Ulaanbaatar’s First Municipal Bond Investment with IFC to Bolster Energy Reliability and Sustainability

Mongolia’s Capital Issues Landmark Bond to Fund Battery Energy Storage System for a Greener Future.

The Governor’s Office of the Capital City of Mongolia (MUB) has achieved a major milestone by issuing its first over-the-counter (OTC) market bond through a private placement to the International Finance Corporation (IFC). The bond, with a five-year maturity, will finance a 50-megawatt Battery Energy Storage System (BESS) in the Baganuur District, aimed at improving energy reliability and facilitating renewable energy integration in the country.

This bond marks a first for Mongolia, representing a non-sovereign guaranteed municipal bond issued to a foreign investor. It creates a new asset class for funding sustainable infrastructure while preserving public financial resources. Once operational, the BESS will ensure uninterrupted electricity for up to four hours a day, directly benefiting 25,000 households and indirectly supporting nearly half of Mongolia’s population residing in Ulaanbaatar.

A Commitment to Sustainable Urban Growth

Ulaanbaatar faces challenges including rising energy demands, air and soil pollution, traffic congestion, and the need for reliable energy systems. Mayor Nyambaatar Khishgee emphasized the transformative potential of the project: “Ulaanbaatar is rapidly expanding, and we must ensure our energy infrastructure keeps pace. The Baganuur BESS enables the integration of more wind and solar energy, ensuring a greener, more resilient future. Our partnership with IFC and Envision Energy demonstrates our dedication to world-class, sustainable solutions for our growing city and its residents.”

IFC’s Role in Mongolia’s Energy Transition

IFC’s investment includes support from the Canada-IFC Blended Climate Finance Program, marking IFC’s first municipal investment in the Asia-Pacific region. This initiative aligns with the World Bank Group’s strategic engagement in Mongolia’s energy transition plan, which includes:

• Funding a 188 km, 220 kV double circuit transmission line from Baganuur to Choir.
• Conducting a feasibility study for a 200 MW grid-side battery storage project.
• Providing a comprehensive diagnosis of Mongolia’s energy sector to guide future investments.

Matthieu Le Blan, IFC's Resident Representative for Mongolia, highlighted the significance of public-private partnerships: “Our research indicates that Mongolia requires over $10 billion in additional investment over the next 25 years to achieve its climate and development goals. This bond underscores the vital role of energy-efficient solutions like storage in accelerating the transition. We are proud to support MUB in advancing its sustainable future.”

A Technologically Advanced BESS System

The Baganuur BESS will feature cutting-edge infrastructure, including:

• 27 battery blocks equipped with advanced liquid cooling and battery management systems.
• A 110/35 kV substation and control building.
• Overhead transmission lines, expanded grid substations, and improved access roads.

The Ulaanbaatar City Development Corporation JSC will oversee operations once the station becomes operational.

A Model for Future Investments

This project not only sets a precedent for municipal financing in Mongolia but also serves as a model for integrating renewable energy into urban infrastructure. By enabling the reliable integration of wind and solar power, the BESS will contribute to reducing Mongolia’s reliance on coal-fired power, mitigating urban pollution, and enhancing the resilience of the power grid.

Key Outcomes and Impacts

• Energy Reliability: Enhanced power supply for 25,000 households.
• Sustainability: Supports Mongolia’s renewable energy goals and reduces urban pollution.
• Economic Growth: Opens avenues for private sector participation in sustainable urban development.
• Regional Leadership: Positions Ulaanbaatar as a regional model for energy transition.

The IFC’s collaboration with MUB signifies a major step forward in Mongolia’s journey toward energy security, sustainability, and resilient urban development.