The project aims to transform Mongolia’s heating sector by piloting Solar District Heating (SDH) systems, developing a clean heating policy and investment plan, and establishing a financial support mechanism. This initiative seeks to reduce Mongolia’s reliance on coal, which currently supplies over 90% of its electricity and heat, and to support the country’s Nationally Determined Contribution (NDC) target of reducing GHG emissions from energy production by 32% by 2030. The Mitigation Action facility project will demonstrate the viability of SDH technology in Mongolia, foster investment in clean heating, and build capacity for the design, development, and operation of renewable heating systems.

The project aims to demonstrate the viability of renewable energy technologies for district heating, support the adoption of a clean heating policy and investment plan, and establish financial mechanisms to scale up clean heating investments. This will contribute to Mongolia’s goal of reducing emissions from energy production by 32% by 2030 and enable further climate ambition in subsequent NDCs.

– Pilot an 11MW solar district heating project in Sainshand, which will meet at least 20% of the heat demand in the provincial capital.

– Demonstrate the feasibility of SDH technology in Mongolia and develop a business model and financial mechanism for scaling up clean heating.

– Support adopting a clean heating policy, developing an investment pipeline, and building capacity for designing, financing, and operating SDH systems.

The Mitigation Action facility project anticipates mobilizing EUR 20 million and commissioning three additional SDH systems, providing 40 MW of clean heating and significantly reducing GHG emissions.

Mongolia’s dependence on coal results in high carbon intensity, with GHG emissions from energy production expected to exceed 26,000 Gg CO2-eq by 2030. The updated NDC commits to reducing these emissions by 32% through renewable energy and system improvements. However, Mongolia’s cold climate and reliance on coal for heating pose challenges. Developing clean heating solutions, particularly solar district heating, offers a pathway to decarbonize the energy sector. The project addresses barriers such as skepticism about renewable heating technologies, high subsidies for coal, and affordability issues for consumers.

The Mitigation Action facility project includes the following three components:

Component 1: Pilot SDH project in Sainshand. This component includes an 11 MW SDH pilot project that will provide at least 20% of heat demand in the provincial capital. The pilot project aims to demonstrate the viability of the technology in the Mongolian context and confirm the key requirements for the business model and financial mechanism to enable further scaling up.

Component 2: Adoption of a clean heating policy and investment plan and financial mechanism (clean heating payment guarantee). The policy will include an investment pipeline to enable further scale up of clean heating.

Component 3: Capacity building to support the design, development, financing and operation of solar district heating systems and awareness raising.