EGIIN GOLIIN HYDROPOWER PLANT PROJECT INTRODUCTION

The Egiin Goliin Hydropower Plant Project

(EGHPP) was initiated in 1991 by the Minsitry of

Energy and the Feasibility Study and Environmental

Impact Study was completed in 1995, financed by

ADB.

Since then the project was delayed until

November 2013 the Government of Mongolia

approved the construction of 220 MW hydropower

plant and established project implementation unit

(PIU) specifically for EGHPP. The project is a state

owned project, currently financed by the Government’s

Chinggis bond. Once the hydropower plant is

operational it will be connected to the Central energy

system grid. The PIU is working with Tractebel

Engineering (GDF Suez) and local expert consultants

on the completion of Feasibility Study update and EIA,

planned to complete in July 2014. Access road, bridge

to the dam site and transmission line, substations

construction is to start within this year.

Key Specifications. Location 2.5 km upstream of Eg and

Selenge confluence,

Bulgan province Khutag

Undur sum. 130 km from

Erdenet city.

Installed capacity 220 - 315MW

Annual electricity

generation

480 - 670 mln.kW/hr

Dam height 95 -115 m

Crest width 8 m

Crest length 710-740 m

Crest elevation 900- 920 m a.s.l

Dam type RCC

Reservoir 50- 62 km long,

max surface area

125- 168 км2,

volume of 4- 6.8 billion м3

Turbines 4 vertical 55 MW Francis

turbines or + 2 x 20MW

Energy demand forecast.

The Central energy system (CES) distributes to 70% of

the nation, 85% of the population. The current CES

installed capacity is 864.3 MW.

To calculate energy demand increase since 2000, using

correlation analysis and estimate annual regular

increase starting 2014 is 8% then energy sources

balance and forecasted demand shows that energy

deficiency could occur from 2014 to 2020.

Planned energy sources’ immediate construction and

operation shall generate the condition where increasing

demand and estimated use gets closer to start in 2020.

Energy use peak load increase shows that Mongolia

needs to act immediately to construct more energy

sources into operation in order to meet peak load

demand.

EGHPP contribution to the Central Energy System.

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Except as may be expressly authorized by EGHPP, any reproduction, modification or distribution of this material or content,

in whole or in part, is strictly prohibited

▲ Decrease dependency on import Mongolian Electricity System Reserve Margin has

been declining to a point where dependence on import

from Russia is at highest level. Since 1988, no any

significant energy sources were commissioned into

operation. The EGHPP participation in the CES would

be to decrease the peak load electricity which is

currently from import.

▲ Reliable electricity supply Mongolian energy system is in need of 200 MW, which

likely to increase to 250 MW during peak load in near

future as well as spinning reserve of 100 MW.

Connecting a regulating hydropower plant can produce

the needed energy that could prevent Mongolia from

facing energy shortage.

▲ Stable system frequency regulation Mongolian Energy System existing thermal plants’

frequency regulating capacity is limited; manually

regulates required power amount, temporary and slight

difference between supply and demand leads to

increases in power import. The system lacks frequency

regulating spinning reserve, consumes import

electricity to regulate frequency change, which results

in cutting energy supply to customers during

emergency conditions such as connection interference

from Russia and/or sudden delay of generators etc. It is

obvious that cutting energy supply is very poor and

uneconomic approach. Hence, as a solution to these

issues, EGHPP needs to be constructed as soon as

possible.

Mongolia is committed to renewable energy development.

The Mongolia’s National Programme for Renewable

Energy 2005-2020, the country is targeting 20.0 – 25.0

percent of the total energy to be produced from

renewable sources by 2020 by introducing advanced

renewable energy technology and increasing

conservation and increase efficiency in production,

transmission, distribution and operation.

Mongolia’s 3,800 streams and rivers, which are located

primarily in the northern and western areas of the

country, have the potential for the generation of up to

6.4GW of hydropower.

Egiin Goliin hydropower plant contribution to sustainable development.

EGHPP is an environmentally friendly project. Once in

operation, it will help reduce 550 000 tons of carbon

dioxide emission annually, by avoiding CO2 emissions

from electricity generation by fossil fuel power plants

that is supplied to Grid. It will also help reduce

greenhouse gas emission and contribute to sustainable

development in following ways:

▲ To replace importing fuel and coal burning

technology by hydropower

▲ It will support irrigated agriculture and tourism

etc.

▲ To bring and adapt world best practices and

technologies through hydropower plant

establishment and contribute to country's

development

▲ To prevent local citizens migrating to settled areas

and leave remote areas behind

▲ Employment opportunities during and upon

construction phase, will empower work force and

prepare skilled employees and

▲ Additional income to local community (forest

operation, fish breeding etc)

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Except as may be expressly authorized by EGHPP, any reproduction, modification or distribution of this material or content,

in whole or in part, is strictly prohibited

Economic benefits.

In accordance with the Feasibility study (1992-1995),

the economic and financial analysis show that EGHPP

is not only the best available future source of peaking

capacity of Mongolia and reserve capacity, but also that

the project is economically and financially feasible.

The EGHPP installed capacity in the previous study

was 220 MW, however the PIU and the consultants are

studying the possibility of EGHPP installed capacity of

315 MW to produce approximately 670 million kWh of

electricity annually, generating approx. annual income

of $ 51 million.

To determine economic benefits of EGHPP, not only

direct economic benefits, but also the indirect benefits

shall be considered as well.

EGHPP is a multiple purpose project. For instance:

▲ Mongolian Central Energy System would become

independent of electricity imports to meet peaking

requirements. Mongolia paid 39 billion tugriks for

imported electricity (325 million kWh) in 2013.

▲ To increase existing plants’ efficiency.

▲ To reduce greenhouse gas emissions in Mongolia

compared to a business-as-usual scenario.

▲ Mongolia’s first regulating plant, which would

enable the country to control the reliability of its

peaking capacity.

▲ Reservoir would increase humidity in the region,

thus, mitigating desertification in the long run.

▲ To bring benefits such as to decrease centralization

of production in energy market and creates an

opportunity to develop the market

As to estimate the economic benefits of EGHPP,

above-mentioned advantages need to take into account,

which cannot be expressed in monetary terms.

Feasibility study update will allow to evaluate those

benefits and study is being conducted.

Financing of the project

The project unit is planning to start the Access road,

Bridge and Transmission line, substations construction

works within this year and to begin the Main dam

construction in 2015 spring.

Two financing phases:

I. Pre-construction works financing /Access road, Bridge and Transmission

line, substations/ Construction period: 2014 July – December

II. Main construction financing

Construction period: 2015 spring –2019

Autumn However, the two phases of

financing is considered as one project

financing.

The Government has provided the project initiation

funding, and in accordance with resolution numbered

375 of Government of Mongolia, the source of

financing of the whole project shall be from loan

financing.

Hence, the project unit is seeking efficient source of

loan financing.

Cost estimation

The EGHPP total project cost was estimated three

times in the past.

▲ In 1995, Electrowatt Engineering Services

estimated $ 275.6 million.

▲ In 2006, Ministry of Energy estimated $385.4

million.

▲ In 2007, Sinohydro and CMEC tender bidding

price proposal estimated the EGHPP project cost

to be $398.6 million.

The 2014 total project cost estimation will be

completed when the Feasibility study and EIA update

is completed in July 2014.

Tel: (+976) 7711 - 1150 Fax: (+976) 7711 – 1160 Website: www.eghpp.mn/en

Address: Encanto Town 3rd

floor, Olympic street, Bayanzurkh district, 26th khoroo,Ulaanbaatar, Mongolia