BY: ERIK TSOGOO

Enkhbayar Tsogoo is a Master of International Public Policy student at the School of Advanced International Studies of Johns Hopkins University in Washington, DC. His functional focus areas are Development, Climate, and Sustainability, with a specific interest in transitions in the Global South and just transitions. He is also energized by the limitless potential of the clean energy transition.

1. INTRODUCTION

Heating is an important part of energy consumption. However, certain regions face significant environmental challenges during the heating season. For example, despite having ample reserves of different energy sources that can meet the energy demand, Ulaanbaatar city in Mongolia is grappling with challenges due to inadequate infrastructure and insufficient capacity or delivering energy. Heating energy poverty in Ulaanbaatar city, within the household context, is defined as “a situation faced by residents who struggle financially to access cleaner heating alternatives, improved insulation systems, or alternative energy sources.” From the city administration’s perspective, it is defined as “a situation where the authorities cannot fully meet heating consumption demands with technical capacity of the power output.” As a result, residents often resort to burning coal and coal briquettes or other less optimal fuel sources, which significantly contributes to air pollution problems during the eight-month-long heating season.

Given the detrimental health effects of pollution, this paper identifies solar photovoltaic (PV) energy combined with battery storage as the fastest (fast) way to alleviate air pollution. It also identifies feasible policy changes that the Ulaanbaatar city administration and the state government can implement to accelerate the transition to cleaner (good) and more affordable (cheap) heating energy.


2. CURRENT AIR POLLUTION AND ENERGY CONSUMPTION

Air pollution in Ulaanbaatar presents a significant threat to public health during the winter months [1]-[4]. Severe winter pollution has been linked to decreased fertility rates and a worsened quality of life [5]. In January 2016, pollution reached a level approximately 80 times higher than the World Health Organization’s recommended level [6].

As of 2022, most electricity in Ulaanbaatar (84.1%) is generated by thermal coal plants, with approximately 6.9% imported from Russia and around 9% sourced from renewables such as solar and wind power [7]. Energy demand peaks in December, with the annual energy consumption growth rate standing at 5.6% and projections indicating it could reach approximately 6.36 terawatt hours (TWh) by 2030 under the business-as-usual scenario [8].

Currently, about 200,000 households in Ulaanbaatar, constituting 60% of the city's population, rely on coal briquettes for winter heating [9]. To address pollution, several government initiatives have been introduced, most significantly the 2019 ban on raw coal burning in ger (peri-urban) districts. These initiatives also include government subsidies for coal briquettes as an alternative heating source [10]. While this plan has led to some reduction in PM2.5 levels [11], overall pollution levels have not decreased sufficiently.

3. INFRASTRUCTURE AND INTERESTED STAKEHOLDERS

Currently, the energy sector is entirely controlled by the government, which also sets electricity prices. Since 2001, authorities have traditionally offered significant subsidies, with residential users receiving a 72% subsidy and industrial and commercial consumers receiving a 58% subsidy [12]. However, this approach has resulted in a financially unsustainable system, leading to challenges in financing infrastructure maintenance [13]. Even with a sufficient budget to fully subsidize electricity tariffs for all households, there would still not be enough generation and infrastructure capacity to meet the energy demand. Therefore, the main challenge in achieving affordable energy access lies in the lack of generation and delivery capability. The key stakeholders involved and interested in resolving air pollution are shown in

Figure 1.

Figure 1. Interested stakeholders

Households: These are the stakeholders who suffer the most from heating energy poverty. They would benefit from access to cleaner air, which would reduce respiratory diseases and improve overall well being .

Businesses: Business owners grapple with energy shortages that disrupt their operations. A stable energy supply and consistent pricing would facilitate smoother business operations, enabling long-term planning.

The government (politicians): For politicians and the government, successfully reducing air pollution could be a significant advantage. It would demonstrate their commitment to sustainability and showcase their ability to improve living conditions, potentially gaining public support. From the perspective of a mutual interest Venn diagram, it is unlikely that any stakeholders would oppose efforts to reduce air pollution as long as the plan is well designed and results in positive changes. Theoretically, all parties are deeply concerned with and affected by air pollution.

4. GOAL OF REDUCING SMOKE PIPES BY HALF AND SOLAR ENERGY COST

Assuming that an average coal-heated household occupies an area of 35m², an energy-efficient electric heater with a 2000 W capacity could adequately heat the space for 17 hours per day, resulting in a total required energy consumption of 34,000 Wh (34 KWh). Mongolia enjoys approximately 270 to 300 sunny days annually, with its average annual solar radiation ranging from 1,200 to 1,600 kilowatts per square meter, reaching nearly 2,000 kW/m² in certain areas, while the dry air in the region enhances solar PV output. In 2022, the levelized cost of electricity (LCOE) for solar ranged from $0.030/kWh to $0.120/kWh [14], with a median of $0.075/kWh.

Even the LCOE for utility-scale solar PV+battery storage ranged from $0.046/kWh to $0.102/kWh in 2023 [15], with a median of $0.074/kWh. Assuming an average cost of $0.075/kWh, the estimated total cost for 17 hours of heating would be about $1.28 per day. This cost is lower than the daily expenditure on government-subsidized coal briquettes, which averages around 4700 MNT ($1.50), including spending on other materials such as wood and lighters. If 100,000 households (half of those that use coal) were to transition to electric heating systems in Mongolia, an additional generation capacity of around 200 MW would be necessary to support 17 hours of heating each day.

5. THE FASTEST SCALING-UP TECHNOLOGY

Solar PVs represent one of the most rapidly scalable energy sources. For instance, in just eight months, solar energy generation in the US surged by approximately 9 GW [16]. One study forecasts that by 2030, it could be feasible to fulfill up to 77% of Ulaanbaatar’s electricity demand from renewables, with solar contributing 54% and wind 23% [17]. Consequently, employing solar power in tandem with battery storage emerges as a practical solution to address the city’s escalating energy needs within a short timeframe. The typical cost of constructing a 200 MW solar power plant with battery storage on a global scale stands at around $680 million.

This amount represents approximately 89% of Ulaanbaatar's budget income of 2024 [18] and 9.2% of the government’s tax revenue as of 2022 [19], indicating the feasibility of public funding. It is also noteworthy that spending on the current coal-briquette production program has surpassed approximately $350 million since 2019, with expectations for further growth.

However, the total cost of financing the subsidized coal-briquette initiatives remains unclear, as the government has not disclosed it. Moreover, the recent passage of legislation enabling the city to issue municipal bonds for the first time [20], coupled with growing interest from both local and foreign entities in investing in energy facilities, suggests an additional avenue for funding.

6. CONCLUSION AND POLICY IMPLICATION

The concept of “good, cheap, fast” is exemplified in renewable energy, particularly solar power, where the LCOE is lower (cheap) than that of fossil fuels, making it economically viable. Utility-scale solar PV and battery projects can be rapidly (fast) scaled up using a “bring–assemble–connect” approach, leading to cost savings and quicker returns on investment.

Moreover, these facilities can be relocated if a more viable energy source becomes available (in the case of implementing a gas-to-power plant utilizing vast reserves of coalbed methane). While the feasibility studies, engineering design, and legal procedures for a coal power plant can take over two years, the required generation capacity from solar PVs can be installed and connected to the grid within that timeframe, making clean energy an effective (good) solution.

1. Updated regulation. Mongolia’s current renewable energy regulation, which still offers feed-in tariffs (FiT), is outdated due to the significant decline in PV costs and is fiscally unsustainable, necessitating amendments. Even Spain, an economically developed country, has abandoned the costly FiT model due to its high expense [21]. One of the most successful examples of renewable energy development is seen in Uruguay, which has achieved impressive results without relying on FiT, with the government supporting renewables solely through “price discovery” and a “learning period” approach [22].

2. Liberalization and polycentric governance. To ensure the successful implementation of the PV+battery storage project, it is crucial to adopt a political economy perspective that emphasizes accountability and effective decision-making. Liberalizing the electricity market in Ulaanbaatar is highly recommended. This is not a time for indecision in making a choice between maintaining political control over the grid system and providing cleaner air (and better health) for all citizens. In heavily regulated China, where the central government overlooked ten illegal coal power plants in Inner Mongolia in 2006 [23]. Currently, China, albeit reluctantly, has begun to introduce elements of liberalization in its domestic energy sector [24]. Moreover, the eradication of energy poverty in Nepal and Zambia demonstrates that, despite weak institutions and limited financial resources, significant progress can be achieved through the active involvement of local cooperatives [25, p.51]. Similarly, successful energy reforms in China and Vietnam during the 1980s illustrate that substantial improvements are possible even in the face of extreme poverty. The common thread in these instances is robust local accountability [25, p.240]. A new type of energy (polycentric governance) is beginning to emerge in numerous countries. One such example is the implementation of Community-Based Energy in Minnesota, where Connexus Energy, the largest cooperatively owned energy supplier, provides power to approximately 125,000 households [26]. Another example from Denmark illustrates that communities are more likely to support energy systems when they have a stake in them, emphasizing that inclusive participation, particularly from rural actors, homeowners, and stakeholders, can greatly enhance climate and energy governance [27]. In Europe, REScoop is a federation of energy cooperatives, where individuals become co-owners of local renewable energy projects by purchasing a cooperative share [28]. With a network of 2,250 cooperatives representing over 1.5 million citizens, REScoop stands as a notable force. In California, Marin Clean Energy exemplifies the Community Choice Aggregation model, providing local control over supply sources and rates while incorporating community goals [29].

3. A new managing entity. Even though the Venn diagram shows that no one is likely to oppose clean air initiatives, both external and internal governance obstacles have contributed to the failure of numerous past energy projects. This has resulted in a situation where air pollution disproportionately affects the poor, while certain powerful actors benefit from the system's inefficiencies. Considering the failure of government-initiated energy projects—such as the 700 MW Baganuur Power Plant project, stalled since 2015 [30], and prolonged discussions on the fifth power plant project that aims to generate 450 MW [31], under discussion since 2011—it is vital to engage more powerful, external stakeholders, including local households and businesses, in proposed energy initiatives. Achieving this through local, community- led initiatives, partnerships, and co-management arrangements represents a shift from the top-down approach, which has failed over the past two decades, to the bottom-up approach.

By combining the strong community desire for clean air, the innovative capacity and flexibility of private enterprises, including their financial resources, and political backing from supportive policymakers—such as expediting approval processes, offering free land for the project, or providing partial financing or loan guarantees— the PV+battery storage project can be efficiently implemented in a timely manner. Local residents, particularly those residing in highly polluted areas, should be given a stake in the new venture to ensure heightened and constant public pressure. While dividends may not be guaranteed, shared ownership grants them direct involvement in company management. Private industries are recommended to take a leading role in management by leveraging their creativity, which is essential for swift development.

Moreover, private entities with substantial electricity consumption in their production lines are encouraged to participate, as they stand to benefit the most from a reliable energy supply. Should the approach prove successful, this experience could be further leveraged to alleviate air pollution in cities such as Bishkek, Almaty, Dushanbe, and others facing similar environmental challenges.


References

[1] P. K. Davy et al., “Air particulate matter pollution in Ulaanbaatar, Mongolia: determination of composition, source contributions and source locations,” Atmospheric Pollution Research, vol. 2, no. 2, pp. 126–137, Apr. 2011, doi: 10.5094/apr.2011.017. Available: https://doi.org/10.5094/apr.2011.017

[2] M. Wang, K. Kai, N. Sugimoto, and S. Enkhmaa, “Meteorological Factors Affecting Winter Particulate Air Pollution in Ulaanbaatar from 2008 to 2016,” Asian Journal of Atmospheric Environment, vol. 12, no. 3, pp. 244–254, Sep. 2018, doi: 10.5572/ajae.2018.12.3.244. Available: https://doi.org/10.5572/ajae.2018.12.3.244

[3] S. K. Guttikunda, S. Lodoysamba, B. Bulgansaikhan, and B. Dashdondog, “Particulate pollution in Ulaanbaatar, Mongolia,” Air Quality Atmosphere & Health, vol. 6, no. 3, pp. 589–601, May 2013, doi: 10.1007/s11869-013-0198-7. Available: https://doi.org/10.1007/s11869-013-0198-7

[4] G. Byambajav, B. Batbaatar, A. Ariunsaikhan, and S. Chonokhuu, “Particulate matter concentrations during winter seasons of 2016-2020 in Ulaanbaatar, Mongolia,” Proceedings of the Mongolian Academy of Sciences, pp. 30–39, Mar. 2021, doi: 10.5564/pmas.v61i01.1559. Available: https://doi.org/10.5564/pmas.v61i01.1559

[5] D. Warburton et al., “Impact of Seasonal Winter Air Pollution on Health across the Lifespan in Mongolia and Some Putative Solutions,” Annals of the American Thoracic Society, vol. 15, no. Supplement_2, pp. S86–S90, Apr. 2018, doi: 10.1513/annalsats.201710-758mg. Available: https://doi.org/10.1513/annalsats.201710-758mg

[6] “Air pollution in Mongolia,” Bulletin of the World Health Organization, vol. 97, no. 2, pp. 79–80, Feb. 2019, doi: 10.2471/blt.19.020219. Available: https://doi.org/10.2471/blt.19.0202192

[7] “National Dispatching Center,” ndc.energy.mn. Available: https://ndc.energy.mn/. [Accessed: Dec. 13, 2023]

[8] R. Sanders, “Electricity transition in a developing city, A case-study of Ulaanbaatar (Mongolia),” 2019. Available: https://studenttheses.uu.nl/handle/20.500.12932/35251

[9] G. Ganbat, T.-O. Soyol-Erdene, and B. Jadamba, “Recent Improvement in Particulate Matter (PM) Pollution in Ulaanbaatar, Mongolia,” Aerosol and Air Quality Research, vol. 20, no. 10, pp. 2280–2288, Jan. 2020, doi: 10.4209/aaqr.2020.04.0170. Available: https://doi.org/10.4209/aaqr.2020.04.0170

[10] S. Jun, “Is the Raw Coal Ban a Silver Bullet to Solving Air Pollution in Mongolia?: A Study of the Mongolian Government’s Air Pollution Reduction Policies and Recommendations in the Context of COVID-19,” Journal of Public and International Affairs. Available: https://jpia.princeton.edu/news/raw-coal-ban-silver-bullet-solving-air-pollution-mongolia-study-mongolian-governments-air. [Accessed: May 24, 2024]

[11] G. Byambajav, B. Batbaatar, A. Ariunsaikhan, and S. Chonokhuu, “Particulate matter concentrations during winter seasons of 2016-2020 in Ulaanbaatar, Mongolia,” Proceedings of the Mongolian Academy of Sciences, pp. 30–39, Mar. 2021, doi: 10.5564/pmas.v61i01.1559. Available: https://doi.org/10.5564/pmas.v61i01.1559

[12] “Recommendations on the In-depth Review of Energy Efficiency Policies and Programmes of Mongolia,” 2010. Available: https://www.energycharter.org/fileadmin/DocumentsMedia/CCDECS/CCDEC201009 .pdf. [Accessed: Dec. 14, 2023]

[13] “Mongolia Energy Situation,” energypedia.info. Available: https://energypedia.info/wiki/Mongolia_Energy_Situation#:~:text=The%20ERA%20is%20responsible%20for,in%20the%20Mongolian%20energy%20sector. [Accessed: Dec. 12,2023]

[14] “RENEWABLE POWER GENERATION COSTS IN 2022,” 2022. Available:https://mc-cd8320d4-36a1-40ac-83cc-3389-cdnendpoint.azureedge.net/-/media/Files/IRENA/Agency/Publication/2023/Aug/IRENA_Renewable_power_generation_costs_in_2022.pdf?rev=cccb713bf8294cc5bec3f870e1fa15c2

[15] G. Bilicic and S. Scroggins, “2023 Levelized Cost Of Energy+.” Available: https://www.lazard.com/research-insights/2023-levelized-cost-of-energyplus/

[16] “2024 renewable energy industry outlook.” Available: https://www2.deloitte.com/us/en/insights/industry/renewable-energy/renewable- energy-industry-outlook.html

[17] R. Sanders, “Electricity transition in a developing city, A case-study of Ulaanbaatar (Mongolia),” Theses. Available: https://studenttheses.uu.nl/handle/20.500.12932/35251

[18] Amarjargal, “2024 Capital city budget approved,” UB Post, Dec. 08, 2023. Available: https://theubposts.com/2024-capital-city-budget-approved/

[19] Oyun-Erdene, “MNT 140 billion required for pension increase of MNT 100 thousand resolved,” mongolia.gogo.mn, Nov. 13, 2023. Available: https://mongolia.gogo.mn/r/43jw9#:~:text=The%20State%20Budget%202024%20was,expenditure%20is%20MNT%2027%20trillion

[20] “Ulaanbaatar City Initiates Capital City Bond Issuance for Strategic Development.,”www.mongoliaweekly.org, www.mongoliaweekly.org, Aug. 26, 2023. Available: https://www.mongoliaweekly.org/post/ulaanbaatar-city-initiates-capital-city-bond-issuance-for-strategic-development.

[21] Robertr, “Spain abolishes FITs entirely,” Pv Magazine International, Jul. 15, 2013. Available: https://www.pv-magazine.com/2013/07/15/spain-abolishes-fits-entirely_100012050/

[22] M. Muñoz Cabré, Alvaro Lopez-Peña, Ghislaine Kieffer, Arslan Khalid, and Rabia Ferroukhi, “Renewable Energy Policy Brief,” report, 2015. Available: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2015/IRENA_RE_Latin_America_Policies/RENA_RE_Latin_America_Policies_2015_Country_Uruguay.pdf

[23] S. Oster, “Illegal Power Plants, Coal MinesIn China Pose Challenge for Beijing,” WSJ, Dec. 27, 2006. Available: https://www.wsj.com/articles/SB116718773722060212. [Accessed: Dec. 13, 2023]

[24] S. Zhang and P. Andrews-Speed, “State versus market in China’s low-carbon energy transition: An institutional perspective,” Energy Research & Social Science, vol. 66,p. 101503, Aug. 2020, doi: 10.1016/j.erss.2020.101503. Available:https://doi.org/10.1016/j.erss.2020.101503

[25] M. Aklin, P. Bayer, S. P. Harish, and J. Urpelainen, Escaping the Energy Poverty Trap. 2018. doi: 10.7551/mitpress/11479.001.0001. Available: https://doi.org/10.7551/mitpress/11479.001.0001

[26] T. Bauwens, “Polycentric Governance Approaches for a Low-Carbon Transition: The Roles of Community-Based Energy Initiatives in Enhancing the Resilience of Future Energy Systems,” in Green energy and technology, 2017, pp. 119–145. doi: 10.1007/978-3-319-33753-1_6. Available: https://doi.org/10.1007/978-3-319-33753-1_6

[27] B. K. Sovacool, “An international comparison of four polycentric approaches toclimate and energy governance,” Energy Policy, vol. 39, no. 6, pp. 3832–3844, Jun.2011, doi: 10.1016/j.enpol.2011.04.014. Available:https://doi.org/10.1016/j.enpol.2011.04.014

[28] “About us - REScoop.” Available: https://www.rescoop.eu/about-us

[29] J. Taminiau, J. P. Banks, D. Bleviss, and J. Byrne, “Advancing transformative sustainability: A comparative analysis of electricity service and supply innovators in the United States,” Wiley Interdisciplinary Reviews Energy and Environment, vol. 8, no. 4, Feb. 2019, doi: 10.1002/wene.337. Available: https://doi.org/10.1002/wene.337

[30] “Baganuur Power Station,” www.sourcewatch.org. Available: https://www.sourcewatch.org/index.php/Baganuur_power_station

[31] “Ulaanbaatar-5 power station - Global Energy Monitor,” Global Energy Monitor. Available: https://www.gem.wiki/Ulaanbaatar-5_power_station

Comment