Mongolia – Energy Performance Contracting for Residential Retrofitting in Ulaanbaatar City

Copyright: NAMA Facility

Low energy efficiency of precast buildings with thin walls and single-glazed windows contribute to Mongolia’s high GHG emission per capita. Precast buildings represent 30% of the building stock in Ulaanbaatar, the capital of Mongolia, where half of the country’s population lives. In winter, when temperatures fall below -40 Celsius, energy losses in such buildings increase the need for heating and affect the quality of life of the related 45,462 households. Under the Paris Agreement, Mongolia has committed to reducing building heat loss by 20% before 2020. The 2016-2020 Action Programme of the Government of Mongolia states the necessity of energy efficiency improvement measures; however, few actions addressing residential buildings have been adopted. Challenges include the lack of financial resources available to finance retrofitting of the building stock. Limited fiscal resources, subsidized heat and power tariffs, limited capacity and awareness from stakeholders all increase the risk perception of investing in such projects. The challenges are similar to other countries in the region with a large precast building stock built before 1990. Therefore, identifying workable solutions for retrofitting the existing building stock could be an interesting showcase beyond Mongolia.

This NSP aims to break the financing deadlock facing Mongolia’s building energy efficiency and to support long lasting change of the framework conditions in Mongolia with the following interventions:

1. A physical intervention to deliver energy efficient retrofitting of 375 residential building blocks within the NSP implementation period of five years.

2. A financial intervention to initiate the first-ever energy performance contracting model in Mongolia for the energy efficient retrofitting of residential buildings. This is to be steered by a set of financial support mechanisms, including a blended fund to pool financial resources together for energy efficient retrofitting and the introduction of a Standard Offer Programme that functions like a feed-in tariff for energy saving.  

3. An awareness raising and capacity building component that (i) develops enabling regulations and standardised energy performance contracting documents and processes; (ii) conducts capacity building for companies (ESCOs, construction industry), government institutions and homeowners’ associations; (iii) raises awareness in households and (iv) provides policy guidance and advocacy to support a heat tariff reform.

The NSP intends to drive transformational, sustainable and replicable changes in the areas of energy efficiency finance and policy in the existing housing sector. By treating energy savings as energy generation, the NSP helps trigger utilities to reconsider their business model and the government to review the current subsidy scheme in the heating sector. The physical component creates an immediate demand for services of ESCOs and improves market conditions for energy performance contracting. The NSP is expected to leverage financial contributions from the Government of Mongolia, the city administration of Ulaanbaatar and private households (the beneficiaries), which will finance a portion of the retrofits. Households will benefit from lower energy bills, improved living comfort and increased property values of their apartments. The NSP size will allow the retrofitting of 35% of the total pre-cast building stock and will be the first of three phases to extend the retrofitting to the total precast building stock in Ulaanbaatar City. The NSP is expected to save at least 70,000 tons direct CO2 emissions annually, with a 10-year cumulative savings of 524,000 tCO2e.

Facts
Partner MinistriesMinistry of Construction and Urban Development and Ministry of Environment and Tourism
Implementing PartnersMayor's Office of Ulaanbaatar City and Development Bank of Mongolia
Applicant Support PartnerGlobal Green Growth Institute (GGGI) and ICLEI -- Local Governments for Sustainability
StatusDetailed Preparation Phase
Call6th Call

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