Prior to now few weeks, the state-owned foremost electrical energy supplier in Ulaanbaatar introduced a collection of potential interruptions, citing inadequate energy provide. These disruptions – which got here alongside an enhance in set-tariff costs on electrical energy and heating – had been not welcomed by common Mongolians as winter peaks within the coldest capital metropolis on the planet. In 2023, Mongolia produced 77.7 p.c of its electrical energy domestically, primarily (90 p.c) via coal-fired thermal energy crops, and imported the remaining 22.3 p.c of electrical energy from Russia.
The Ulaanbaatar Electrical energy Distribution Community (UEDN) notified prospects of a possible disruption wherever from 60 to 120 minutes between 4 and 6 p.m. and urged individuals to restrict pointless utilization throughout the peak time. In keeping with the UEDN web site, the community serves half of the nation’s inhabitants (1.7 million out of three.4 million in 2023), together with individuals in Ulaanbaatar and the encircling space, with government-set tariffs. The electrical energy and heating tariff is closely sponsored by the federal government at the price of accumulating a substantial quantity of debt. The value has stayed the identical since 2019, in accordance with the Statistics of Vitality Report 2023.
After the parliamentary election in June 2024, the brand new authorities set its consideration to reforming the electrical energy and heating trade to perform better power safety. For example, the creation of the Vitality Reform Job Drive and Committee obtained an overwhelming quantity of help (100 out of 126 Parliament members) and is anticipated to prioritize tariff reforms, inexperienced power transition, and personal sector involvement within the power market.
Just lately, the Vitality Regulatory Fee advocated a change in tariffs primarily based on market ideas reminiscent of provide and demand. The chair of the fee, Tuvshinchuluun Erdenechuluun, famous operation loss and potential disruption within the power trade if the tariff worth on electrical energy and warmth continues to fall in need of the manufacturing value.
“There’s a want to extend costs. Two foremost points had been taken under consideration when growing costs. We plan to carry the value of electrical energy and warmth to its manufacturing value whereas including the bottom potential monetary burden on customers,” he stated final November.
These adjustments in tariffs and elevated emphasis on the power sector are clear alerts that Mongolia is making ready to deal with its power insecurity, which is deeply intertwined with its economic system and geopolitics. In keeping with Deputy Prime Minister Dorjkhand Togmid, the nation has not had important power sector reforms because the Nineteen Eighties. That’s set to alter: 4 out of the 14 mega initiatives deliberate by the federal government in 2024-2028 are within the power sector.
There are numerous ongoing developments within the power sector, together with constructing a solar energy plant and an power storage system in Gobi-Altai province, Indian curiosity in shopping for coking coal, a French deal in uranium mining, and a $100 million mortgage from the Asian Growth Financial institution for local weather financing, which incorporates power initiatives. Actually, these steps are an indication that Mongolian policymakers are heading in the right direction to deal with power insecurity within the nation. However to see long-term outcomes, common Mongolians would possibly have to endure some disruptions within the power sector alongside the best way.