Comparative Policy Analysis of Renewable Energy Expansion in Mongolia and Other Relevant Countries

Abstract

The study aims to conduct a comparative analysis of policies governing the expansion of renewable energy in Mongolia and selected countries. Against the backdrop of global energy transitions and Mongolia’s recent energy challenges, this research aims to identify and evaluate policy frameworks that facilitate the sustainable growth of renewable energy sources. The study delves into the unique socio-economic and geopolitical context of Mongolia, emphasizing the nation’s energy dependence on Russia. The findings of this comparative analysis provide valuable insights for Mongolian policymakers, offering recommendations for enhancing domestic policies that encourage the diversification of energy sources and attract foreign investment. By drawing on successful practices from some countries, this paper aims to contribute to the formulation of effective and context-specific strategies for Mongolia to achieve a more sustainable and resilient energy landscape.

1. Introduction

Recent developments in climate change and rising carbon dioxide (CO₂) emissions worldwide underscore the imperative for all countries to substantially enhance their efforts in decarbonizing the energy sector, despite the growing share of renewable energy (RE) in the primary energy supply. The power industry in Mongolia possesses several distinct features. First, because district heating is heavily relied upon during the harsh winter months, coal-fired CHP facilities generate the majority of the energy produced, which is 96% of total power production.

Second, there is no nationwide transmission system due to the vast territory and scarce population. Instead, there is a single major grid that is centered in Ulaanbaatar and extends southward into the Gobi Desert, along with a few smaller, autonomous grids that serve other regions of the nation.

Third, due to its small customer base and remote location, Mongolia’s power system is rigid and small, with only one cross-border connection to Russia that it depends on to meet summertime demand during the day and wintertime demand at its peak. The system has approximately 1 GW of installed capacity.

Finally, energy demand is growing rapidly, especially in the South Gobi region where the majority of existing and future mines are likely to be located. The Mongolian economy is in urgent need of investments in its power sector. The country relies on costly electricity imports from Russia since existing domestic capacity cannot currently meet its increasing power demands. Mongolia is estimated to have vast renewable energy resources, which, if fully exploited, could be pivotal in helping the country to meet rising power demand, bolster energy security, reduce pollution, meet global climate commitments and develop regional electricity exports. New policies promise to rapidly accelerate renewable energy development.

The 50-megawatt (MW) Salkhit wind farm that commenced operation in July 2013 was a significant milestone, marking the development of Mongolia’s first utility-scale non-hydro renewable energy facility [1].

In June 2015, the Parliament adopted the State Policy in the Energy Sector which sets as a strategic goal increasing renewable energy as a percentage of Mongolia’s overall power capacity to 20% by 2020 and to 30% by 2030 [2].

An increasing number of wind and solar projects are in the pipeline in response to the renewable energy targets set by the government. However, Mongolia’s renewable energy sector faces a number of important barriers to further renewable energy deployment, related to the availability of financing, technical constraints of the grid infrastructure, the higher cost of renewable energy technologies and associated affordability concerns, and public awareness of the potential benefits.

Mongolia, like many other countries, faces significant challenges in transitioning to low-carbon energy systems due to combination of its geographical, economic, and social factors. Conversely, several countries have made notable progress in decarbonization, offering valuable insights into effective policy measures and strategies. This study aims to delve into the challenges and barriers to decarbonization efforts both in Mongolia and in other relevant countries. By investigating the policy measures implemented by these countries to overcome these barriers, the study seeks to identify applicable strategies for Mongolia. Furthermore, it intends to propose pertinent policy changes within the Mongolian Energy Policy framework.

This article is divided into seven sections and is structured as follows: The Introduction section provides the general background, aims, and objectives of the research. Section 2 offers a comprehensive literature review, summarizing global renewable energy trends and successful policies in various countries, while identifying gaps in Mongolia’s renewable energy landscape. Section 3 provides an overview of Mongolia’s renewable energy policies and objectives, highlighting the key challenges the country faces in transitioning to a low-carbon energy system. Section 4 explores potential improvements for enhancing the utilization of renewable energy resources in Mongolia. Section 5 presents a comparative analysis of successful renewable energy strategies implemented by other nations, drawing valuable lessons for Mongolia. Section 6 proposes policy recommendations specifically tailored to Mongolia’s socio-economic and geopolitical context. Finally, Section 7 concludes the article by summarizing the main findings and offering a roadmap for future policy initiatives.

2. Literature Review

The transition to renewable energy has become a global priority, with many countries implementing policies aimed at reducing greenhouse gas emissions and enhancing energy security. Studies indicate that effective policy frameworks are critical to the successful deployment of renewable energy technologies. For instance, the International Renewable Energy Agency (IRENA) highlights that countries like Denmark and Germany have set ambitious targets, aiming for over 70% of their electricity to come from renewable sources by 2030 [3].

These countries utilize a variety of strategies, including feed-in tariffs, renewable energy auctions, and substantial investments in grid infrastructure to facilitate the integration of renewable sources into their energy systems [4].

Mongolia presents a unique case in this global landscape due to its heavy reliance on coal for energy production, which accounts for approximately 96% of total electricity generation. The country has significant renewable energy potential, particularly in wind and solar, but faces considerable challenges, including an outdated energy infrastructure, financial constraints, and regulatory barriers [5].

Recent literature emphasizes that Mongolia’s energy policies have begun to recognize the importance of renewable energy, as demonstrated by the State Policy on Energy adopted in 2015, which set a target for renewable energy to comprise 30% of the energy mix by 2030 [6]. However, progress has been slow, with many projects remaining unimplemented due to insufficient investment and a lack of effective policy enforcement.

Comparative analyses of renewable energy policies in other countries provide valuable insights for Mongolia. For example, research shows that countries like Chile have successfully leveraged their solar resources through competitive energy auctions, leading to a significant decrease in the cost of solar energy. Similarly, Australia’s experience with renewable energy policy emphasizes the role of public–private partnerships in attracting investment and fostering innovation [7,8].

These successful examples underscore the need for Mongolia to adopt a more structured and integrated approach to its energy policies, focusing on both technological advancements and regulatory reforms to facilitate the transition to renewable energy.

The scientific novelty of this study lies in its comparative policy analysis of renewable energy expansion in Mongolia, focusing on the socio-economic and geopolitical context, particularly the country’s reliance on Russia for energy. By examining the successful policy frameworks of countries like Australia, Canada, Chile, and Denmark, the study provides unique, context-specific recommendations for Mongolia to overcome challenges in adopting renewable energy, offering valuable insights for sustainable policy reform. This research seeks to fill a gap in the literature by identifying applicable strategies and lessons learned from international best practices, informing policy development in Mongolia and ensuring the effective harnessing of its renewable energy potential.

3. Challenges Facing Adoption of Renewable Energy Resources

The obstacles facing Mongolia to increase the use of renewable energy can be divided into the following categories.

3.1. Regulatory and Policy Issues

The government of Mongolia has initiated several policies and programs with the aim to improve reliability and cost-efficiency of the energy sector [9]. The summary of the Laws in Energy Sector is shown in

Table 1. Summary of the Laws in Energy Sector.

Legal Document	Adopted Date	Last Amendment Date	Goals and Objectives
Energy law	1 February 2007	19 June 2016	To govern relationships on energy production through resource utilization, coordination of transmission, supply operations, building of energy infrastructure, and energy.
The Energy Conservation Law	26 November 2015	26 November 2015	To regulate relations concerning energy saving and effective use.
Renewable Energy Law	7 January 2011	19 June 2015	The 2007 Renewable Energy Law prioritizes wind and solar resources and aims to regulate the production and distribution of electricity from renewable energy sources. The bill established a fund for renewable energy and set feed-in tariffs and government guarantees for RE power sources.
Adoption of List: Government Resolution#303	23 August 2008		The decision represented the exemption from income tax for businesses that traded 41 different kinds of equipment and techniques that are significant for green growth. Equipment for renewable energy is on the list.

Source: www.legalinfo.mn, accessed on 15 August 2024.

. Historical studies on Mongolia’s renewable energy policies suggest progress since the 2000s in harnessing renewable resources [10]. However, the implementation of these policies is very slow, and the evaluation and monitoring of the performance of these projects and programs remain weak. Renewable energy projects and programs are complex and long-term processes that require the development and implementation of appropriate and sustainable policies. Additionally, renewable energy tariffs change directly depending on the exchange rate. In other words, if renewable energy is produced and supplied to the unified grid, there is a risk that the renewable energy support tariff sold to consumers will increase depending on the exchange rate at the time. For example, the average cost of 1 kWh of electricity sold to consumers is MNT 145. However, the price of electricity generated by solar power plants is MNT 509.26–611.2, and the price of wind energy is MNT 27–322.5, resulting in a price differential [11].

The current renewable energy tariffs are shown in

Table 2. Price of Renewable Energy.

	Wind	Solar	Hydro
In USD (article 11.1 of the Law on Renewable Energy)	USD 0.08–0.095	USD 0.15–0.18	USD 0.045–0.06
Converted to MNT (11 August 2024, Bank of Mongolia closing exchange rate USD 1 = MNT 3395.09)	MNT 271.60–332.53	MNT 509.26–611.11	MNT 152.77–203.70

Source: https://erc.gov.mn/web/en/, accessed on 11 August 2024.

.

This is likely to create legal and policy barriers to attracting foreign investors to renewable energy production. As a result, there is a need to enhance the legal and policy framework to foster an environment conducive to free and fair competition within the energy sector, aligned with market standards, and to ensure stable prices and tariffs.

3.2. Investment Issue

The unequal distribution of financing in Mongolia’s energy sector mirrors global challenges developing countries face, where fossil fuel investments continue to dominate energy financing. Studies show that, globally, more than USD 500 billion was spent on fossil fuel subsidies in 2021 alone, far outpacing investments in renewable energy (IEA, 2022). In Mongolia, it appears that a significant portion of the investment in the energy sector is directed towards large coal-fired power and thermal plants, with approximately 90% of the total investment allocated to these sources. In contrast, only a small fraction, around 3–5%, is dedicated to investments in renewable energy sources such as hydro, solar, and wind power plants [12]. For example, large coal-fired power plant projects like the Baganuur Power Plant (400 megawatts (MW)) and the Booriljuut Power Plant (600 MW) each have an investment of USD 1 billion [13]. By 2030, the target is a 30% increase in the proportion of renewable energy to installed capacity. However, delaying policy implementation is creating challenges in achieving this target.

3.3. Issues with Technology and Infrastructure

Mongolia faces numerous challenges in mitigating climate change through its energy sector [14]. In Mongolia, eight thermal power plants with a total installed capacity of 1161 MW supply approximately 90.9% of the country’s domestic energy. Most of these are coal-fired heat and power plants located in cities and towns.

The amount of electricity produced in Mongolia in 2023 was 8528.7 million kWh, an increase of 3.3% or 349.7 million kWh over the year before as shown in Figure 1. The majority of electricity produced, 90.9%, came from combined heat and power plants; the remaining 8.5% came from solar and wind power, 0.6% from hydropower sources, and 0.01% from diesel generators. In addition, the amount of power imported during the reporting period was 2447.6 million kWh, which represents a 13.2% increase over the previous year by 286.3 million kWh.

During peak load periods of the energy system in the winter season, consumption exceeds 1000 MW per year. In the winter of 2023–2024, the Central Power System experienced a peak load of 1636 MW on 21 December 2023 as shown in Figure 2.

To meet this demand, 294 MW was imported from Russia, while 71 MW had to be limited. It means the electricity supply was limited for more than 140,000 households [15].

In 2023, loss of electricity transmission and distribution decreased in central and western power systems as shown in

Table 3. Loss of electricity transmission and distribution (%).

	2019	2020	2021	2022	2023
Central power system	13.75	13.60	13.4	12.7	12.18
Western power system	24.27	23.37	21.77	23.18	21.2
Eastern power system	3.85	4.4	3.06	5.31	5.78
Altai-Uliastai power system	21.47	19.9	18.8	16.9	18.3

. Instead, it has increased in the eastern and the Altai-Uliastai power systems.

About 20 percent of the total electricity consumption is imported from Russia and China, which reduces energy savings and efficiency and further impacts energy security. Most of the thermal power plants and transmission networks are 30–60 years old, and due to outdated and worn-out equipment, they are inefficient. As a result, the electricity consumed for domestic needs is 1.5 times the global average, and the loss in electricity transmission and distribution doubled between 2008 and 2018 [16].

It is crucial to support policies that expand and modernize existing plants, adopt advanced low-carbon technologies [17], construct new thermal and hydropower facilities, and promote clean production and green consumption to meet increasing electricity demand and establish backup capacity.

3.4. Dependency on Coal

From the standpoint of the energy system, coal dominates Mongolia’s main energy source. CHP units that run on coal provide both heat and electricity. In 2023, Mongolia’s electricity production amounted to 8528.27 million kWh, increasing by 349.7 million kWh, or 4.3 percent, compared to the previous year’s performance, with thermal power plants accounting for 90.9 percent of total electricity, 8.5 percent from solar and wind power plants, 0.6 percent from hydropower plants, and 0.01 percent from diesel plants as shown in

Table 4. Electricity production by source, (%).

Source	2019	2020	2021	2022	2023
Thermal power station	6346.6	6493.6	7109.6	7428.5	7755.2
Diesel power plant	3.0	2.7	1.1	1.2	0.5
Solar PV	109.0	108.9	156.9	178.7	193.0
Hydroelectric facility	85.4	83.3	83.1	61.7	48.1
Wind farm	469.3	467.2	563.0	508.5	531.5
Total production	7003.3	7145.7	7913.6	8178.6	8528.3
Import	1715.8	1705.6	1861.9	2161.5	2447.6

.

The consumption of coal in households, electricity and heat generation, and industrial processing not only contributes to greenhouse gas emissions but also significantly contributes to air pollution, adversely affecting human health. Figure 3 shows the percentage of greenhouse gas emissions from all thermal power plants in 2023.

Although coal remains the primary energy source for Mongolia, there is a trend towards decreasing coal consumption in the future. Growing the use of renewable energy in the future will be crucial in order to reduce carbon dioxide emissions, ensuring economic and energy security and achieving independence.

4. Possibilities to Improve the Utilization of Renewable Energy

4.1. Increasing the Efficiency of Utilizing Renewable Energy Resources

Since 2000, the government of Mongolia has implemented various measures to enhance the utilization of renewable energy. On 9 June 2005, it approved the National Program on Renewable Energy, thus initiating the development of energy utilization. Subsequently, on 11 January 2007, the “Law on Energy” was enacted, confirming the creation of a legal framework to encourage vigor and to establish cooperation in this field, aiming to attract foreign investors and create a favorable environment for the energy sector [18].

Currently, there are three wind, eight hydroelectric, nine solar PV, and two battery energy storage systems operating in the integrated power system (Figure 4).

According to the National Renewable Energy Center (NREC), the Gobi Desert’s enormous solar and wind potential accounts for most of Mongolia’s estimated 2.6 terawatts (TW) of renewable energy potential [19]. According to IRENA, Mongolia has untapped potential in solar and wind energy [20]. This resource has the capability not only to fully satisfy domestic energy consumption but also to meet the energy demand of the northeast Asian region, provided that the energy transmission infrastructure requirement is optimally resolved. Therefore, it is necessary to properly utilize the abundant renewable energy resources, install energy storage systems, and make use of these resources effectively.

4.2. Increase Investment in Renewable Energy

With its expanding population and beyond, Mongolia is well-positioned to produce renewable energy at a cost that is both dependable and reasonable. The analysis report of the Green Economy Policy Assessment: Mongolia estimates that by investing 4% of GDP annually in green development until 2030, it is possible to reduce greenhouse gas emissions per unit of GDP production by 17.2% [21]. Apart from being inexpensive, wind and solar PV will make use of local resources, greatly enhancing Mongolia’s energy independence and security. Increased reliance on renewable energy sources can help Mongolia cut greenhouse gas emissions and support international efforts to slow global warming. Therefore, it is necessary to support financing for renewable energy, increase involvement of both the public and private sectors, and attract more foreign investment.

4.3. Increase Participation of Public–Private Partnerships

The country’s National Renewable Energy Center and the Ministry of Energy are actively promoting the use of public–private partnerships (PPPs) in Mongolia’s renewable energy sector, which have shown promising developments. In recent years, projects with foreign investment aimed at increasing renewable energy have been successfully implemented.

Wind Power Projects: The International Finance Corporation (IFC) has been advising the Mongolian government on its first competitively tendered renewable energy independent power producer (IPP) project. This project aims to harness private sector capital and expertise to develop wind power, which is expected to significantly boost Mongolia’s renewable energy capacity [22].

Solar and Battery Energy Systems: The Asian Development Bank (ADB), in collaboration with the Mongolian government, launched a grid-connected renewable hybrid energy system in the province of Zavkhan. This system consists of a 5 MW solar photovoltaic (PV) array and a 3.6 MWh battery energy storage system. This project is part of the ADB’s Upscaling Renewable Energy Sector Project, which aims to install 41 MW of distributed renewable energy systems across Mongolia [23]. These facilities aid in the incorporation of extra renewable energy capacity into the power grid and can generate clean electricity during periods of peak demand. Such initiatives have the potential to overcome the perceived dangers connected with the integration of renewable energy and offer essential demonstration effect, which in turn can serve as the foundation for replication at scale.

5. Renewable Energy Policies in Other Countries and Proposed Recommendations

Australia is moving toward achieving the target of 82% of its electricity demands coming from renewable sources by 2030. Like Mongolia, Australia faces the problems of long distances between renewable energy sources and the grid and a substantial reliance on coal-fired power. In Australia, the share of renewable energy sources in overall electricity generation has increased from 17% in 2017 to an anticipated 36% today [24].

Similar to Mongolia, Canada has difficulties because of its large territory and some areas’ reliance on fossil fuels. Clean energy is one area with potential, as both countries navigate massive geography with extreme climates. Canadian renewable energy know-how could aid Mongolia’s transition away from polluting coal. Since 2015, the Canadian government has committed more than CAD 100 billion to clean growth and climate action, supporting the development of clean technology solutions to help in the fight against climate change. Canada has a lot to offer Mongolia, and it is our hope to help introduce some of Canada’s innovative solutions in Mongolia [7].

Chile, like Mongolia, is challenged by its geographical diversity and remote energy resources. However, Chile has successfully capitalized on its vast renewable energy potential, particularly in solar and wind power. As of 2024, about 45% of Chile’s electricity comes from renewables, with a target of 70% by 2030. Chile’s progress has been driven by a combination of favorable policies, such as renewable energy auctions, and significant investments in grid infrastructure to integrate these intermittent energy sources [25].

In addition, Denmark’s challenges are similar to Mongolia’s in terms of integrating a high share of renewable energy into the grid. It is anticipated that biomass and wind power will overtake fossil fuels as Denmark’s primary energy sources. The bulk of electricity is anticipated to come from onshore and offshore wind farms, while the main heating sources are anticipated to be biomass and electricity [26].

Mongolia can benefit from the renewable energy strategies employed by Australia, Canada, Chile, and Denmark. By analyzing the successes and challenges faced by these countries, specific strategies can be tailored to suit Mongolia’s unique socio-economic and geopolitical context.

5.1. Australia

Australia is moving toward achieving the target of 82% of its electricity demands coming from renewable sources by 2030. Australia faces the problems of long distances between renewable energy sources and the grid, as well as a substantial reliance on coal-fired power. In Australia, the share of renewable energy sources in overall electricity generation has increased from 17% in 2017 to an anticipated 36% today [27].

Australia has developed a structured approach to renewable energy that involves several key strategies and frameworks:

Integrated System Plan (ISP): The Australian Energy Market Operator (AEMO) developed a comprehensive roadmap for the National Electricity Market (NEM), focusing on achieving net zero emissions by 2050. The ISP highlights the impacts of coal closures and emphasizes the increasing affordability and necessity of renewable energy. The plan calls for substantial investments in generation, storage, transmission, and system services [28].

Renewable Energy Target (RET): The RET aims to lower the industry’s greenhouse gas emissions while increasing the amount of electricity produced from renewable resources [29]. This target requires generating an extra 33,000 gigawatt-hours (GWh) of electricity annually from 2020 to 2030.

• Large-scale Renewable Energy Target (LRET): This supports investment in large-scale projects such as wind farms and solar plants.
• Small-scale Renewable Energy Scheme (SRES): This incentivizes the installation of small-scale systems like rooftop solar panels.

Government Policies and Incentives: State and federal governments have introduced various policies to support renewable energy adoption. This includes funding programs, grants, and rebates for renewable energy projects, as well as regulatory frameworks to ensure compliance and encourage investment [30].

5.2. Canada

Similar in its vast landscapes, cold climate, and efforts to transition from fossil fuel dependency, Canada’s primary energy source traditionally has been hydropower, which accounts for about 60% of the country’s electricity [31].

Renewable Energy Sources: Canada is rich in renewable energy sources, primarily utilizing hydropower. Over 60% of Canada’s total electricity generation comes from hydroelectric plants. Recently, solar PV production has been increasing. In 2023, Canada’s solar energy capacity reached 3.3 GW [32].

Incentives and Support:

• Government Subsidies: Local and federal governments provide financial support for solar and other renewable energy projects. For example, the “Canada Clean Energy Program” offers interest-free loans and grants for solar energy projects.
• Residential Programs: The Canadian government encourages the use of solar energy by providing financial support for households to install solar energy systems. The “Green Homes” program helps cover a portion of the installation costs for residential solar energy systems.

Clean Technology Initiatives: Canada supports clean technology innovation and aims to reduce carbon emissions through various initiatives and programs. The “Low Carbon Economy Fund” provides financial assistance to businesses implementing carbon-reducing technologies.

5.3. Chile

For its aggressive renewable energy deployment in a resource-rich but geographically and climatically challenging environment, Chile has ambitious policies about climate change and renewable energy. It plans to achieve carbon neutrality by 2050, phase out coal power by 2040, and for 70% of electricity to come from renewable sources by 2030. In 2019, 45% of the nation’s electricity was generated from renewable sources, primarily hydropower but also a growing amount from solar and wind energy [33].

Through a number of crucial initiatives, Chile has improved the investment climate for renewable energy projects:

Stable Regulatory Environment: Chile’s government has established a clear and consistent regulatory framework for renewable energy. This stability provides confidence to investors, ensuring that policies are unlikely to change abruptly and affect their investments negatively [34].

Competitive Auctions: Chile has implemented technology-neutral tenders for electricity supply, which encourages competition and drives down the cost of renewable energy. These auctions allow various technologies to compete on equal footing, leading to the selection of the most cost-effective projects.

Energy Policy and Planning: The National Energy Policy 2050 includes ambitious targets for renewable energy and carbon neutrality. The policy was developed through an inclusive public consultation process, which helped to gain broad support and ensure comprehensive planning.

Infrastructure Development: Significant investments in electricity transmission infrastructure and the creation of an interconnected national electricity system have facilitated the grid integration of renewable energy sources. This development is crucial for managing the variable nature of renewable sources like wind and solar.

Government Commitments and Incentives: The Chilean government has committed to retiring thermal power plants by 2040 and aims to have 70% of energy consumption come from renewable sources by 2030. Additionally, laws like Chilean Law 20.571 promote small-scale renewable energy generation by residential owners, further encouraging widespread adoption.

Support for Innovation and New Technologies: Chile is actively pursuing green hydrogen projects and aims to become a leading exporter of hydrogen by 2050. This focus on innovative technologies attracts investment and positions Chile as a forward-thinking leader in renewable energy [35].

5.4. Denmark

Denmark used to rely mostly on fossil fuels, especially coal, for its energy and heat consumption. For example, the goal of the long-term, strategic Aalborg Energy Vision 2050 is for the city to be fossil-fuel-free by the year 2050 at the latest. This includes heating. Although a coal CHP plant currently provides the majority of the heat for Aalborg’s district heating system, coal use is expected to decline over time. The energy vision is predicated on the idea that, by 2050, Aalborg will be completely dependent on locally produced renewable energy sources, negating its reliance on fossil fuels [36].

Wind Energy Leader: Denmark is a global leader in wind energy. As of recent years, wind power contributes to approximately 50% of Denmark’s total electricity consumption, and the country aims to increase this share further. The country has several large offshore wind farms, and more are in development. The largest of these, the Horns Rev 3 offshore wind farm, has a capacity of 407 MW.

Renewable Energy Goals: Denmark has set ambitious targets for renewable energy. By 2030, the country aims to have at least 70% of its electricity generation covered by renewable sources. The long-term goal is to achieve 100% renewable energy in the electricity sector by 2050.

Energy Transition Plan: Denmark’s energy transition plan includes phasing out coal by 2030, promoting energy economy, and expanding the grid.

Incentives and Support

• Feed-in Tariffs: Denmark has implemented feed-in tariffs to encourage the production of renewable energy. These tariffs guarantee a fixed price for the electricity produced from renewable sources.
• Subsidies and Grants: The Danish government provides subsidies and grants for wind, solar, and biomass energy projects.
• Tax Exemptions: Renewable energy producers may benefit from tax exemptions and reductions to lower the cost of developing and operating renewable energy installations.

District Heating System: Denmark has a well-established district heating system that utilizes biomass and geothermal energy. This system provides efficient and sustainable heating to residential and commercial buildings.

6. Key Recommendations for Renewable Energy Sector of Mongolia

Mongolia’s journey towards a sustainable energy future could benefit from adopting a structured policy approach, as demonstrated in the European Union’s National Energy and Climate Plans. As noted in European roadmaps to achieving 2030 renewable energy targets [37], countries that integrate comprehensive policy tools such as feed-in tariffs, financial incentives, and grid modernization programs tend to perform better in achieving their renewable energy targets. For Mongolia, a similar multi-faceted policy strategy could address key challenges like grid capacity, foreign investment, and reliance on coal. Implementing such policies can help close the gap between current energy production and the ambitious target of 30% renewable energy by 2030.

• Enhancing cooperation and support from international funds and financial institutions that provide concessional loans and grants to support green development and renewable energy.
• Simplify and clarify the technical requirements for issuing permits for small-scale renewable energy sources (up to 20 kW) for households.
• Increase electricity tariffs to align with the actual production costs of electricity generation.
• Based on international best practices, provide up to 50% support for the initial investment in the construction of renewable energy sources with capacities of 5–20 kW for households and small to medium-sized enterprises.
• Due to geographic characteristics, using distributed small-scale energy sources can reduce dependence on imported energy. The government should support households and organizations generating electricity through incentive policies.
• Significant investment should be allocated to renewable potential exploration, specifically for technologies that are not fully or thoroughly assessed in Mongolia such as geothermal, as this could provide valuable baseload production in future district heating systems. In addition, it should cover the potential for low-temperature sources for future district heating systems, namely waste heat from industry and commerce, and waste-water treatment plants, amongst others.
• Privatization or community ownership of new energy developments could be a viable solution. A thorough assessment of possible ownership models for the Mongolian context should be developed. Experiences from other countries where non-profit or consumer-owned forms of ownership are favored should be considered.
• Regulations and the infrastructure should enable district heating billing to be measured based on consumption rather than on the heated space to promote energy efficiency (Energy Sector Management Assistance Program, 2019). In this case, the tariff structure for heating could be composed of two elements: Fixed and variable costs. The fixed costs include all the investment in equipment and consider its depreciation. Variable costs are based on the actual heat consumption. An example of a variable tariff scheme is being implemented in Aalborg, Denmark, where the plan is to phase out coal CHP plants. The situation is similar to the one in Mongolia, where coal (medium-quality lignite) is the main fuel utilized for CHP.

Table 5. Key Policies and Goals by Country, and Recommendations for Mongolia.

Country	Renewable Energy Policies and Goals	Recommendation for Mongolia
Australia	- Aim for 50% renewable energy by 2030 - Incentives for solar and wind energy projects - Investment in renewable energy infrastructure	- Set clear, achievable renewable energy targets - Provide incentives for solar and wind energy projects - Invest in renewable energy infrastructure
Canada	- Target of 90% non-emitting electricity by 2030 - Support for hydro, wind, and solar energy - Government funding for renewable energy research and development	- Focus on reducing emissions from electricity - Support diverse renewable energy sources - Allocate funds for renewable energy R&D
Chile	- Target of 70% renewable energy by 2030 - Emphasis on solar energy due to high solar potential - International partnerships to develop renewable energy technology	- Establish ambitious but attainable renewable energy goals - Leverage Mongolia’s natural resources for renewable energy - Seek international partnerships for technology and investment
Denmark	- Aim for 100% renewable energy in electricity and heating by 2035 - Strong support for wind energy due to favorable conditions - Integration of renewable energy into the grid	- Set ambitious long-term renewable energy goals - Utilize Mongolia’s wind energy potential - Develop robust grid infrastructure for renewable energy integration

summarizes the key policies and goals of each country and provides specific recommendations for Mongolia.

7. Conclusions

7.1. Discussion and Policy Implication

Mongolia’s experience with renewable energy policy highlights the importance of leveraging natural resources, providing government support, engaging in international cooperation, addressing infrastructure challenges, and involving local communities. Mongolia has committed to aggressive targets to cut its greenhouse gas emissions by 22.7% by 2030 and has accepted international treaties, such as the legally binding Paris Agreement. In order to live up to these promises, favorable laws and regulations pertaining to investments in renewable energy must be established.

Here are recommendations based on learning from the policies of leading countries in renewable energy.

Chile has been more successful in attracting investment in renewable energy projects compared to Mongolia. Chile’s stable regulatory environment and competitive auctions have been important elements in operating investment in renewable energy. Mongolia could learn from Chile’s approach to creating a favorable investment climate for renewable energy projects.

By learning from Australia’s successful renewable energy policies, Mongolia can create a favorable investment climate and accelerate its transition to a sustainable and diversified energy portfolio. Adopting a stable regulatory environment, implementing competitive auctions, supporting large-scale projects, investing in grid infrastructure, emphasizing research and development, fostering public–private partnerships, and providing financial incentives are key strategies that can drive Mongolia’s renewable energy transition.

A major contributor to effectively putting renewable energy projects into action across Canada has been public–private partnerships. These collaborations have brought together the knowledge and assets of the public and private sectors, enabling shared risks and rewards [38]. To maximize the knowledge, resources, and technology of the private sector for extensive renewable energy projects, Mongolia can support public–private partnerships. Infrastructure for renewable energy can be installed more quickly in Mongolia if cooperation between public and commercial sectors is encouraged.

Decentralized energy systems, where local communities generate and control their energy needs, have been successfully adopted in Denmark [39]. This strategy has strengthened local communities, decreased transmission losses, and improved energy efficiency.

In light of its large size and sparse population, Mongolia stands to gain from implementing decentralized energy systems. Mongolia possesses the capacity to improve energy accessibility in rural regions and lessen reliance on centralized energy plants by promoting the establishment of community-based renewable energy projects, like small-scale wind and solar farms.

In conclusion, Mongolia’s journey toward expanding its renewable energy sector is marked by significant challenges, particularly in policy implementation, investment allocation, and technological constraints. While Mongolia has set ambitious goals to increase its renewable energy capacity, the country’s heavy reliance on coal, outdated infrastructure, and dependency on imported electricity hinder progress. Comparative analysis with countries like Denmark, Australia, Canada, and Chile reveals that successful energy transitions require robust policy frameworks, substantial investment in renewable technologies, and strategic infrastructure upgrades. To achieve a more sustainable and resilient energy future, Mongolia must prioritize the diversification of its energy sources, modernize its grid infrastructure, and create a more favorable environment for foreign investment in the renewable sector [40]. This will not only help Mongolia meet its growing energy demands but also enhance its energy security, reduce environmental impact, and position the country as a potential leader in regional renewable energy exports.

7.2. Limitations and Shortcomings

While this paper provides a comprehensive comparative analysis of renewable energy policies in Mongolia and other relevant countries, several limitations should be noted. First, the research relies primarily on publicly available data, which may not capture the full complexity of Mongolia’s renewable energy sector, especially regarding unpublished government initiatives or private investments. Additionally, the rapidly evolving nature of energy technologies and policies means that some of the information may quickly become outdated.

Another shortcoming is the lack of in-depth empirical analysis on the technical feasibility and economic impact of the proposed renewable energy policies in Mongolia. The focus of this paper is more on policy comparison than on quantitative modeling, which limits the scope for predicting specific outcomes based on the recommended policy changes.

7.3. Future Research Directions

Future research should focus on addressing these limitations by incorporating detailed empirical studies and case-specific simulations. Further research could explore the economic implications of renewable energy transitions in Mongolia through cost–benefit analyses and energy modeling. Another potential area of study is the social acceptance of and community participation in renewable energy projects, which are crucial for the successful implementation of policy changes. Additionally, with emerging technologies like green hydrogen and advanced battery storage systems, future work could investigate the technical potential and scalability of these innovations within Mongolia’s unique energy landscape.