Briefing Paper 11-10-14 PDF

Developing Renewable Energy in North East Asia Gobitec and the Asian Super Grid

Ulaanbataar Energy Charter Forum 26th June 2014

Brie�ng Paper

Author: Samantha Mella 7/8/14

2014Acknowledgements:

My trip to Mongolia would not

have been possible if it were not

for the generous support of the

Northern Territory Environment

Centre and other sponsors.

Thanks for your support of our

renewable energy future.

The present available AC and DC transmission technologies for...underground and sea cables... do not pose practical limits to interconnections:

the main limits are political, regulatory, �nancial. WEC 2010

Executive Summary


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The Energy Charter Forum in Ulaanbaatar, Mongolia provided an excellent update on the Asia Super Grid and the Gobitec Project.The Asia Super Grid is the concept of multilateral electricity trade via a connected electricity grid between Japan, Russia, China, Korea, Mongolia and beyond. “Gobitec” is Mongolia’s ambition to mobilise its massive wind and solar resources in the Gobi desert and become North East Asia’s energy hub, churning out 100 GW of clean energy by 2030.

The Forum was opened by the President Elbegdorj Tsakhia. He explained that the Energy Minister had seen a wind map of Mongolia and realized the nation’s renewable energypotential.

Mongolia has passionate political leadership for the widespread implementation renewable energy and a vision for multi-lateral renewable energy trade. The President and his Ministry are highly driven to utilize Mongolia’s renewable resources, despite Mongolia’s massive coal reserves. Unlike Australia, there appears to be no con�ict or competition between the coal mining industry and the renewable energy sector.The Mongolian government wants all sectors of its economy to thrive, and perhaps understands that thermal coal is not a long term prospect. There are even plans to place renewable power stations adjacent to coal mining areas to supply energy to the mines.

The President is emphatic that the Asia Super Grid and the Gobitec Project are viable projects.Challenges such as intermittency can be overcome. He stated that in light of climate change the world needs mechanisms to give uphigh emissions and Mongolia can be a leader in introducing the international trade in renewable

energy. His government has swept aside protectionist regulation to make the country attractive for renewable energy investors. The Forum included a tour of Mongolia’s �rst wind farm, the 50 megawatt Salkhit Windfarm, built completely with private investment. There are several other wind farms in development. Solar is also high on the agenda for Mongolia, and the Gobi desert has excellent solar resources. The solar power stations are still in the assess-ment phase.

Across North East Asia, there are a few versions of the Asia Super Grid emerging. There is Gobitec, the solar and wind version of the Asia Super Grid balanced by hydro storage; and there is some discussion of the construction of large thermal coal power plants at the Shivee Oovoo coal mine in collaboration with Russia (see Saneev presentation). Korean energy giant Kepco is also a keen supporter of the Asia Super Grid. While Kepco is has plans to expand its renewable portfolio, it is still �rmly entrenched in fossil fuel generation (See Kwang presenta-tion). Kepco already operates some submarine cables.

Companies like Kepco and the Russian Inter Rao will play an important role in the evolution of the Asia Super Grid because they will build, own and operate the commercial interconnectors.It will be interesting to see if their uptake of renewable energy increases as the divestmentmovement takes hold.

Grid integration is happening across Asia. Electricity trading is already occurring in bilateral agreements. There are a number of single interconnectors in discussion or in progress, Russia-Japan, China-Mongolia,

Executive Summary


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Korea-Russia, Korea-China and Korea-Japan. Bilateral electricity trading is occurring in Central Asia and South East Asia as well. The Forum concluded that the Asia Super Grid is underway and will continue to grow one connection at a time.

Many speakers highlighted that the Asia Super Grid and multi-lateral renewable electricity trade is technically feasible.The barriers are political will, �nancial and regulation. The Energy Charter is a key supporter of Gobitec. In the interest of energy security for all North East Asian nations, the EC advocates for the need for a legal framework to protect all stakeholders in multi-lateral electric-ity trade. International Renewable Energy Agency (IRENA) highlighted The African Clean Energy Corridor and noted that the ASEAN Clean Energy Corridor is forthcoming.

Mongolia does face signi�cant challenges to implement Gobitec. Fossil fuels are very much a part of the interconnections that are forming and still dominate energy investment in staggering proportions. (see Pudlik presenta-tion). There are longstanding geopolitical issues in the region. Gobitec is high on the President’s agenda and he is using international organiza-tions and forums to put international renewable energy trade on the agenda. Certainly all North East Asian nations would reap huge bene�ts such as load balancing, reduced pollution and emissions in the region.

Analysis - What does Gobitec mean for Australia?

Australia’s key coal customers are Japan, Korea and China. If Mongolia is successful in its goal to supply 100 GW or more of clean energy to North Asian markets by 2030, this will impact on Australia’s coal exports to the region.

China is undertaking signi�cant grid intercon-nection internally and its 2017 goal is 70 and 150 GW respectively of installed solar and wind capacity. The scale of the wind implementation in northern China is staggering. Seen from35 000 feet, turbines stretch as far as the eye can see. China does not need Mongolia’s renewable energy, but Japan and Korea do. China has capped coal imports and continues to restrict coal use.

In August this year Zhenya Liu, Chairman of China’s State Grid Corporation, took the Asia Super Grid concept one step further proposing a “Global Energy Internet” based on renewable energy. China’s renewable rollout demonstrates it means business. In this context, Australia’s current focus on expanding coal export infrastructure, such as Terminal Four in Newcas-tle and others in Queensland, appear as recipes for stranded assets. Given ASEAN has the goal of grid integration by 2020 and is in the develop-ment phase of a Clean Energy Corridor, Australia would be fare better building a subsea Intercon-nector to the ASEAN grid, and to the Asia Super Grid. This would enable Australia to mobilize it’s vast desert energy resources.

Australia’s view of itself as a net energy exporter to Asia in the forms of only coal and gas is rapidly becoming outdated. In contrast to Mongolia, the current government has created an unstable environment for renewable energy investors, who are heading o�shore. This is damaging to Australia’s economy in a global market where coal demand is in decline and an international trade in the renewable energy is starting to emerge.

Australia has enormous renewable resources and could make a signi�cant contribution to the ASEAN Grid and/or the Asia Super Grid. We need to think about new ways to export energy.

Project Investors: GE, Clean Energy Asia, FMO, The European Bank Investment: 120 million USD

• First Independent Power Provider• First Power Purchase Agreement• First new power plant connected to the grid in 30 years• First wind farm in Mongolia• Becoming as a model for future projects• Saves 122,000 tons of raw coal annually• Saves 1.6 million tons of potable water annually• Reduction of CO2 by 180,000 tons annually (Source: Clean Energy Asia)

The Salkhit Windfarm Tour: June 25

• Average Wind Speed: 8m/s• Total WTGs: 1.6MW/ 31unit• Wind Farm Capacity: 50 МW• Annual electricity generation: 168.5M kWh• Produces 3% of Central Grid’s Energy• Providing 100,000 households with electricity• Introducing renewable energy technologies as a viable business model

Image: inhabitat.com

Image: upsides.com


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Opening Remarks

1) President Elbegdorj Tsakhia

Key Messages:

• Renewable potential is vast• National goal to become North East Asia’s Energy Hub, renewable energy superpower• Committed to pushing forward Asia Super Grid agenda with all regional partners: Russia, China, Korea, Japan• The Asia Super Grid has moved from being a pipedream to a main agenda item in North East Asia• Mongolia is open for business and seeks partners and foreign investment to expand renewable energy industry

2) Minister for Energy Sonompil Mishig

Key Messages:

• Mongolia is rich in mineral wealth, however Renewable Energy is also a priority sector• 20% Renewable Energy Target by 2020 very feasible• Have created tax incentives to attract investment in renewable energy and have issued many licences• Keen to exchange ideas in the region and collaborate, particularly with China

Energy Charter Forum: June 26

3) Secretary General Energy Charter Ambassador Urban Rusnák

Key Messages:

• Climate change limits options for energy supply • Energy Charter (EC) shares objective of energy security for all countries• EC aims to assist with the legal framework, improved interconnection and political support for RE• Talks regarding regional cooperation and Asia Super Grid in progress • Gobitec represents a shift to renewable, improved air quality in Mongolia, Japan and Korea• Electric ity supply for Japan and Korea• How to build support for such a large scale project? Supranational strategy, joint energy cooperation, consultation on a regional level, inform policy makers, politicians and people

I thank the President for his personal support, and his vision to improve the

quality of life for his people - Urban Rusnák , Secretary General,

The Energy Charter

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1) Director General, Invest Mongolia, Sereeter Javakhlanbaatar

Implications of new investment law and business opportunities in Mongolia

Key Messages:

• Mongolia has passed a number of laws and tax incentives to create stable, attractive investment environment for RE investors• Removal of protectionism and streamlined processes to create to an open and liberal market

2013 Investment Law Reforms• No approval to establish an entity• No approval to enter into market and buy a local company• Approval required for state owned entities, but not from Parliament; just from Ministry• Investors Protection • Investment Promotion Agency• Tax Stabilization


2) CEO, Clean Energy Asia Mr. Gankhuyag Dagva

Successes and challenges faced by the business sector to develop wind farms in Mongolia

Key Messages:

• Clean Energy Asia is a joint venture between the Softbank (Japan/Korea) and the Newcom Group (Mongolia)• A new company with big ambitions to exploit Mongolia’s vast RE resources to be producing 100GW of Renewable Energy by 2030 earning $9 billion US annually and creating 880 000 jobs• Key partner in Gobitec Project• Co-location of wind projects near coal mines to provide power to mines• Storage solutions are high priority, pumped hydro - grid scale batteries• Want to see environmental tax for polluters

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Panel I - Why and how to attract large scale investments to wind and solar projects in the Gobi Desert?

Source: Clean Energy Asia



Source: Japan Renewable Energy Foundation

3) Director of Renewable Energy Division, Mongolian Ministry of Energy, Mr. Angarag Myagmar

How to invest in the solar power potential of the Gobi desert

Key Messages:

• Mongolia has superb solar potential

• Goals: - To build a significant renewable Mongolian network to connect with a regional NE Asian network - To promote building a high-voltage, direct current (HVDC) Electric power transmission lines between NE Asia through Mongolia

Asia Super Grid

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Current status of Asian Super Grid in Mongolia:

• “Renewable Energy Cooperation and Grid Integration in Northeast Asia” international conference was organized by Ministry in Mongolia in November, 2012

• Memorandum of Understanding was signed between Ministry of Energy of Mongolia (MEM), Russian Energy Institute (REI), Korean Energy and Economic Institute (KEEI), Japan Renewable Energy Foundation (JREF) and Energy Charter Secretariat. MOU to conduct joint research.

• “Asian Super Grid” research team was established under the Ministry of Energy of Mongolia in March, 2014.

• Requested funds for feasibility study of Asian Super Grid from Asian Development Bank (ADB)



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Panel II - Cross Border regional cooperation, to develop Asian Super Grid (ASG)

1) Director General, Power Grid Planning Department, Korea Electric PowerCorporation Mr. Park Kab-ho

The Asian Super Grid with a focus on interconnection between the Republic of Korea and Japan

Key Messages:

• Benefits of Super Grid: - Diversity of generation; optimization of power mix - Development of RE - Clean Development Mechanism Project - Asian Super Grid >>Global Electricity Trade Market using Ultra-HVDC System - Decrease Middle-East Energy dependency

• Technically feasible, European/African existing connections - HVDC Line : 2,090 km (China : Jinping ~ Sunan) Capacity : 800kV, 7.2 GW, Operation Start : 2013 - Submarine HVDC Line : 580 km (Europe : Nor ~ Ned) Capacity : 450kV 0.7 GW, Operation Start : 2008 - Kepco has 2 existing submarine operational HVDC lines of about 100 km in Korea

Salkhit Windfarm



08

• Why is Kepco so interested in ASG? - Solution to grid problems by peak sharing/ Korea is isolated grid like the Japan - Poor energy resources (Korea, Japan) - High demand (Korea, China, Japan) vs. surplus electricity (Russia) - Different power peak demand (Japan : Summer, Korea : Summer & Winter, Russia : Winter) • Kepco’s ASG plans - Energy Council expert working group>>Model and design - Feasibility study launch>>Establish investment plan>>Start interconnection business - Korea –Russia - MOU signed - Korea –China – pre-feasibility phase, 350km , Capacity 3GW Grid System, HVDC 500kV - Korea-Japan - pre-feasibility phase 250km Capacity 2GW Grid System, HVDC 500kV

2) Deputy Director, Energy SystemInstitute of Russia, Prof. Boris Saneev

Formation of Gobitec and the Asian Super Grid: its impact on energy development in Russia andMongolia and on energycooperation between the two countries

Key Messages:

• Official Russian documents suggest an increase in Russian Energy resources to the markets of China Japan, Korea and other East Asian countries• The Russian Government has started large scale development of energy resources in the East • Russia already exports electricity to China and feasibility studies for other descrete interconnections with Korea and Japan are in progress• The Asia Super Grid is a global project that requires considerable investment and close international cooperation

The Problem: The Asia Super Grid will include different types of power systems, linking grids of vastly

different capacity across a vast region... There is an urgent need to develop a

scientifically grounded road map/strategy of the Asian Super Grid

with the Gobitec Project between Russia and Northeast Asia countries.

Prof. Boris Saneev



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3) Energy System Institute of Russia,Mr. Dmitry Sokolov

Interconnections Russia-China, Russia-Japan and Russia-Korea in the framework of possibleelectricity grid uni�cation

Key Messages:

• Study outlines projected demand of North East Asia to 2035, seasonal load by country• Forecast generating capacity for expansion to 2035 and current power mix • Modelled base case with no power system interconnections (as now) and case of full integration

Many bene�ts to all nations were found and include di�erence between the indexes for the base case and integration case: for example capacity saving bene�t is equal to three quarter of the current generating capacity of Republic of Korea

4) Dr. Martin Pudlik, Fraunhofer Institute for Systems and Innovation Research ISI, Germany

Implications of the Europeanelectricity interconnectionexperiences for the region ofNorth East Asia and the German case study on renewable energyimplementation

Key messages: World Energy Investment Report 2014 Renewable Energy Sector Summary (RES)

The investment path that we trace in this report falls well short of reaching climate stabilisation goals, as today’s policies and market signals are not strong enough to switch investment to low-carbon sources

Key Messages:

• More than $1 600 billion was invested in 2013 to provide the world with energy• RES: 60$ billion (2000) / 300$ billion (2011) / 250$ billion (2013) 1/2 of the investment is due to RE demand increase• Private sector participation is essential - 90% of investment takes place in stable environments.• New types of investors in the energy sector are emerging, but the supply of long-term finance is not guaranteed.• Good potential RE locations are not always near the main demand centres - both options feasible • Example of a supranational Project - DESERTEC

Despite transmission losses, there can be considerable cost savings to using desert power

• Pumped hydro storage to balance system



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Source: WEIO 2014

Source: The Energy Charter

A common regulatory framework, Energy

Charter Treaty (ECT), covers key areas including

investment protection, trade, transit, dispute

resolution andenvironmental aspects. The ECT can be seen as a political guarantee and legal insurance for the development of large scale infrastructure.

Panel III: Role of International Organizations in supporting Gobitec and the Asia Super Grid initiatives

1) Energy Charter Secretariat, Senior Expert, Zafar Samadov

Common legal framework for cooperation in the energy sector:

Generation Mix of 2030 and importing RE from Gobitec



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Key Messages:

• Countries want independence, however interdependence is necessary for energy security• Gobitec regional study created a partnership with huge expertise: Outcomes of Gobitec study - The Asia Super Grid aims to interconnect strategic countries in Northeast Asia via HVDC - Wind and solar photovoltaic systems are the dominating technologies - The Gobitec and Asia Super Grid will deliver economic, social and environmental benefits - The overall potential of solar and wind energy in the Gobi Desert is about 2,600 TWh - PV and wind will be grid-connected and combined with dispatchable technologies to balance supply and demand

Gobitec & Asia Super Grid have the potential to meet the challenges of the energy supply in Northeast Asia

- Regional cooperation can play a key role in establishing Gobitec & Asia Super Grid - Legal frameworks: Energy Charter Treaty is necessary to ensure positive investment climate, reliable trade, transit regime & protection of property rights

2) United Nations Economic and Social Commission for Asia and the Paci�c (ESCAP), Chief of Energy Security and Water Resources, Mr. Hongpeng Liu

Supporting Gobitec and the Asian Super Grid through the Asian Energy Highway

Key Messages:

• ESCAP is an international platform to facilitate intergovernmental process• Asia will be transformed as its urban population nearly doubles from 1.6 billion to 3.1 billion• Asia is projected to surpass the OECD before 2030 to become the world’s largest energy consuming block:

Uneven distribution of energy resources within the Asia-Paci�c presents challenges at the national level in terms of supply security

• Energy trading is already occurring within AP in bilateral agreements• Sub-regional recognition of need for cooperation: 1. ASEAN Power Grid and Energy Market Integration

2. SAARC (South Asian Association for Regional Cooperation) Energy Ring and Market for Electricity 3. Central and South Asia Regional Electricity Market 4. Greater Mekong Subregion Power Market 5. North-East Asian Super Grid and Gobitec 6. Unified Energy System of Central Asia



- Enhance security by diversity of supply - Enable a capacity for regional load planning and balancing, increasing e�ciencies - Progress towards a regionally integrated and competitive electricity marketplace

• Precedents for Pan Asian Infrastructure include Asian Highway and Rail Networks

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• Asian Energy Highway - ESCAP Promotes regional cooperation for energy security and sustainable development

• May 2012, Resolution (68/11) adopted to enhance regional energy security by improving e�ciency, connectivity and promoting a greater share of renewable and clean energy for a more sustainable future

Vision for Asian Energy Highway

Source: Grenatec



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3) International Renewable Energy Agency (IRENA), Senior Program O�cer, Mr. Masaomi Koyama

Facilitating innovation, technology and know-how transfer for renewable

Key Messages:

• IRENA mission is to accelerate deployment of renewable energy• Provides Renewable Readiness Assessment and Advisory Services, Maps • Summary on Gobitec project - Capacity and Knowledge Building: strategic plan >>technical skills/ human capacity required for renewable energy resource development is lacking - Cross-institutional cooperation: is not sufficiently developed both domestically and internationally (especially for data sharing) - R&D Funding: Specific plans have yet to be developed for financial support

• Development for RE and Potential of Super Grid for Northeast Asia: - Regional Energy Cooperation Strategy: unclear about how to develop an implementable cooperation - Resources and Technologies: unclear what assessment of renewable energy technologies can be developed for trans-boundary power exchange - North East Asian Super Grid: unclear about achievable target for further investigation to help make it a reality

• The Africa Clean Energy Corridor (CEC) - Transmission links between Eastern and Southern African power pools expanding - RE can provide an large share of energy in CEC from Egypt to South Africa - Affordable clean secure sources of energy for Africa - Forthcoming Clean Energy Corridors: MENA, Central America, ASEAN

• Regional Clean Energy Corridor (CEC) Process Concepts - Zoning: Renewable development zones to cluster development and plan cost effective transmission links to load centres - Planning: Integrated resources planning at country and regional levels to incorporate greater share of cost effective renewables - Enabling: Open markets to reduce financial risks to boost renewable investment - Capacity Building: To plan and operate power grids with a higher share of renewables

• IRENA studies bring expertise, experience innovation, R& D cooperation and engagement with international community• Offers finance not aid

4) Asian Development Bank (ADB), Senior Energy Specialist, Mr. Teruhisa Oi

Supporting regional energycooperation in Northeast Asia

• Initial thoughts – Gobitec project is too big, start small and build with one power treaty, for example China - Mongolia• ADB will always support regional cooperation• Can share experience from real projects• Finance and advisory role


Mr. Tomas Kåberger Executive Board Chair, Japan Renewable Energy Foundation

• Strong collaborative relationship between Energy Charter and Japan Renewable Energy Foundation• Remarkable development costs of solar and wind to make a significant contribution to energy markets and bring affluence at low marginal cost• Transition coming with electricity versus fuels being used for transport• Asia Super Grid at present being driven by NGOs and corporations, the economic benefits will become irresistible• Immense opportunity for Mongolia with people in all sectors of society participating• Building connections to neighbours >> Asia Super Grid will be the result of many small decisions, 1 connection at a time

Salkhit Windfarm

Closing Remarks

Mr. Delgertsogt Davaadorj Secretary of State, Ministry of Energy of Mongolia

• Milestone project promoting regional cooperation• The Asia Super Grid a major agenda items at Shanghai meeting between President Elbegdorj Tsakhia and Chinese leader Xi Jinping• Asia Energy Highway is evolving from a dream to becoming an action item• Asia Super Grid is becoming mainstream

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