SOUTHEAST ASIA CONSTRUCTION22 Mar 2019
ADB supports private sector solar power development in Mongolia

The Asian Development Bank (ADB) and Private Infrastructure Fund (LEAP) have signed a US$18.7 million loan with Sermsang Power Corporation Public Company Limited (SSP) and Tenuun Gerel Construction LLC (TGC) to build, operate and maintain a 15-MW solar power plant supplying electricity to Mongolia’s central grid system.

The loan agreement for the Sermsang Khushig Khundii Solar Project marks ADB’s first cofinancing with LEAP in Mongolia’s renewable energy sector. The Canadian Climate Fund for the Private Sector in Asia provided a technical assistance grant to offset first mover costs and to catalyse the financing of ADB’s first private sector solar power project in Mongolia.

“This project uniquely incorporates climate-resilient technical solutions from the private sector to accommodate Mongolia’s cold and dry climate,” said Michael Barrow, director general of private sector operations department at ADB. “The project also benefits from the transfer of operational knowledge and advanced technology from Japan and Thailand in developing and operating solar power plants.”

The solar power plant is located in the Khushig valley at Tuv aimag province, in the Sergelen soum county. It aims to supply electricity to the Central Energy System, which delivers power to an area accounting for over 80% of the country’s energy demand.

The solar project is expected to generate clean electricity totalling 22.3 GW-h annually in Mongolia, while lowering the country’s carbon emissions by 26,400 tons per year (about 23,949 tonnes). It will help the government increase the share of renewable energy in total installed capacity from 12% in 2017 to a targeted 20% by 2023 and 30% by 2030, according to ADB.

Shifting to cleaner energy sources will also reduce electricity imports, improve Mongolia’s energy security, and mitigate air pollution. The energy sector is dominated by coal-fired power plants and currently accounts for over 60% of the country’s greenhouse gas emissions.

TGC is owned by Sermsang Power Corporation Public Company Limited (SSP) in Thailand, Sharp Energy Solutions Corporation (SESJ) in Japan, and AMOE Solar LLC and SH Energy Solution LLC in Mongolia.

“For SSP, this project is not only an important milestone for investment in renewable power projects in Asia, but also reflects our philosophy in developing ecologically sustainable projects,” said SSP CEO Varut Tummavaranukub.

“With ADB’s and LEAP’s support, we are excited to equip the Mongolian central area with clean energy and contribute to the reduction of greenhouse gas emissions through this landmark project,” said Tatsuya Satoh, senior executive director of SESJ and chair of TGC.

LEAP was established in 2016 to fill financing gaps and increase access to finance for ADB-supported infrastructure projects in Asia and the Pacific. The fund is supported by the Japan International Cooperation Agency and is managed by ADB’s private sector operations department.

The Canadian Climate Fund for the Private Sector in Asia (CFPS) was established by the Government of Canada in 2013 to provide blended concessional financing and technical assistance grants to private sector climate change mitigation and adaptation projects in Asia. The CFPS is administered by ADB under the Clean Energy Financing Partnership Facility.

Sermsang Power Corporation Public Company Limited, established in 2015 and based in Bangkok, Thailand, is a renewable energy producer and distributor in Asia that is committed to sustainable power production, as well as promoting a clean environment for a better future.

Sharp Corporation, parent company of SESJ, founded in 1912 and headquartered in Sakai City, Osaka, Japan, is a leading global electronics manufacturer. It is dedicated to contributing to the culture, benefits, and welfare of people worldwide through the use of its innovative technology.