy wastage in power stations and electricity grids and there is still much potential for end users to save energy. The situation could be greatly improved by decommissioning outdated facilities and building new power stations as well as by investing in the networks. However, it is expected to be another five years at least before any new power stations are built. The revenues generated by existing power stations are less than the overall costs required to generate energy which is why power stations are heavily indebted. As a result, the Mongolian energy sector is not particularly attractive in terms of new investment. At present, the Mongolian Government has neither a framework in place, nor strategies or incentive mechanisms to encourage energy efficiency and energy savings. In most cases, the actors in the energy sector, industrial users and end users are not fully aware of how they can save energy and be more efficient.
Objective
The conditions have improved not only for making national and strategy-based investment decisions related to energy efficiency, and for implementing them in power stations, but also on the demand side.
Approach
The programme supports the Energy Authority (EA) and the Ministry of Mineral Resources and Energy with measures to improve energy efficiency in power stations and on the demand side.
Advisory services in the area of energy policy focus primarily on improving the conditions and incentive systems which are designed to encourage energy efficiency. New laws, ordinances, norms, guidelines and standards for energy efficiency as well as a national monitoring system to record the effects of energy efficiency measures are to be developed and introduced, thereby creating incentives for investments in energy efficient technologies. The aim of an energy efficiency strategy will be to provide a broader and more systematic basis for decisions regarding (operational) improvements, investments and other aspects, which are often taken in isolation.
An analysis of the overall electricity generation system is being carried out in the power station industry in order to systematically identify the potential for efficiency and to derive recommended courses of action. As regards energy efficiency on the demand side, the potential for reducing consumer peak loads and for distributing loads more evenly will be identified and financing options for investment measures will be developed.
At the same time, training measures are being continued in power stations since large numbers of qualified staff will be required in future. Cooperation with trade associations, institutions and companies in Europe gives Mongolian experts and institutions access to specialist knowledge and modern technologies, and helps in the process of reforming the Mongolian energy sector.
Results achieved so far
The Mongolian parliament has adopted an Ordinance on Measures in the Energy and Fuel Sector. One aspect of the Ordinance is the continuation of the tariff reform. Based on this reform, power stations will be able to cover their costs from 2014 onwards, thereby making the sector more attractive to new investment. A strategy for improving the normative framework in the energy sector has been developed and adopted by the political partner as a basis for making further improvements to all standards applied in the energy sector.
Under the draft of the Energy Efficiency Act, which is to be presented to the Mongolian parliament in 2012, a new office for drawing up and implementing a national energy efficiency strategy is to be set up, which will develop further ordinances and guidelines as well as a central monitoring system.
Increasingly, managers in the energy sector are adopting the mindset that the entire sector needs to be reformed and modernised, for which well-trained staff are required. Mongolia is therefore now financing extensive training measures together with VGB PowerTech, a specialist association for the energy industry and a technological leader in Europe, as well as the Kraftwerksschule Essen.
Today, managers and engineers employed by the power stations and grid operators are able to better identify possibilities for improving energy efficiency and therefore to draw up considered proposals for sustainable operational measures.
Processes for implementing technical feasibility studies, which were developed jointly with the programme, were initiated by the Mongolian partner organisation EA. Three studies on energy savings in Power Station 4, which provides 70 per cent of all of Mongolia’s energy needs, were developed with the support of KfW Entwicklungsbank in 2011. These measures will reduce annual fuel costs by EUR 300,000 and carbon dioxide emissions by 130,000 tonnes per year.