08.06.2024 Author: Bair Danzanov

Thermal power in Mongolia – a past that has found demand in the present

Thermal power in Mongolia

Today, in the era of active development of green energy, which has swept not only developed but also developing countries, traditional energy sources such as brown coal remain important in Mongolia – even though renewable energy sources are being developed in parallel in the country. The authorities of the country, where all major energy facilities were built by foreign (in this case Soviet) specialists many decades ago, have in recent years begun to turn their attention back to thermal power generation, abandoning utopian notions of renewable energy as a universal “panacea” capable of ridding the country of the threat of energy shortages without harming the environment.

Current status of the thermal power sector in Mongolia

Thermal power still dominates Mongolia’s energy mix, providing more than 80 per cent of the country’s electricity generation. The main fuel for all current Mongolian CHPs and TPPs is domestically mined coal.

There are nine relatively large CHPs and TPPs in the country, three of which are located in the capital city of Ulaanbaatar. They account for more than 70 per cent of the country’s electricity generation.

The country lacks the capacity of the existing thermal power facilities. In recent decades, no major facilities in this sector have been commissioned – Mongolia has, at best, limited itself to the reconstruction of existing ones.

The threat of energy shortages

While Mongolia’s electricity consumption is growing by 7-8 per cent annually, the growth in generating capacity is barely keeping pace, reaching at best 6 per cent per year. The country’s central energy system – with its three largest thermal power plants – is overloaded for the fifth year in a row, and the western energy system has to rely almost entirely on electricity supplies from Mongolia’s neighbours Russia and China. The same can be said for the southern neighbour of Mongolia, but only in relation to the country’s southern power system, which is under tremendous strain due to the rapid expansion of coal and copper mining at the country’s two largest deposits, Tavan Tolgoi and Oyu Tolgoi. The south of the country is less than 10 per cent self-sufficient in domestic power generation capacity. It is due to the growing needs of the southern fields that the PRC accounts for more than 70 per cent of Mongolia’s total electricity imports, which contrasts with Russia’s dominance as Mongolia’s electricity supplier in previous decades.

What to do: promising construction sites

Mongolia began to address this situation in the mid-2010s when a number of new projects were proposed as part of the national industry development programme. Below are descriptions of the new power plant projects and the progress of their construction.

1-The prospective Baganuur thermal power plant will supply electricity to the country’s largest thermal coal deposit of the same name. The tender for the construction of the 700 MW Baganuur thermal power plant, announced back in 2015, was initially won by China’s Pinggao group, but the results were cancelled shortly after being announced due to a corruption component.  A new tender for the construction of the plant was announced in 2021. The design capacity of the plant was reduced to 400 MW. The cost of the project is estimated at $620 million, with completion scheduled for 2026.

2nd, additional “private” investors are currently being sought for the construction of a 300 MW thermal power plant (2 boilers of 150 MW each) to serve the large Buruljuut lignite coal deposit as well as Baganuur. Construction of the facility has commenced from mid-2022 and is so far being entirely funded from the country’s budget. It is expected to be completed during 2025. Part of the power generation from this plant is planned to meet the needs of the country’s capital, where electricity consumption has increased by 12 per cent in 2023. In March 2024, it was announced that 50 per cent of the construction works at the station had been completed and that there were plans to supply the Ulaanbaatar metro with electricity from this CHP, the creation of which was again actively discussed in February this year.

3- Over the past two years, Mongolian power engineers have focused their attention on the Tavantolgoi thermal power plant project, which is designed to supply electricity to the country’s largest coal deposit, Tavantolgoi, as well as a number of other promising enterprises in southern Mongolia, such as the Oyu Tolgoi copper deposit. According to preliminary technical specifications, the plant should have a capacity of 450 MW, and the project cost exceeds $800 million. The search for foreign investors through the organisation of two tenders in 2020-2022 was unsuccessful due to the lack of willingness of some of the country’s partners (especially Western ones) to finance environmentally “dirty” power generation – so the project is being financed with funds from the Mongolian budget as well as from the state-owned company Erdenes Tavantolgoi.

4- At the same time, in 2015-2023, no work was done on the project included in the industry development plan for 2015-2030 to create a thermal power plant at the  Shivee-Ovoo field with a capacity of 5,280 MW (three times the country’s total needs), oriented towards exporting electricity to the PRC and other Northeast Asian countries. At the time when such an ambitious initiative was put forward, the international arena was actively discussing the prospect of creating a so-called “Northeast Asian Energy Ring”, which could involve Russia, China, Japan, both Koreas and Mongolia. Now this project is not even mentioned in the annual reports of the country’s Ministry of Energy.

In 2022, seven years after the first mention of the projects described above, Mongolian media reported on the government’s plans to build a coal-fired CHP plant in Bayanteeg, near another large coal deposit with a capacity of up to 40 MW. Also, according to the same Mongolian media, the possibility of building a 50 MW thermal power plant in the Selenge Aimag of Mongolia from mid-2023 is being studied. Construction is scheduled to start in spring 2024, with work to be completed by 2026.

Reconstruction and modernisation

In particular, the Russian company Inter-RAO is reconstructing CHPP-3 in Ulaanbaatar. A memorandum of understanding between the parties was concluded in 2021. Already in August 2022, Inter-RAO presented a feasibility study of the project to its Mongolian colleagues.  Currently, the plant provides 15% of the country’s energy consumption. The reconstruction guarantees an increase in the plant’s capacity by 300 MW. Also discussed is the construction of a new unit at this plant (or at CHP-2), which will use natural gas instead of coal, with a capacity of 100 MW.

CHP-4, which also provides electricity to the capital of Mongolia, has recently been reconstructed, first by specialists from Japan and then from the Russian ROTEC. The agreement on Japanese participation was signed in 2016 – at that time, the power plant provided almost 70 per cent of all electricity generation in Mongolia. The works were completed in 2018 – as a result, the plant’s capacity increased by 20%. Later, in 2019-2021, four new power units of the plant were commissioned – the work was carried out by the Russian companies ROTEC and Ural Turbine Works. As a result of the two modernisations, the power plant’s capacity was increased from 540 to 772 MW.

The reconstruction of the Choibalsan CHP plant in eastern Mongolia is expected to be completed soon, which will increase the plant’s capacity by 50 MW. The work is being carried out by the Chinese company TBEA. The reconstruction of the thermal power plant is also being financed by Chinese banks.


Thus, Mongolia’s thermal power sector is not only maintaining its dominant position in the 21st century, but is also significantly strengthening it through the development of new capacity and optimisation of existing capacity. However, the development of the sector faces limited external funding sources due to the negative environmental impact of these projects, as well as exacerbating the environmental situation in a country already suffering from desertification, landfills and air pollution. In this regard, it is encouraging to see the Mongolian authorities making at least a partial switch from coal to gas as a fuel for CHPs and thermal power plants, which has become apparent with the intensification of the Trans-Mongolian gas pipeline. It is likely that the development of GHPPs and CCPPs may become a new priority for thermal power development in Mongolia in the coming years – albeit at a much higher cost than the traditional “commitment to coal”.


Bair DANZANOV, independent expert on Central Asia and Mongolia, especially for the New Eastern Outlook

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