EBRD, alongside Triodos Investment Management and FMO Dutch Development Bank will provide a $30.7 million loan to finance the construction and operation of Mongolia’s largest utility-scale solar plant – a 30 MW project to be located in the Gobi Desert region, around 450 km south east of Mongolian capital Ulaanbaatar.
The loan will be provided to Desert Solar Power One – a special purpose vehicle formed for the development of this project, ultimately owned by London & Dubai based investment group United Green, and German headquartered Tucher Group.
Financing will be provided on a limited recourse project financing basis. EBRD will provide an ‘A’ loan of $10.5 million, and Triodos Investment Management and FMO Dutch Development Bank will provide a further $10.5 million each as a ‘B’ loan. EBRD estimates the total cost for the project at $47.5 million.
The project will be EBRD’s first solar investment in Mongolia, though it has completed three wind farms, which it says contributed to the creation of a renewable energy market in the country.
While Mongolia’s nomadic population has long made good use of solar in remote farming operations, the country’s grid still largely relies on old coal fired power stations, despite the abundance of land and excellent solar irradiation levels – the United States Renewable Energy Laboratory has estimated the country has 2.6 terawatts of potential renewable energy to be harnessed.
According to EBRD, the four renewable energy projects it has now financed in Mongolia amount to $114 million in investment and 180 MW of capacity – 16% of Mongolia’s total installed capacity. Last year, Mongolia announced plans for a 10 MW solar plant, as part of a $54.4 million financing package from the World Bank to help the country modernize its grid.