R 270225Z APR 09
FM AMEMBASSY ULAANBAATAR
TO SECSTATE WASHDC 2795
INFO AMEMBASSY BEIJING 
AMEMBASSY MOSCOW 
AMEMBASSY SEOUL 
AMEMBASSY TOKYO 
AMEMBASSY LONDON 
AMEMBASSY BANGKOK 
ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
DEPT OF TREASURY WASHINGTON DC
DEPT OF ENERGY WASHINGTON DC
USDOC WASHINGTON DC
HQ EPA WASHINGTON DC 0061
NSC WASHINGTON DC
SECDEF WASHINGTON DC

UNCLAS ULAANBAATAR 000112 
 
 
BANKGOK FOR REO HAL HOWARD 
 
E.O. 12958: N/A 
TAGS: ENRG ECON PGOV SENV PREL EAID MG
SUBJECT: EARTH, WIND, AND SOLAR: MAKING RENEWABLES HAPPEN IN 
MONGOLIA 
 
¶1. (U) SUMMARY: Mongolia's abundant animal, solar, wind, and hydro 
resources offer tremendous opportunities for the government and 
private investors to establish a vibrant renewable energy sector. 
The government openly encourages development of these resources, but 
apart from intermittent successes among a range of small projects, 
widespread, successful, sustained use of renewables continues to 
prove elusive.  Lack of institutional capacity to assess the precise 
nature of renewable energy sources and to develop and execute 
projects and programs remain the key impediments to advancing 
renewable energy use in Mongolia.  END SUMMARY. 
 
MONGOLIA: HOME TO VAST RENEWABLE POSSIBILITIES 
--------------------------------------------- - 
 
¶2. (U) Animal waste, sun, wind, and water are Mongolia's most 
abundant renewable energy resources, but the country has not yet 
developed a comprehensive strategy to harness their power.  To date, 
no complete study on the viability of these resources has been 
conducted.  Informed observers, however, believe that Mongolia's 
rural population might benefit most from a comprehensive renewable 
energy strategy.  Sixty percent of Mongolia's population (roughly 
1.5 million people) lives in rural areas, which is also home to more 
than 40 million head of livestock.  Many rural dwellers live outside 
of aimag (provincial capital) or soum (county) centers, and have no 
access to the central electric grids that link their respective 
provinces to the national power.  For those who do reside in rural 
towns, power outages from the central grid are a regular feature of 
daily life. 
 
¶3. (U) In addition, the five westernmost aimags have no connection 
to the central grid at all, and must rely on expensive imported 
power from Russia or costly diesel generators.  Moreover, reliance 
on Russian power gives Russia a continuing hold over Mongolia.  In 
short, the average rural dweller has at worst no power, and at best 
unreliable, expensive power.  For these consumers, untapped 
renewable resources present economically viable, appropriate, and 
achievable alternatives. 
 
¶4. (U) Use of renewables is not a new concept in Mongolia's 
countryside.  Currently, almost every herder family collects and 
saves animal waste, especially dung, which is used for fires for 
cooking and heating in lieu of coal and timber.  With 40 million 
plus livestock, Mongolia's rural population remains among the 
world's best recyclers.  They need no lesson in the value of these 
fuels, although long-time observers note that more efficient stoves, 
combining heat retention and ease of transport, would be a plus. 
 
INITIAL POLICY STEPS 
-------------------- 
 
¶5. (U) The Parliament of Mongolia has produced two main policy 
documents on renewable energy.  The first, the 2005-2020 National 
Renewable Energy Program (NREP) was released in June 2005, followed 
by passage of the Renewable Energy Law of Mongolia in January 2007. 
Mongolia, like many other countries, considers expansion of 
renewable energy, energy efficiency, and greenhouse gas abatement 
technologies as national priorities.  Although the legal framework 
is now in place, Mongolia needs to increase the institutional 
capacity of both its government agencies and energy companies in 
order to proceed with the structural reforms that would allow the 
implementation of such technologies. 
 
¶6. (U) To this end, Mongolia is seeking to develop its capacity to 
design, install, and operate demonstration projects on renewable 
energy, such as small hydropower, wind power, and photovoltaic solar 
projects.  Organizations such as the Mongolian Academy of Sciences 
(MAS) and private renewable energy companies are looking to expand 
their respective technical bases in order to develop renewable 
energy projects.  For example, MAS and Mongolian university experts, 
scientists, and technicians are actively engaged in studies in these 
areas. 
 
SOLAR: BUILDING ON RECENT SUCCESSES 
----------------------------------- 
 
¶7. (U) Since Mongolia enjoys nearly 300 sunny days a year, many 
observers believe that solar energy is a highly suitable source for 
lighting and electrification in rural areas.  (Note: Heating, 
cooking, and other needs require other energy sources.  End Note.) 
Some small solar projects have already been successfully implemented 
in Mongolia.  For example, the Mongolian Post and Telecommunication 
Authority in 1998 built a plant to manufacture photovoltaic (PV) 
modules with total capacity of 500 KW (a series of 12, 24, and 50 
watt PV modules).  The plant purchased its basic equipment from the 
U.S.-based Spire Corporation.  Assembled modules were installed at 
more than 360 country-side soum and aimag telecommunication and 
post-office facilities.  As a result, essentially every rural phone 
and mail station has an independent, PV-based power source to 
sustain operations. 
 
¶8. (U) PV panels are also being used by nomadic herder families, 
since they tend to be the least expensive power source in remote 
areas.  In 2001, the government inaugurated the "100,000 Solar Ger 
Program."  Now managed by the Ministry of Mineral Resources and 
Energy (MMRE), the program, in coordination with other private 
resources, has already furnished more than 80,000 herder families 
and rural town dwellers with PV systems. 
 
¶9. (U) While large PV systems did not make economical sense for 
urban users, small, portable PV applications were the logical option 
for remote users over gas and diesel powered generators, or even 
wind powered generators.  PV panels are durable, easily 
transportable, and can be easily linked to car batteries to power 
lights and small appliances for rural households and gers.  The 
government underwrote the program by covering part of the cost of 
the PV systems, with the herder providing a share, usually through 
cheap financing for the solar equipment underwritten through 
collaboration between MMRE and Mongolian commercial banks. 
 
¶10. (U) The next phase of the plan is implementing larger scale 
solar developments in rural Mongolia.  The New Energy and Industrial 
Technology Development Organization of Japan demonstrated the 
potential of dispersed PV power generation systems, installing a 200 
KW system to supply the center of Noyon soum, Umnugovi aimag.  This 
PV power generation system consists of series of dispersed PV units, 
which are connected through bus lines.  Dispersed PV systems are 
installed at the soum's hospital (40 KW), school (40 KW), telecom 
office (10 KW), and soum administration center (10 KW).  Three 
diesel generators with a capacity of 60 KW each were also installed 
and work in parallel with the PV system. 
 
CAN WIND POWER CATCH ON? 
------------------------ 
 
¶11. (U) According to a 2001 USAID-U.S. Department of Energy National 
Renewable Energy Laboratory (NREL) report, 160,000 square km of 
Mongolia, or 10 percent of its territory, has good-to-excellent wind 
potential for utility-scale wind power applications.  Using 
conservative assumptions about power potentials, NREL estimated that 
Mongolia could reliably generate about seven megawatts (MW) per 
square km, or 1.1 GW, and over 2.5 trillion kilowatt-hours (kWh) per 
year.  More than 25 percent of that potential, 300,000 MW, lies in 
the Gobi's massive Umnugovi province.  These data show that wind 
could play an important role both rurally and in small urban 
centers. 
 
¶12. (U) Studies show that the maximum wind potential in Mongolia is 
found in lower elevation regions, especially in the Gobi Desert 
zones near the Mongolia-China border.  Fortuitously, this is also 
close to the most likely market for wind-power output, China. 
Mongolia's winds, however, are demonstrably seasonable.  Maximum 
wind resource potential is from March through June, with April and 
May being the windiest months.  The wind resource decreases rapidly 
after this period, resulting in the lower elevation areas having a 
wind resource minimum in July and August.  The wind resource 
distribution for the period from October through February is more 
complex.  Some locations show a secondary wind resource maximum in 
October and November and a decrease in the resource from December 
through February before the primary resource maximum in the spring. 
A few lower elevation locations have a winter (December through 
February) or autumn (October and November) wind resource maximum. 
These seasonal variations in windfall present challenges to tapping 
the resource effectively.  Still, among renewable energy 
technologies, wind energy technology applied in areas with abundant 
wind energy resources has proven to be the most competitive in terms 
of cost for the bulk power market internationally. 
 
¶13. (U) Mongolia has very little experience with wind energy. 
According to MMRE's Renewable Energy Officer, wind energy use 
remains low in Mongolia.  The officer attributed this to lack of 
technical capacity, funding, and information.  There is also a need 
to conduct a wind velocity survey to determine the technical and 
financial feasibility of this option in Mongolia. 
 
HYDRO POWER ADVANCEMENT CAUGHT UP IN THE RAPIDS 
--------------------------------------------- -- 
 
¶14. (U) According to Mongolian government and international reports, 
Mongolia has an estimated 3,800 small rivers with a total length of 
65 thousand kilometers and an estimated hydro energy potential of 
6.2 GW.  Although hydropower resources of Mongolia have also not 
been fully investigated, a number of promising hydropower sites have 
been identified.  These sites together offer more than one GW of 
potential hydropower, with plans in development to build plants with 
a combined capacity of 250 MW.  In practice, however, large scale 
hydro power plants have proven controversial.  First, regional 
politics complicate tapping water resources.  Mongolia has few 
rivers deep and large enough for damming.  Suitable rivers, such as 
ones that are part of the Lake Baikal watershed, raise concerns over 
how the Russians would react to Mongolia's inhibiting the flow of 
Baikal's prime feeder stream, the Selenge River.  Second, many 
rivers freeze over during the winter and cannot provide sufficient 
flows to generate year-round electricity. 
 
¶15. (U) In western Mongolia, the desire to free the five western 
provinces from dependence on Russian power sources has led to the 
construction of two dams connected to hydro power stations.  The 
economic basis for both projects has been questioned by the World 
Bank, the Asian Development Bank, USAID, and the foreign experts 
advising the Chinese contractors who built them.  Specifically, the 
projects' economic rates of return have been considered too low 
given the high costs of operation.  In addition, in both cases 
estimates as to when the reservoirs will be sufficiently filled to 
reliably generate power have proven too optimistic. 
 
¶16. (U) Having borrowed money to construct dams several years behind 
scheduled operation, MMRE officials have soured on hydro-power and 
have suspended or cancelled future projects.  However these same 
officials are willing to consider mini-hydropower plants of up to 
one MW capacity, which could be used to supply soum centers with 
electricity, as an alternative to diesel plants.  These are more in 
the vein of water mills that would generate electricity in the 
spring, summer, and fall months.  (Note: Post has also alerted the 
MMRE of run of river hydro technologies which could be installed in 
river bottoms and not require impeding the flows of Mongolia's best 
hydropower sources in the Baikal watershed.  We and the Department 
of Commerce plan to promote these possibilities at the annual 
U.S.-Mongolia Business Forum in Washington in June 2009.  This 
year's theme is energy production goods and services.  End note.) 
 
COMMENT 
------- 
 
¶17. (U) Mongolia has rich renewable energy potential, and over the 
past few years has sought to develop these resources as rapidly as 
possible.  Renewable energy is highly attractive for rural 
electrification in Mongolia.  Enterprises of small-sized solar 
energy systems for nomadic families are well established, but large 
scale projects continue to remain beyond Mongolia's reach.  The 
available skills, competence and managerial ability of local 
experts, technicians, and institutions remain insufficient to 
assess, select, develop, and implement projects.  There is a need 
for capacity building through training, and for the transfer of 
renewable energy technologies as well as models and software for 
conducing economic-financial analyses and environmental impact 
assessments of projects. 
 
HILL