Mongolia has enough wind and solar resources to build a renewable energy industry far larger than its domestic electricity market. The open steppe, high solar irradiation and extensive territory create strong conditions for utility-scale development. Yet the country’s operating renewable portfolio remains small, and coal-fired combined heat and power plants continue to dominate electricity and winter heating.
This contrast defines Mongolia’s energy transition. The main obstacle is not a shortage of renewable resources. It is the limited ability of the electricity system to absorb, transport and balance variable generation across an enormous and sparsely populated country.
By the end of 2025, Mongolia had approximately 314 megawatts of renewable capacity. Solar accounted for around 129 megawatts, while three major wind farms provided most of the country’s commercial wind capacity. Renewable plants form a larger share of installed capacity than of actual electricity generation, reflecting the continuing dominance of coal plants and imported power in meeting demand.
Mongolia Has Built a Renewable Industry, but Not Yet at Scale
The Salkhit wind farm marked the beginning of Mongolia’s utility-scale renewable sector when it entered operation in 2013. The 50-megawatt project demonstrated that internationally financed wind generation could operate within the Central Energy System.
It was followed by the 50-megawatt Tsetsii wind farm in the southern Gobi region and the 55-megawatt Sainshand wind farm in Dornogovi Province. Together, these projects established wind as one of Mongolia’s principal non-coal electricity sources.
The southern and eastern regions contain much more potential than these plants currently use. Strong winds, open terrain and proximity to mining areas create opportunities for larger projects. Mining companies are important potential customers because their operations require significant amounts of power and are often located far from the main urban grid.
Solar development has followed a more distributed pattern. Plants have been constructed in areas including Darkhan, Sainshand, Choir, Altai and several western provinces. The 10-megawatt solar facility in Altai City was particularly significant because it was paired with battery storage and designed to strengthen a regional system that had depended heavily on imported electricity.
Solar systems can also serve remote settlements, public facilities and herding communities. Mongolia’s low population density makes conventional grid extension expensive, especially when small communities are separated by hundreds of kilometers. Local solar generation combined with batteries can provide more reliable power without waiting for a high-voltage connection to the central network.
Winter Heating Keeps Coal at the Center of the System
Mongolia’s renewable transition cannot be understood by examining electricity generation alone. Coal-fired combined heat and power plants supply both electricity and district heating, especially in Ulaanbaatar, where winter temperatures can fall below minus 30 degrees Celsius.
Heating is an essential public service rather than an optional energy use. The thermal plants must continue operating during winter to circulate hot water and steam through district heating networks. Their electricity output is therefore partly determined by heat demand rather than by the availability of lower-cost wind or solar power.
This reduces the flexibility of the grid. When wind farms or solar plants are producing strongly, system operators cannot always reduce coal generation without also affecting heat supply. Renewable facilities may consequently face curtailment even when their electricity is available.
Most of the combined heat and power fleet is old. The newest major units are already decades into operation, and many plants have low efficiency and high emissions. Replacing them is difficult because a new system must provide dependable heat as well as electricity during Mongolia’s severe winters.
Renewable electricity can still reduce coal use, particularly outside the heating season. Over time, electric boilers, large heat pumps, thermal storage and modernized district heating networks could create a more flexible relationship between heat and power. Until those systems are developed at scale, coal plants will remain embedded in the country’s winter energy security.
Storage Has Become a Core Part of Mongolia’s Renewable Strategy
Mongolia was an early adopter of utility-scale battery storage relative to the size of its power system. An 80-megawatt, 200-megawatt-hour battery facility entered operation in 2023 with support from the Asian Development Bank. A further 50-megawatt system was commissioned in Baganuur in late 2024.
These facilities can store electricity when supply is high and release it when demand rises. They can also respond rapidly to changes in frequency, reducing the need for coal plants to provide every balancing service.
Battery storage is particularly important because Mongolia’s electricity demand peaks during dark winter evenings, while solar production is concentrated in daytime hours and is lower during winter. Wind generation is less predictable over short periods. Storage cannot shift an entire season of renewable production, but it can improve daily balancing and reduce sudden changes in output.
Future renewable tenders are increasingly likely to combine generation and storage rather than treating them as separate investments. This approach can make new projects easier to integrate and give system operators more control over when renewable electricity enters the network.
Transmission Is the Main Barrier Between Resources and Demand
Many of Mongolia’s best wind and solar areas are located in the Gobi and other remote regions. The largest concentration of electricity demand is in the Central Energy System, which supplies Ulaanbaatar and accounts for most national consumption.
Connections between these areas are limited. Much of the transmission network operates at 110 kilovolts, with long lines crossing difficult terrain. Some regions depend on a single transmission corridor, creating reliability risks and restricting the amount of new generation that can connect.
Network losses are also substantial. Electricity must travel long distances to reach widely separated communities, mines and industrial sites. When a fault occurs, the absence of alternative transmission routes can produce extended outages.
These weaknesses explain why Mongolia has developed only a small share of its theoretical renewable potential. Constructing a wind farm in an isolated resource area has little value if there is no available line to carry its power to Ulaanbaatar, a mining complex or an export connection.
International lenders are supporting new transmission investments intended to reinforce regional networks and improve links between Mongolia’s separate power systems. These projects are less visible than wind turbines or solar parks, but they are more important to the long-term transition. Every large renewable target depends on the network being able to receive and move the resulting electricity.
Auctions Could Create Mongolia’s Next Development Cycle
Mongolia has set a target of increasing renewables to 30% of its electricity generation mix by 2030. Reaching that level will require a sharp acceleration from the present position.
A partnership with the European Bank for Reconstruction and Development is intended to introduce competitive auctions for solar, wind and storage projects. The program includes plans for up to 300 megawatts of solar capacity and 200 megawatts of wind capacity, together with supporting storage and transmission infrastructure, by 2028.
The proposed additions would be large relative to Mongolia’s existing renewable fleet. Competitive auctions could also replace project-by-project tariff negotiations with a clearer process for selecting developers and setting prices.
Further developments are beginning to move through procurement. The government has sought interest in an approximately 100-megawatt wind independent power project near Mandalgovi, while the Asian Development Bank is supporting a planned solar and battery program containing roughly 115 megawatts of photovoltaic capacity.
Successful auctions will still require bankable power-purchase agreements, financially stable buyers and confidence that completed projects will not be heavily curtailed. Electricity tariffs have historically been too low to cover the full cost of investment, leaving utilities dependent on government support. Reform must therefore balance commercial sustainability with affordability for households.
Domestic Reliability Comes Before Large-Scale Exports
Mongolia’s renewable resources have encouraged proposals to export electricity to China, Russia and a wider Northeast Asian power market. The technical potential is considerable, and the Gobi’s wind and solar conditions could support projects much larger than domestic demand.
Large-scale exports remain a long-term prospect. Mongolia first needs stronger internal transmission, more flexible generation, dependable storage and a healthier electricity market. Building export capacity without addressing domestic shortages could create projects that pass power through resource-rich regions while local systems remain unreliable.
The more immediate opportunity is to use renewables to reduce electricity imports, support mines and improve regional energy access. Mongolia imported roughly one-fifth of its electricity supply in 2023, principally because domestic generation could not consistently meet demand. Every well-integrated renewable project can reduce that exposure, provided the grid can deliver its output when needed.
Mongolia’s renewable transition will therefore be measured less by its resource estimates than by its infrastructure. Wind and solar potential have already been established. The decisive questions are whether the country can strengthen transmission, separate electricity production from inflexible heating demand and create investment rules capable of moving projects from proposals into operation.
