The electric power plant in Ukhaa Hudag - the first to be constructed independently by Mongolian engineers - will start operating this August. By introducing a cooling system suited to the Gobi region’s harsh conditions, the Energy Resources Company once again confirms its achievements in the energy field. The Mongolian Economy has interviewed Ch. Davaakhuu, Energy Resources Vice President for Operations and Project Management.
-What are the distinctive features of the Ukhaa Hudag electric power station cooling system? Were there any problems to adapt the new technology to Mongolia?
-We have chosen a dry cooling system after taking into consideration factors such as water resources scarcity in the Gobi region, a possible increase in water demand due to projects to be implemented there and the protection of the environment. Although this system is used in our country for the first time, a substantial period of time has passed since it is used internationally. The system offers the advantage of wasting 0% of water. In terms of preparatory works, we carefully studied and evaluated technologies, equipment and facilities from various countries to choose the most reliable and most suitable ones to the conditions of our country. After careful deliberations, we selected the German GEA Company and its products as the best option. During the phase of installation, experts from GEA came to Mongolia to offer their advices, which was a good experience for Mongolian companies. Furthermore, the electric power station team went to several power stations with similar cooling systems to learn from their practices and attend trainings. Of course, difficulties are likely to emerge since this is a new technology; however, preparatory work is going well.
-It has been announced that the Ukhaa Hudag electric power station will provide for the energy demand of the Tsogtsetsii soum as well as the mining deposit. What is the quantity of energy used by your mine? Will you increase the capacity of the power station in the future?
-As well as meeting the energy demand of the Ukhaa Hudag mining site, we are planning to supply the energy demands of the Tsogtsetsii soum after the power station is operational. Last year, during preparatory works, we have connected the mining supply network with the soum’s supply network. Today, the energy demand near the mining site fluctuates between 1.2 and 1.5 MW; however, due to tests at a coal processing plant nearby, the electricity demand reached 3 MW. When the plant is operational, it will alone consume from 5 to 6 MW of electricity. On the other hand, we estimate that once the second and third expansions are operational, the capacity of the power station will reach its maximum. Although this capacity stands at 18 MW, it can be further expanded to meet with the demand in energy of projects to be implemented in the area in the future.
-How much money has Energy Resources spent on the project? What are the costs of this energy produced with a new technology in comparison to other thermal power stations in Mongolia?
-The Ukhaa Hudag electric power station has a comparatively lower capacity than other stations built today, which makes its cost per unit of capacity higher. Although it is rather small, it will require all the supporting facilities that are built in a regular power station. These will include facilities for the processing of chemical water, for the cooling system and for a maintenance workshop. The dry cooling and the cleaning system are part of the station’s most expensive features. The total cost of the power station approximates USD45 million. The electric power sub-station and the power grid required an additional USD10 million in order to complete the system.
-Apart from Energy Resource, other private companies pay a great attention to the energy sector. How do you assess the investment climate in this sector? Does the Government provide support to private companies’ initiatives and their quest for introducing new technologies?
-The recent private sector’s initiatives to build new sources of energy is driven by the need to meet with the demand and by the lack of adequate infrastructure. But due to rather high investment costs and as tariffs have not been transferred to a market system yet, benefits are long-term and direct investment into the energy sector seems to be risky. Therefore, the main option for private companies is to build small-scale electric power stations for their own use. Actually, if several large-scale stations were to be built, investment and utility costs would be low and cost effective.
Most importantly, the sooner actions are taken to transfer the energy sector into a market system, the sooner benefits will be made. I think that even if domestic and foreign investors have a growing interest in investing into this sector, the unfavorable tariffs as well as the legal climate hampers its development.