The European Bank for Reconstruction and Development (EBRD) together with Triodos Investment Management and FMO are providing a $31.6 million syndicated loan to Desert Solar Power One (DSPO) to build the largest solar plant in Mongolia.
The financing will support the construction and operation of the Bank’s first solar project in Mongolia. The EBRD was the original seed investor in the first ever renewable energy project in the country, the Salkhit wind farm, and financed a total of three wind farms, thus contributing to the creation of a renewable energy market in the country.
Power and heat generation in the country depends on old and highly polluting coal-fired combined heat and power plants. The 30 MW solar photovoltaic (PV) power plant will become the first utility-scale solar PV in the country and will generate electricity during the day, when the demand is higher than supply.
The syndicated financing package of $ 31.6 million will consist of an EBRD A loan of US$ 10.5 million, a B loan from impact investor Triodos Investment Management and FMO Dutch Development Bank, who will provide $ 10.5 million each. The two ultimate shareholders of the borrower are United Green Group (UGG) and Tucher Group GmbH.
This is the first solar plant in Mongolia to be project financed, continuing the EBRD’s leading role in the country’s renewable sector. The project is in line with the EBRD’s Green Economy Transition approach (GET), a flagship initiative which promotes sustainable energy and resource use. GET aims to dedicate 40 per cent of its annual investments to climate finance by 2020.
The EBRD is a leading institutional investor in Mongolia, with over €1.4 billion invested in 93 projects in the country to date. The bank has invested more than $ 114 million in renewable energy in the country, supporting four projects and funding more than 180 MW of capacity. In total, EBRD financing committed so far will help Mongolia reach 16 per cent of installed electricity generation capacity, and 6 per cent of its domestic electricity consumption of energy use from renewable sources, helping the country meet its obligations under the Paris climate agreements.