Mongolia has awarded a 530 MW renewable energy project in the Gobi through a competitive auction, a move aimed at reducing Oyu Tolgoi’s dependence on imported electricity.

• 🧩 Current Situation: Oyu Tolgoi currently imports around 1.6 billion kWh of electricity annually from Inner Mongolia, costing an estimated $120-$140 million a year. Imports are projected to rise to 1.87-2 billion kWh annually by 2027–2030, while the current supply agreement expires in 2030.

☝️ The Auction

The Ministry of Energy held the auction on September 24, with 10 companies initially expressing interest. Two consortiums met the qualification requirements and submitted deposits. The auction started at 9.7¢ per kWh, with a consortium of Net Zero Tech, MCS International and Inner Mongolia Energy International Cooperation winning at 7.9¢ per kWh. The tariff is 24% below the current import price.

🤨 What Will Be Built?

The winning consortium will develop 260 MW connected to the Oyu Tolgoi substation and 270 MW connected to the Zes-Oyu substation, for a combined capacity of 530 MW. The project will combine solar and wind generation and must meet a 99.5% reliability requirement for the two mining operations. Unlike a simple lowest-price bid, the auction also evaluated the technical solution needed to provide stable power to the mines.

• 👉🏻 The project requires no state budget funding, while replacing imported electricity with domestic generation could reduce foreign-currency outflows and add new renewable capacity to Mongolia’s grid.

👀 The Second Renewable Energy Auction

The project is Mongolia’s second renewable energy auction. The first, held in June, awarded projects totaling 220 MW of solar capacity and a 135 MW/440 MWh battery energy storage system across five provinces.

Overall… Mongolia is using competitive auctions to bring down renewable power costs and reduce its reliance on imported electricity. The key test is now execution: can the 7.9¢-per-kWh project be built and commissioned before Oyu Tolgoi’s import agreement expires in 2030?