by Linda Bertelsen
Mongolian family tent situated in one of the Ger areas in Ulaanbaatar

Focus on CO2 reduction and a green transition away from fossil fuels is at the top of the agenda worldwide. This also applies in Mongolia, a large but sparsely populated country with very hot summers and frigid winters. Over 80% of gross energy consumption in 2021 was based on local coal.

By Lars Gullev, Senior Consultant, VEKS

Published in Hot Cool, edition no. 2/2024

This article, based on the report “Renewable Energy Solutions for Heating Systems in Mongolia—Developing a Strategic Heating Plan, 2023,” prepared by IRENA, gives insight into Mongolia’s energy and climate challenges in the green transition. At the same time, recommendations are also given on how renewable energy (RE) can be implemented in the district heating (DH) sector.

The strategic heating plan indicates that it’s possible to reduce the emission of CO2 by up to 93% in 2050 compared to the present level – a challenging task but not impossible.

What is a Strategic heating Plan (SHP)?

A strategic heating plan (SHP) is a techno-economic assessment that shows how municipalities, districts, cities, or countries can transform their heat supply from fossil-based sources by integrating RE resources.

In Mongolia, IRENA developed a detailed SHP covering the city of Ulaanbaatar to leverage the existing DH network by utilizing locally available RE heat sources and renewable electricity from solar and wind.

A comparative heating system assessment was conducted for Ulaanbaatar as the major city, and an exemplary case study was conducted for heat demand in Mongolia. The assessment involved the formulation and evaluation of three scenarios:

Reference 2020 scenario

The Reference 2020 scenario represents the existing heating structure in Mongolia. Heat demand is split into DH demand and individual household demand. DH demand includes space heating and hot water demand in buildings and spatial heat demand by industry. Individual heat demand includes heat demand and domestic hot water for detached single-family homes and tents in the Ger areas in Ulaanbaatar.

Long-term 2050 scenario

For the analysis behind the 2050 scenario, two 2050 heating systems are modelled: a baseline fossil fuel-based system and a 100% RE-based system. The Baseline 2050 system is a projection of the current coal-based heating system to 2050.

The Renewable 2050 system is a 100% renewables-based system using a mix of RE technologies, such as geothermal, solar thermal, large-scale heat pumps, and waste incineration. The results for both systems are compared regarding annual system costs, primary energy supply, greenhouse gas (GHG), and particulate matter emissions.

Short-term 2030 scenario

Once the long-term 2050 scenario is finalized, it’s backcast to create a short-term 2030 scenario. This serves as a benchmark for the short-term implementation of measures such as energy efficiency improvements in DH networks, building renovations, expansion of renewable heat supply capacity, and DH. This scenario helps energy planners ensure that future policies are aligned with a high-level, long-term goal.

Fact box – Mongolia

(National Statistic Office of Mongolia, 2022)

  • Area: around 1.5 million km2.
  • Population: 3.4 million, of which 2.3 million live in urban areas.
  • Capital city Ulaanbaatar has 1.6 million inhabitants.
  • Population density: around two persons/km2.
  • Population is growing at around 50-60,000 persons/year, equal to an annual growth rate of about 1.9%.
  • A large share of the “new” population is in informal settlement areas, called Ger*) areas, which account for around 58% of the total building stock of Ulaanbaatar.
  • In 2020, the total number of households in Mongolia was 897,400, of which 60.9% were houses, 38.2% were Gers, and 0.9% were other dwellings. Within the housing category, around 50% were apartment buildings and 50% detached houses.

*) Ger is a round tent, a portable housing structure composed of a wooden frame with a felt covering, traditionally used by nomadic herders.

Fact box – Mongolia (Climate)

  • Mongolia has a large variation in ambient temperature over the year.
  • In Ulaanbaatar, the max. temperature reaches 33°C to 38°C while the minimum temperature reaches -33°C to -37°C.
  • Heating season in Mongolia is about eight months in most places.
Mongolia map

The current heating situation in Mongolia

In general, Mongolia’s energy supply is dominated by coal—in 2021, more than 880 PJ out of 1,060 PJ were based on coal, equivalent to more than 80% of the total primary energy supply—mainly produced domestically. The heating sector is nearly entirely based on coal, both in DH supply and individual households.

Coal provides an economical option for the heat supply to the population but is also a main cause of many challenges in the country. Local pollution due to coal usage is high in cities, causing respiratory-related health issues.

Most buildings in Mongolia have low energy efficiency, and their heat supply systems are also inefficient. Furthermore, a large share of the population has relatively low purchasing power, which implies that upgrading heating systems and integrating more renewable supply is not a simple pathway.

Finally, the country’s population is increasing rapidly, only adding to these problems if the current heating-related challenges are not addressed. Mongolia, however, also has large potential sources of RE – especially wind, solar, and geothermal energy.

Ulaanbaatar city, Mongolia
Ulaanbaatar city, Mongolia

Main challenges and opportunities

The reliance on and availability of coal create critical challenges for advancing the country’s efforts to reduce GHG emissions from the energy sector. In addition, extreme air pollution levels are evident due to these heating systems’ emissions, which contribute about 80% of the country’s accounted air pollution.

This condition is worsened by the geographic conditions in certain cities (for example, cities surrounded by mountains), such as the case of Ulaanbaatar and its temperature inversion layer.

During the winters of 2015-2020, the average concentration of the three major sources of air pollution—PM2.5, PM10 (the mass (weight) of particles smaller than 2.5 µm (PM2.5) and particles smaller than 10 µm (PM10)), and SO2—was up to ten times higher than the limits recommended by the World Health Organization (WHO).

Since the National Programme for Reducing Air and Environmental Pollution 2017–2025 has been implemented, the PM2.5 concentration fell by 51% in 2019 – 2020 compared to the level in 2016 – 2020 – but many days are still at “unhealthy,” “very unhealthy” or “hazardous” levels during the winter. For example, around 85 days were in these three categories from October 2021 to March 2022. This is a severe health problem that needs to be addressed.

Energy systems with low energy efficiency

In Mongolia, three coal-fired combined heat and power (CHP) plants and about 100 heat-only boilers (HOBs) supply the existing DH system, accounting for 98% of the DH supply. They are very old and need renovation – most/all plants were commissioned in 1983 or earlier.

The energy efficiency of Mongolia’s existing buildings and its DH infrastructure need attention. Heat losses in the Ulaanbaatar DH network are around 17%, which is relatively high compared to similar cities, with heat losses around 6-9%. This results in factors such as high heating demands, which require high supply temperatures due to poor insulation of buildings and DH pipes.

In recent years, many of the pipes in the Ulaanbaatar DH system have been replaced, but still, around 25% are from before the year 2000. The temperature level of the system is also relatively high, with a supply temperature of around 130°C, due to high-temperature requirements in individual buildings.

Ulaanbaatar’s Green City Action Plan acknowledges the lack of financial resources slowing renovation activity, especially in Ger (see Text box) areas. In terms of energy, it considers that RE promotion is on track.

Still, energy efficiency in buildings in the Ulaanbaatar DH heating area is challenging, especially in retrofitting pre-cast concrete panel apartments. Furthermore, there is a need for long-term investment planning strategies to increase energy efficiency in buildings and the Ulaanbaatar DH network.

Fact box – IRENA

  • IRENA (International Renewable Energy Agency) is an intergovernmental organization.
  • Supports countries in their transition to a sustainable energy future and serves as the principal platform for international cooperation, a centre of excellence, and a repository of policy, technology, resource, and financial knowledge on renewable energy.
  • IRENA promotes the widespread adoption and sustainable use of all forms of renewable energy, including bioenergy, geothermal, hydropower, ocean, solar, and wind energy, in the pursuit of sustainable development, energy access, energy security, and low-carbon economic growth and prosperity – www.irena.org
  • Link to the report: https://www.irena.org/Publications/2023/Aug/Renewable-Energy-Solutions-for-Heating-Systems-in-Mongolia

Large potential for renewable energy

Due to Mongolia’s rich geological heritage, the country has enormous potential for RE generation. Currently, the energy system has only 4.2% renewable penetration, but the potential to expand is significant:

  • The wind resource has been estimated at up to 1.1 TWe with an electricity output of 2,550 TWh/year.
  • The solar potential has been estimated at 4,774 TWh/year based on 270-300 sunny days a year, with an average sunlight duration of 2,250-3,300 hours available in most territories. Mongolia’s annual average solar energy is 1,400 kWh/m2 per year, with a solar intensity of 4.3-4.7 kWh/m2/day.
  • The significant geothermal potential is characterized by hot springs in several parts of the country. Still, limited data are available in underground temperature maps and site measurements.
  • Hydropower potential has been estimated to be 1.2-3.8 TWe.
  • Regarding heating, biomass from forests in northern Mongolia and excess heat from industry could be potential sources.

Recommendations for implementation of renewable energy in district heating systems

One significant challenge to implementing the green transition in Mongolia’s heating sector is the low price of coal, which hinders the financial feasibility of RE options. One way to solve this is to include externalities such as air pollution and GHG emissions in the heat tariff through taxation. The increasing population is leading to a rapid increase in heat demand, which adds pressure to build more heat supply plants.

Here, it is important to ensure that new buildings are energy efficient, for example, through building regulation measures. Low heating tariffs are a major barrier hindering the implementation of energy efficiency measures in existing buildings since the cost of building renovation may not be recovered through the associated energy savings.

This could be solved by introducing an appropriate tariff scheme based on consumption billing that reflects the heat production cost. Today, buildings do not use heat metering to measure their heat consumption and billing.

Regarding new renewable sources, further investigation into geothermal and excess heat sources would be worthwhile for the DH sector, as there are limited detailed surveys on their potential.

Recommended measures that could be implemented to promote RE deployment in Mongolia’s heating systems under four categories are shown below:

  • Target increased investment in RE development and the decarbonization of the heating sector.
  • Develop enabling regulations for renewable technologies in the Mongolian context.
  • Set ambitious, specific targets for coal phase-out to meet the 2050 vision.
  • Assess renewable potential (e.g., geothermal potential).
Energy efficiency in buildings
  • Provide heating installations with energy meters and heat cost allocators.
  • Implement measuring instruments to assess the development of heat demand in buildings.
  • Improve thermal insulation in buildings.
  • Revise construction standards for new building regulations regarding energy efficiency measures.
  • Introduce energy performance certificates for new and renovated buildings.
District heating
  • Introduce RE solutions (including thermal storage) that supply domestic hot water.
  • Create DH investment plans supported by regulation to upgrade, increase capacity, and maintain DH systems.
  • Structure heating tariffs to be composed of both fixed and variable costs.
  • Create DH cost-covering systems by revising heating tariffs and ownership models.
Ger areas
  • Investigate heat pump potential for buildings in Ger areas.
  • Assess the electrification of the heating supply in Ger tents and plan alongside electricity distribution grid reinforcements.
  • Improve insulation capacity in Ger tents where possible.
Figure 1: The development of district heating demand in Ulaanbaatar from 2020 to 2050.

Figure 1: The development of district heating demand in Ulaanbaatar from 2020 to 2050.

Figure 2: Primary energy demand, including electricity export balance for the assessed cases.

Figure 2: Primary energy demand, including electricity export balance for the assessed cases.

Figure 3: The resulting annual CO2 emissions in the assessed cases.

Figure 3: The resulting annual CO2 emissions in the assessed cases.

Figure 4: The resulting annual emissions of pollutants from the assessed cases

Figure 4: The resulting annual emissions of pollutants from the assessed cases

Figure 5: System costs related to the investment and operation of the assessed cases by categories.

Figure 5: System costs related to the investment and operation of the assessed cases by categories.

Output of Strategic Heating Plan

Today, Mongolia’s dependence on coal is high, but the scenarios highlighted in the SHP show that it is possible to implement a green transition of the country towards 2050:

  • The conversion will mean a significant expansion of DH in Mongolia (Fig. 1).
  • The primary energy consumption can be reduced by up to 55% (fig. 2).
  • The emission of CO2 can be reduced by up to 93% (Fig. 3)
  • The emission of SO2, NOx, and particles will be reduced by up to 99% (Fig. 4).
  • In 2050, the system costs will be able to be reduced by 62% compared to Baseline 2050 (fig. 5).

The analysis in SHP shows that the Renewable 2050 system is the most cost-effective (Fig. 5). This leads to system cost savings of around 62% compared to the Baseline 2050 fossil fuel-based system. The savings are mainly related to the cost of externalities (local pollution and CO2 emission), which are typically not accounted for in Mongolia today.

This analysis shows that the Renewable 2050 system is a feasible alternative to the Baseline fossil-based DH system in Ulaanbaatar. Furthermore, an integrated energy system analysis, including other energy sectors, could assist in identifying cross-sector synergies that could make the Renewable 2050 system yet more cost-effective.

For further information, please contact: Lars Gullev, lg@veks.dk

Mongolia – Strategic Heating Plan as an essential part of the green transition” was published in Hot Cool, edition no. 2/2024. You can download the article here:

meet the author

Lars Gullev
Senior Consultant, VEKS