ADB to Lend $100 Million for a 125 MW Battery Energy Storage System in Mongolia

The Asian Development Bank (ADB) has approved a $100 million loan to help expand its supply of renewable energy in Mongolia through a 125 MW advanced battery energy storage system (BESS).

The total cost of the project is $114.95 million, of which $3 million is co-financed by a grant from ADB’s High-Level Technology Fund, financed by the Government of Japan. The government of Mongolia will provide $11.95 million towards the cost of the project, which is due for completion in September 2024, states ADB’s press release.

“The BESS will be resilient to Mongolia’s cold climate and equipped with a battery energy management system enabling it to be charged entirely by renewable electricity. This will then discharge clean electricity to supply peaking power in the central energy system grid. The project will also provide a regulation reserve to integrate additional renewable energy capacity in the transmission grid,” states the ADB.

James Lynch, director of ADB’s East Asia Department, said, “Mongolia is among the highly coal-dependent developing member countries of ADB, and its energy sector is the largest contributor to its greenhouse gas emissions, accounting for about two-thirds of the total.”


He further added that the project would lead to the decarbonization of the energy system in the country with increased penetration of renewable energy.

In its press release, ADB added that in 2018, coal-fired combined heat and power projects contributed to 93% of total power generation in the electricity grid. Mongolia’s renewable energy potential – such as wind and solar – is estimated to be equivalent to 2,600 GW, which could fully meet the country’s future power demand.

Further, ADB has pointed out that the country’s potential to generate renewable energy has not been realized.

Meanwhile, the government of Mongolia aims to increase the share of renewable energy in total installed capacity from about 12% in 2018 to 30% by 2030, in line with the State Policy on Energy, 2015-2030.

According to the statement, the country’s renewable energy capacity will be increased through the project, which, after completion, will supply 44 GWh of clean peaking power annually. The project will support the integration of an additional 859 GWh of renewable electricity into the energy system grid, avoiding 842,039 tons of carbon dioxide emissions annually by 2025.

The project will also help strengthen the capacity of the National Dispatching Center to handle power dispatch and grid operations and of the National Power Transmission Grid to operate and maintain the system.

As the energy demand in the Asia and Pacific region grows, ADB is trying to improve the regional energy systems in the Pacific.

In December 2019, it was reported that ADB was planning to roll out nearly $1 billion of energy investments across the region during the 2019-2021 period.

In 2019, Mercom reported that the Asian Development Bank and Asia’s Private Infrastructure Fund (LEAP) had signed an agreement to provide an $18.7 million loan to develop 15 MW of solar power projects in Mongolia.

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