Clean Energy Asia LLC together with its shareholders, Newcom LLC and SB Energy Corp, have signed financing agreements with the Japan International Cooperation Agency (JICA) and the European Bank for Reconstruction and Development (EBRD) to construct a 50MW wind farm in southern Mongolia.
Clean Energy Asia is 51% owned by Newcom LLC, a Mongolian conglomerate with activities in telecommunications, property and energy. The remaining 49% is owned by a subsidiary of SB Energy Corp, a subsidiary of SoftBank Group Corp.
Mongolia faces great 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 supply Mongolia’s power demand with clean, eco-efficient electricity by harnessing Mongolia’s vast and inexhaustible wind resources.
The project will help contribute to sustainable economic development and the mitigation of climate change.
Clean Energy Asia will construct the Tsetsii Wind Farm at Tsogttsetsii Soum, Umnugobi Aimag, and aims to launch operations in December 2017.
Mongolia has a power-supply capacity of 1130MW, consisting of 88% coal, 6% diesel, 6% renewable energy and 2% hydropower sources. While being the world’s eighth country most susceptible to climate change, electricity supply-demand balance along with its economic growth is an urgent issue for Mongolia, and accordingly, Mongolia is a country that particularly requires safe and secure power sources such as renewable energy.
The State Great Khural approved a national power policy in 2015 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, utilising the abundant wind and solar resources in the Gobi region.
Mongolia is the first country to sign a memorandum with Japan on the Joint Crediting Mechanism (JCM) to reduce greenhouse gas emissions. In these circumstances, the Tsetsii Wind Farm project will help contribute to the increased adoption of renewable energy in Mongolia.
It is the first dollar-denominated project finance debt transaction by JICA through its Private Sector Investment Finance scheme in the renewable energy field, and the second renewable energy project in Mongolia for Newcom and EBRD following the 50MW Salkhit Wind Farm, the first wind farm and first private power generator in Mongolia, which began operations in 2013.
The 50MW Tsetsii Wind Farm project marks the first power generation business in Mongolia for SB Energy and the SoftBank Group.
SB Energy chairman and CEO Masayoshi Son said, “This project marks the first step to develop renewable energy in Mongolia for the SoftBank Group. Power generated from the wind farm will supply electricity in Mongolia by connecting to its domestic grid, and I believe the project will help contribute to the stable supply of power for the nation.
“With this project, the SoftBank Group will have bases in Japan, India and Mongolia for its renewable energy business. We will work to further expand our global business to increase the adoption of renewable energy and reduce CO2 emissions.”
Newcom Group chairman Boldbaatar Tserenpuntsag said, “Having first established the Salkhit Wind Farm Project, to date the first and only wind farm and private power generator in Mongolia, Newcom is proud to continue its investments into Mongolia’s renewable energy sector.
“The Tsetsii Wind Farm project is a further demonstration of Newcom’s commitment to the development of Mongolia through strengthening infrastructure and leading the liberalisation of the power sector through sustainable and long-term investments.”
EBRD’s first vice president and chief operating officer Philip Bennett said, “We are delighted to mark the tenth anniversary of our operations in Mongolia by signing the financing for our second wind farm in the country. We are pleased to cooperate in this transaction not only with our long established partner Newcom, but also with our new partners JICA and the SoftBank Group.
“This signing builds on eight years of sustained work with the Mongolian authorities to help them put in place the regulatory framework that allows them to harness Mongolia’s huge renewable resources.”