MUB, the Governor’s Office of the Capital City of Mongolia, successfully issued its first OTC market bond by way of a private placement with IFC. The funds raised will finance a 50 MW BESS project in Baganuur District. It will be contributing to enhanced power grid reliability for the country while providing integration space for a larger percentage of renewable sources into its power supply system.
Pioneering Municipal Investment
This is the first-ever non-sovereign guaranteed municipal bond of five years by Mongolia to an investor from outside its border, opening doors for foreign direct investment into sustainable infrastructure. In securing private funding, MUB will utilize the released public funds better as it sets up a new asset class for infrastructure projects to be undertaken in the future. On completion, BESS will deliver uninterruptible power supply up to four hours in a day for about 25,000 households.
Since half of the population of Mongolia lives in Ulaanbaatar, the city is struggling to increase its energy requirements along with environmental matters such as air and soil pollution, traffic congestion, and stable power supply.
Nyambaatar Khishgee, Mayor of Ulaanbaatar City and Governor of the Capital said, “Ulaanbaatar is rapidly expanding, and we must ensure our energy infrastructure keeps pace. The Baganuur BESS is a significant step toward a greener, more resilient future for our city, as it enables integration of more wind and solar energy into use.
He added, “By partnering with IFC and Envision Energy, we are demonstrating our commitment to harnessing innovative, world-class solutions that will benefit our growing population and help us meet our sustainability goals.”
IFC’s Support for Mongolia’s Energy Transition
This investment also includes funding from the Canada-IFC Blended Climate Finance Program. Notably, this marks IFC’s first municipal investment in the Asia Pacific region and aligns with the World Bank Group’s broader engagement in Mongolia’s energy transition. Additionally, the plan includes assessing Mongolia’s energy sector, funding a 188 km transmission line, and studying a 200MW grid-side battery storage project.
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Innovative Energy Infrastructure
The Baganuur BESS consists of 27 battery blocks equipped with an advanced liquid cooling and battery management system. The project also includes a new substation, control building, transmission line, grid expansion, and access roads to enhance Mongolia’s power infrastructure. Moving forward, Ulaanbaatar City Development Corporation JSC will manage the facility’s operations.