This is a best prospect industry sector for this country. Includes a market overview and trade data.

Overview
Mongolia’s primary electricity grid was installed in the 1960s and 1970s but has not been expanded and adapted to meet the needs of population growth and shifting settlement patterns.  This situation has left a large percentage of the expanding rural population literally “off the grid” while leaving Ulaanbaatar and other urban centers dependent on a system insufficient for their ever-growing demand.  Delayed implementation of planned projects has hampered modernization of the existing power generation system and left vast swaths of the country dependent on imported electricity from Russia and China.  Furthermore, the government acknowledges that low electricity tariffs and an undeveloped regulatory environment inhibit private investment into utility-scale projects.
 
The Mongolian government seeks to overcome these impediments and establish a stable, continuous supply of power to meet its increasing domestic electricity demand.  Eventually, Mongolia hopes to become an electricity exporting country, primarily through renewable energy generation, to the vast Northeast Asian region, including to consumers in Russia, South Korea, Japan, and China.  According to the Ministry of Energy, Mongolia’s energy goals are to improve base load generation and energy storage, explore opportunities for combined heat and power (CHP), and increase energy efficiency and conservation. 
 
The U.S. National Renewable Energy Laboratory estimates that Mongolia has 2.6 terawatts (TW) of total renewable energy potential.  With 300 days of sunshine per year, a high level of wind resources, low moisture, and low temperatures, the Gobi Desert has been identified as a suitable location for construction of both solar facilities, including concentrated solar, and wind power plants. The Eg, Selenge, Zavkhan, and Khovd River watersheds in the northern and western regions of Mongolia have also been identified as areas with abundant hydropower resources.
 
Following the inauguration of Mongolia’s first utility-scale wind farm facility in July 2013, which was funded in part by the Millennium Challenge Corporation, the Mongolia government has demonstrated a strong political commitment to green development by seeking to raise the share of renewable energy from its current seven percent of installed capacity to 20 percent by 2023, and to further increase this to 30 percent by 2030.  Growing numbers of wind and solar projects are in the pipeline in response to the renewable energy targets set by the government. 
 
To incentivize renewable energy development, the Mongolian government has mandated feed-in tariffs of 8 to 9.5 U.S. cents per kWh for wind energy and 15 to 18 U.S. cents per kWh for solar energy.  In addition, in December 2015 the Mongolian government provided for customs and VAT exemptions for imports of renewable energy equipment.
 

 
(In Millions USD)
 

2013

2014

2015

 
2016
 

Total Local Production

 4,388

6,127

5,092

4,678

Total Exports

4,269

5,774.3

4,669.5

4,046

Total Imports

6,358

5,236.7

3,797.2

3,466

Imports from the U.S.

512.7

229.5

116.5

55.6

Total Market Size

6,477

5,590

4,220

4,098

Exchange Rate: 1 USD

1,524

1,818

1,970

2,130

Data Sources:
Total Local Production:  National Statistics Office of Mongolia  
Total Exports:  Bank of Mongolia
Total Imports:  Bank of Mongolia
Imports from U.S.:  U.S. Census Bureau

Leading Sub-Sector Opportunities in Renewables
In July 2013, the 52 MW Salkhit wind farm commenced operations using U.S. wind turbines.  A number of wind farm projects are in the planning and development stages, with five companies (Clean Energy, CleanTech, Sainshand Wind Park, Aydiner, and AB Solar) having obtained licenses from the Energy Regulatory Commission of Mongolia.  The exploitation of Mongolia’s wind resources will require the procurement of equipment such as wind turbines, tower sections, rotor blades, gears, generators, casting and forgings, and transformers.  In addition, engineering, construction, and logistics services will be needed to install the equipment.
 
U.S. companies may have opportunities to provide central solar heating systems to provide heating and hot water to government buildings, schools, hospitals, and residences.  As Mongolia taps its mineral and agricultural resources, remote mining and farming facilities will require power.  While linking these to a central grid will likely be too expensive, a distributed-energy resource solution based on renewables and energy storage may make sense.  Such solutions will require technical advice, support, and technologies to secure stable energy supplies. 
 
Mongolia’s electrical grid is currently disadvantaged by its lack of an energy storage capability or ability to manage variable energy inputs.  Plans to construct new, modern coal plants and hydro plants remain on the government agenda and if completed, would introduce some flexibility into the electricity grid by providing substantial baseload power.  However, implementing electrical storage capabilities would provide a fast and effective mechanism to incorporate wind and solar renewable energy production into the domestic and export markets. 
 
U.S. investors and exporters should note that some of these power generation projects may qualify for Public Private Partnership (PPP) and concessional arrangements with the Mongolian government.  While there currently is no standard PPP agreement or package of concessions for those seeking to develop power projects, the Mongolian government recognizes in principle the need to provide a stable framework for those seeking to build and profitably operate renewable power facilities.
 
U.S. companies wishing to invest in Mongolia’s renewable power generation projects can contact OPIC, U.S. EXIM, and USTDA about potential financing in relation to their investment projects.
 
Web Resources
Mongolian Resources
American Chamber of Commerce in Mongolia
Bank of Mongolia
Business Council of Mongolia
Customs General Administration    
Embassy of Mongolia, Washington, DC
General Agency for Intellectual Property and State Registration
General Agency for Specialized Inspection    
General Authority for Social Insurance
General Tax Authority of Mongolia
Government of Mongolia    
Ministry of Construction and Urban Development
Ministry of Energy
Ministry of Nature, Environment, and Tourism
Ministry of Roads and Transport
Mongolian Builders Association   
Mongol National Chamber of Commerce and Industry
National Statistics Office of Mongolia
Parliament of Mongolia   

U. S. Resources
U.S. Embassy in Mongolia Commercial Specialists:  Ulaanbaatar-Econ-Comm@state.gov
U.S. Embassy, Ulaanbaatar
U.S. Department of Commerce
U.S. Department of Commerce Advocacy Center
U.S. International Trade Administration
U.S. Trade and Development Agency
U.S. Export-Import Bank
U.S. Overseas Private Investment Corporation
U.S. Department of State

Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.