MOEJ/GEC JCM Feasibility Study (FS) 2013

Final Report

10MW-scale solar power generation for stable power supply

implemented by myclimate Japan

Study partners Saisan Co., Ltd,

Mitsubishi UFJ Morgan Stanley Securities Co., Ltd.
Project site Mongolia Govi-Altai province, Taishir Soum district
Category of project Renewable energy
Description of project This proposed JCM project aims to construct 10MW-scale solar power
generation system in Taishir district and sell the generated energy to the
grid which is connected with neighboring 11MW hydro-electric
generation plant.
In this project, the Feed-in-Tariff (FIT) scheme set by Mongolian
government is utilized. This project will contribute to stabilizing power
supply which is an urgent issue needed to be solved in the said district,
mitigating the rapidly increasing greenhouse gas (GHG) emission,
abating the serious air pollution and promoting sustainable energy usage
and energy mix within the country.
JCM Eligibility 1The project activity is generation of mega-solar scale power (more
methodology criteria than or equal to 1,000kW output) in Mongolia.
2The project activity is the installation of a new solar power
generation system at a site where there has been no mega-solar scale
power generation system, or capacity addition to the existing solar
power generation system.
3The electricity generated by the project will be supplied to Altai
Uliastai Regional Energy System in Mongolia to replace existing
electricity generation. If there is any use of electricity imported
from connected electricity systems located in other countries, this
particular electricity will not be replaced by the project.
4The solar power generation system installed in the project measures
net electricity supplied to the grid.
5The solar cell in the system have obtained: (i) certification of design
qualifications and safety qualification set by the IEC (International
Electrotechnical Commission), and/or (ii) any other national
certifications that fully complied with the IEC.
6The solar power generation system installed in the project including
power conditioner(s) in the system should have minimum conversion
efficiency of 98%.
7The solar power generation system installed in the project is
produced by a manufacturer from the country where there is: (i) a
measure in place for reuse and recycle of equipment in the system
after service life or (ii) an initiative for preparation of recycle and
reuse measure underway.
Default A default value (0.0006tCO2/kWh) was set for the Altai Uliastai grid
values emission factor.
Calculation Reference emissions were calculated by monitoring the volume of
of reference electric power supplied to the grid and multiplying this by the emission
emissions factor to be substituted. One of the following will be selected by the
operator as the grid emission coefficient prior to the start of the project
validation survey.
For Option 2, the maintenance coefficient will also be discounted during
calculation of the reference emission coefficient.
Option 1: The default value set in the methodology (0.6tCO2/MWh)
Option 2: The combined margin fully based on all the latest versions of
 grid emission factor tool will be calculated and the result adopted as the
project eigenvalue.
Monitoring Volume of electric power supplied to the grid by the project
method (common to both options)
Purchased volume of electric power (common to both options)
Altai Uliastai grid power supply mix (calculated for Option 1)
Project-specific emission factor of the grid substituted/consumed by
the project (calculated for Option 1)
GHG emission reductions GHG emission reduction: 7,781 (tCO2/year)
Reference emission volume: 7,813.1 (tCO2/year)
Project emission volume: 31.2 (tCO2/year)
Volume of generated power: (kWh): 13,021,819 (kWh)
Project power consumption: 51,996 (kWh/year)
Substituted grid emission factor: 0.0006 tCO2/kWh
Environmental impacts It is not envisaged that the project will have an impact on the fauna and
flora of the project target region. Environmental impact will be assessed
in greater details by the environmental impact assessment scheduled to
be performed during the next fiscal year.
Project plan The status of the project plan is detailed below.
Specification of the Power Generation Implementing Entity
The project is envisaged as a joint venture (JV) with bodies such as
Unigas and Mongolian Corporations as the project implementation
entities. Since Unigas, the principal entity of the joint venture, has
expressed its intent to implement and make capital investment in the
project, it is safe to say that the project implementation body has been
ensured.
Applications for Permits
Applications for the various permits required to implement solar power
generation projects in Mongolia have already been confirmed. The
process of applying for the necessary permits will commence in 2014
with the aim of beginning the solar power generation project in January
2016.
Overview Design
The region where the project will be implemented in the Taishir Soum
district of Govi-Altai Province has been inspected; liaison has been
arranged; and selection of land, specification of equipment to be
introduced, and overview design have been performed.
Capital Planning
Costs associated with the project has been verified and studies into
methods of procuring capital have been performed. Beginning in 2014,
procurement of capital will be promoted based on the results of
foregoing studies and investigations.
Promotion of Japanese While recent years have seen a spread of large-scale solar power
technologies generation projects and solar power generation technologies, risks still
exist that have not yet come to light. For this reason, a maintenance and
management structure that incorporates operational, security and
monitoring systems is absolutely essential to ensure the long-term
sustainability of stable and safe power generation projects. Saisan is
already involved in mega-solar projects in Japan and is conducting
studies into the future application in Mongolia of the operational
technologies it has acquired. Technologies created in Japan are
predominant not only in terms of this type of hardware, but also on the
software front.
Sustainable development in The project will contribute to the sustainable development of the host
host country country in the following three ways.
Improvement of serious air pollution (environmental aspect)
The realization of stable power supply (social aspect)
The promotion of renewable energy industries, the creation of
employment, and the transfer of Japanese technologies (economic
and technological aspects)
 JCM Feasibility Study (FS) 2013 Final Report

JCM Feasibility Study (FS) 2013

10MW-scale solar power generation for stable power supply
(Host country: Mongolia)
Study Entity: myclimate Japan
1Study Implementation Scheme
This study have been implemented by the scheme below.
Mongolia

Study Implementing Entity

Ministry of Energy
Research on Mongolian environmental and
energy policies
Ministry of Environment and Green Development
myclimate Japan Feasibility assessment
Solar power generation market and policies
Unigas Preparation of PDD
Preparation of reports

Sub-Contractor Sub-Contractor

Saisan Mitsubishi UFJ Morgan

Stanley Securities

Support for local investment Development of MRC

Support for technical issues Financeability research

Fig. 1-1: Study Implementation Structure

2Overview of Proposed JCM Project

(1) Description of Project Contents:
a.1. Project Overview

Fig. 2-1: Location of the Site1 Fig.2-2: Photograph of Project Site

The purpose of the project is to construct a 10MW-scale solar power generation plant in the Taishir
district in Altai Province, Mongolia and sell the generated electric power to the grid, applying the
feed-in tariff scheme that has already been established. The Taishir district is distinguished by the
following features: a) Predominance of flat land with no undulation, b) Sandy soil resulting from
the flat geological features which is suited for the construction of foundations of the plant, c)
Expansive land area which is sufficient for the construction of a mega-solar facility, and d) A power
grid and hydroelectric power generation plant adjacent to the project-target site that will make it
possible to minimize the running costs of the project.2
The implementation of the project will lead to the stabilization of electric power supply and
reduction of greenhouse gas emissions, both of which are urgent issues for the nation of Mongolia.
An overview of the project is set out below.

1
https://www.cia.gov/library/publications/the-world-factbook/geos/mg.html
2 According to documents provided by the Ministry of Energy

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a.2. Background of Project

a.2.1. Needs of Mongolia
This project were proposed for the following two reasons: (1) The Mongolia Ministry of Energy has
placed a request for the solar power generation project in the Taishir region and (2) The Ministry of
Energy is prepared to provide support for land rights and applications for the various permits
required (for construction and operation of the mega-solar power plant).

a.2.2 About Unigas LLC

Studies are underway for the implementation of the project as a joint venture (JV) between Unigas
LLC (hereinafter referred to as Unigas) and local entities.
Located in Mongolia and boasting the top sales volume in the industry, Unigas, the principal
implementation entity of the project, is a company engaged in the gas business and was established
in 2004 as a joint venture between Saisan Co., Ltd. (hereinafter referred to as Saisan), a Japanese
company engaged in the sale of LPG, and Petrovis LLC (hereinafter referred as Petrovis),
Mongolias largest petroleum company.
In addition to the sale of LPG and gas for industrial and medical uses mainly in Saitama Prefecture,
Saisan, the parent company, has made inroads into large-scale solar power (mega-solar) generation
business in Japan as a new line of business and already established a track record in the mega-solar
business in Aomori, Saitama, Yamaguchi and Fukuoka Prefectures.
Similarly, Unigas is developing new power generation business in Mongolia and has declared its
goal of becoming a comprehensive energy supplier in the country, reflecting accord between the
aims of the two companies.
The existence of these principal entities with such business ambitions that boosts the potential for
realizing the project is another background of the proposal of plans for the project.

a.2.3. Business Environment in Mongolia

In addition to being a country with an abundance of sunlight suitable for solar power generation
projects, (1) The adoption by the Mongolian government of a policy to increase the ratio of usage of
renewable energy to meet the growing demand for electric power and (2) The existence of a
feed-in-tariff scheme for the purchase of electric power generated by renewable energy sources
established in accordance with the Renewable Energy Law, which was enacted in 2007, shows that
Mongolia is in the process of streamlining the business environment in renewable energy power
generation and this is also a background of the project.

(2) Situation of the Host Country

a. Situation of Energy in Mongolia
a.1. Status of the Demand for Energy in Mongolia
Rapid economic growth over the recent years has engendered an increase in the population of
Mongolia, with the population standing at 2.9 million as of 2012. This economic growth coupled
with the growing population has created an increasing demand for energy (Fig. 2-3).

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Fig. 2-3: Prospects of Energy Demand3

a.2. Status of Electric Power Demand in Mongolia

The distribution system of Mongolia comprises three independent main grids; central (CES),
western area (WES) and eastern area (EES) and the small-scale Altai Uliastai grid with a grid in the
southern area currently under construction. Almost all electric power in Mongolia is provided by
coal-powered power plants. CES is the largest of the four grids mentioned above and meets
approximately 95% of the countrys electric power demand.4 Taishir, the region targeted by the
project, is supplied by the small-scale Altair Uliastai grid.
To meet the growing demand for electricity energy, Mongolia imports some of its power from
Russia, purchasing approximately 284GWh in 2012. In many cases, however, purchase of electric
power is constrained due to the rising price of imported power. Unable to supply sufficient power to
keep up with the dramatically growing power demand due to Mongolias astonishing GDP growth
rate of 12.3%5, the country now finds itself facing serious power shortages.

a.3. Status of Power Demand in the Taishir Region

To supply electric power to Taishir, the region targeted by the project, is shouldered by the Altai
Uliastai grid, a state-operated company.
This grid currently supplies power to almost all the residents and factories in the region. Although
in recent years, there have been a growing demand for electric power, particularly from the mining
industry, the current inability of the grid to supply sufficient power to meet this demand has led to
the use of diesel oil generators within the industry for in-house power supply. While the demand for
electric power from the grid continues to grow, unable to generate sufficient power to meet demand,
the grid is now in need of a new electric power supply source.
One of the causes of electric power shortages in the Altai Uliastai Grid is electric power shortages
at the Taishir hydroelectric power plant. This study revealed that the Taishir hydroelectric power
plant in the Altai Uliastai Grid was unable to generate electric power equivalent to the initial
planned value6. As of 2012, the Taishir hydroelectric power plant has generated no more than
16,221MWh, a little over half of the initial planned value of 32,000MWh.

3
Mongolian National Energy Agenda and Policy Measures - Scope for Subregional Cooperation Ministry of Energy (2013) *Unit:
MW
4
Guide to Investment in Mongolia, Japan International Cooperation Agency (2013)
5
Figures for 2012
6
According to hearings conducted at the Taishir hydro-electric power plant

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a.4. Mongolias Policy in Renewable Energy

a.4.1. Status of Spread of Renewable Energy
Almost the entire capacity of the current power generating equipment of 922MW is reached by
coal-driven power generation (Fig. 2-8). While, blessed with abundant sunlight, Mongolia is fertile
land for solar power generation projects, the amount of power produced by solar and wind power
generation accounted for no more that 0.01% of all power generated in 2011 (Fig. 2-9). Moreover,
almost all the existing solar power plants are small scale, independent off-grid power producers. No
10MW-class grid-connected solar power generation projects have ever been implemented and the
rate of market penetration even of mega-solar scale power generation (scale of output: 1MW or
more) is zero.

Fig. 2-4: Breakdown of Power Generation in Mongolia7 Fig. 2-5: Breakdown of Power Generation Track
Record in Mongolia in 201111
a.4.2 Policy on Renewable Energy
As part of its action plan between 2008 and 2012, the Mongolian government declared a policy to
promote the use of renewable energy, wind, solar and hydro-power generation. While the National
Renewable Energy Program established in 2005 includes plans to raise the ratio of power produced
by renewable energy sources to the total power generation from the level of 0.9% in 2005 to 3 5%
in 2010 and 20 25% in 2020, examination of the present situation reveals that these goals have not
been achieved.
As a step in the policy to promote the spread of renewable energy, the Renewable Energy Law was
enacted in January 2007. Under the law, a feed-in-tariff scheme for the purchase of electric power
generated by renewable energy sources was established and this project discussed herein will apply
this scheme.
Table 2-1: Purchase Prices under the Feed-in-Tariff Scheme
Category Energy Source Capacity Charge (/kWh)
Wind power - 8.0 - 9.5
Less than
On-grid Hydro-power 4.5 - 6.0
5.0MW
Solar power - 15.0 - 18.0
Wind power - 10.0 - 15.0
Less than
8.0 - 10.0
0.5MW
Off-grid Hydro-power
0.5 - 2.0MW 5.0 - 6.0
2.0 - 5.0MW 4.5 - 5.0
Solar power - 20.0 - 30.0

Under the Renewable Energy Law, electric power can be purchased at the charges listed in the table

7
Mongolian National Energy Agenda and Policy Measures - Scope for Subregional Cooperation Ministry of Energy (2013)

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above for at least ten years. Hearings conducted with the Energy Regulatory Commission of the
Ministry of Energy, the local entity with jurisdiction over renewable energy issues, revealed that
purchase prices and periods (after ten years) shall be subject to separate deliberation.

a.5. Environmental Issues relating to the Energy Situation

Growing demand for energy in recent years has caused a steady increase in greenhouse emissions.

Table 2-2: Projected Sector-specific GHG Emissions

Sector 2006 2010 2015 2020 2025 2030

Energy 10,220 14,033 20,233 25,930 32,796 41,815

Industrial processes 891 1,354 1,602 1,836 2,065 2,318
Agriculture 6,462 6,405 6,573 6,657 6,762 6,867
Land usage and forestry -2,083 -1,932 -1,785 -1,420 -1,000 -680

Waste 138 158 183 209 254 294

Total emissions 15,628 20,018 26,806 33,212 40,877 50,614
*Unit: CO2e,1000tons

(*Created by the study group based on values published in the New Mechanisms Information Platform)

Mongolia is also subjected to the effects of global warming caused by such increases in greenhouse
gases. The main problems of global warming in Mongolia include the melting of perpetual snow in
the mountains and subsequent drying up of springs and rivers, degradation of grasslands, melting of
permafrost and desertification8.
Furthermore, concerns around air pollution caused by coal on which Mongolia depends as a source
of energy is also growing steadily. In addition to increasing amounts of exhaust gases produced by
automobiles, other probable factors contributing to air pollution include the combustion of coal by
thermal power plants and the burning of quick lime in Yurt dwellings. In addition, the deteriorating
power generation efficiency of Mongolias aging thermal power plants is exacerbating the problems
of increasing GHG emissions and air pollution.
Pollution by substances such as PM10 and PM2.5, known to cause health problems, is especially
serious and the annual level of suspended particulate matter (PM) in the countrys capital,
Ulaanbaatar, has reached an alarming 279g/m3, by fourteen times compared to the standard value
of 20g/m3 recommended in accordance with studies conducted by WHO9.

3. Study Contents
(1) JCM Methodology Development
a. Eligible Criteria
The applicable requirements and basis of settings in the methodology are set out below.

Eligible Criteria 1
The project activity is generation of mega-solar scale power (more than or equal to 1,000kW
8
http://www.wwf.or.jp/activities/2011/12/1035828.html#3_2
9
Potential in Using Solar Energy for Reducing Air Pollution in City and Settled TownsGreen Solar Energy LLC (2013)

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 JCM Feasibility Study (FS) 2013 Final Report
output) in Mongolia.
Basis of Settings
Since no 10MW-class grid-connected solar power generation projects have ever been
implemented in Mongolia and the rate of market penetration of even mega-solar scale power
generation (scale of output: 1,000kW or more) is zero, the implementation of such
undertaking as a JCM project will address the problem of scarcity.

Eligible Criteria 2
The project activity is the installation of a new solar power generation system at a site where there has
been no mega-solar scale power generation system, or capacity addition to the existing solar power
generation system.
Basis of Settings
For the purpose of simplifying the methodology, this is limited to construction of a new facility or
addition to the existing solar power generation system.

Eligible Criteria 3
The electricity generated by the project will be supplied to Altai Uliastai Regional Energy System in
Mongolia to replace existing electricity generation. If there is any use of electricity imported from
connected electricity systems located in other countries, this particular electricity will not be replaced by
the project.
Basis of Settings
Since JCM requests that all electricity imported from overseas is not subject to JCM, this criteria is set
for complying with that requirement.

Eligible Criteria 4
The solar power generation system installed in the project can measure net electricity supplied to the grid.
Basis of Settings
By providing the system with the capability to measure net power (MWh) supplied to the grid by solar
power generation, the net power (MWh) value can be applied unchanged, simplifying the calculation
of the reduction of emissions (reference emissions).
To save the transcription and/or the calculation of project emissions thanks to this criteria leads to
reduction of human errors in transcription and/or calculation and obligations in monitoring and
reporting of GHG emission reductions. In addition, this criteria ensure the conservatives of
verification process by third party. Moreover, this will achieve the simplified systems which JCM is
aiming to.

Eligible Criteria 5
The solar cell in the system has obtained: (i) a certification of design qualifications and safety qualification
set by the IEC (International Electrotechnical Commission), and/or (ii) any other international
certifications that fully complied with the IEC.
Basis of Settings
Due to the simplicity of their structure and functions, differentiation of solar cell module products and
technology is difficult in terms other than price. For this reason, conditioning the selection of devices
on certification under performance and safety approval standards set by the International
Electrotechnical Commission (IEC) or national standards that fully complied with such standards
make it possible to select Japanese technologies with outstanding safety and durability suitable for use
on JCM projects.
JIS C8918 (Crystalline photovoltaic modules) and JIS C8939 (Thin film photovoltaic modules) are
Japanese standards that contribute to the assurance of consistency of quality of photovoltaic modules.
Moreover, performance approval standards (JIS 8990 and 8991) and safety approval standards (JIS
8992-1 and 8992-2) fully conforming to International Electrotechnical Commission (IEC) standards
are also in place in Japan.

Eligible Criteria 6
The solar power generation system installed in the project including power conditioner(s) in the system
should have minimum conversion efficiency of 98%.
Basis of Settings
In terms of the power conversion ratio, Japanese products are superior for the power conditioners that

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comprise a solar power generation system. While overseas manufacturers in countries such as
Germany and Switzerland have established a track record in the field of mega-solar power generation
at levels close to those of Japanese companies in terms of operating conditions and conversation
ratios, the selection of Japanese products is recommended for a setting of 98% or higher.

Eligible Criteria 7
The solar power generation system installed in the project is produced by a manufacturer from the country
where there is: (i) a measure in place for reuse and recycle of equipment in the system after service life or
(ii) an initiative for preparation of recycle and reuse measure underway. (Eg., PV Cycle10)
Basis of Settings
Although Reuse-Recycling Working Group of Japan Photovoltaic Energy Association (JPEA) is now
under consideration of measures for the reuse and recycling of photovoltaic cells, at this present it has
not been decided yet. On the other hand, in Chiba Prefecture Photovoltaic Appraise Society started to
collect and dispose the wasted photovoltaic cells from household or associated companies in last
September.

b. Data and parameters fixed ex ante

The method of setting studied default values and the resulting default values are set out below.

Background
Based on the fact that the availability of data required to calculate emission factors is extremely
limited in Mongolia with the exception of the Central Energy System, the approach detailed below
has been adopted for the calculation of default emission factors for the energy system in the Altai
Uliastai region.
Using fuel type-specific generated power volume data of last year from the National Dispatching
Center and referencing the latest version of the CDM grid emission factor calculation tool11, the
combined margin was calculated following steps based on this process and the result sets ex-ante as
the default value. It should be noted that, according to the National Dispatching Center, in order to
cope with the urgent demand for power in the Altai Uliastai region in winter, electric power is
sometimes temporarily imported from sources such as the Western and Central Energy Systems.
Since the volume of imported power is recorded by the National Dispatch Center, this is also factor
taken into calculations of default values.
The following power generating source-specific emission factors required for calculations were
used.
Power Generating Source Emission Factor Comments
Hydro-power 0.0 tCO2/MWh -
Diesel 0.8 tCO2/MWh CDM default value
Coal 1.0 tCO2/MWh The lowest emission factor among existing
coal-driven thermal power plants was that of
Thermal Power Plant No. 4 in 2012 at a
value of 1.02tCO2/MWh.
Imports from the Western Energy 0 tCO2/MWh Basically, because this comprises power
System imported from Russia and the Durugun
hydro-electric power plant, no emission
reductions will be achieved by replacing this
power.
Imports from the Central Energy 1.12655tCO2/MWh Average of the latest values published by the

10 http: //www.pvcycle.org/
11
Tool to calculate the emission factor for an electricity system
http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-07-v4.0.pdf

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 JCM Feasibility Study (FS) 2013 Final Report
System Mongolian government of OM 1.1501
tCO2/MWh and BM 1.0559tCO2/MWh
weighted by 0.75:0.25

A breakdown of the total volume of power generated and fuel types from last year (2012) in the
Altai Uliastai region is shown below. No power was imported from other systems in 2012.

Type Volume of Power Generated Operations launched in:

Taishir Hydro-electric Power Plant 16,221MWh 2008
Multiple diesel power plants 16,569MWh Unknown

Method of Setting
Step 1: The operating margin (OM) was calculated using the values of power generated (fuel
type-specific) during the year immediately preceding the year when the project was initiated.
Calculation in accordance with the formula below produced an operating margin (OM) of
0.8tCO2/MWh.

Simple operating margin CO2 emission factor in year

EFgrid,OMsimple,y = = 0.8
y (t CO2/MWh)
Net quantity of electricity generated and delivered to
EGm,y = = 16,569
the grid by power unit m in year y (MWh)
CO2 emission factor of power unit m in year y (t
EFEL,m,y = = 0.8
CO2/MWh)
All power units serving the grid in year y except Diesel
m =
low-cost/must-run power units generators
y = The relevant year as per the data vintage 2012

Step 2: The build margin (BM) was calculated using the values of power generated (fuel
type-specific) during the year immediately preceding the year when the project was initiated.

Because it was unable to obtain information (timing of commercial operation, volume of power
generated) on the multiple individual diesel power plants connected to the grid in question, only the
Taishir hydro-electric power plant, which was put into operation in 2008 and accounted for 20% of
all the power generated by the grid, was included in calculation of the build margin (BM). The fact
that the emission factor for hydro-electric power generation is zero makes this an extremely
conservative technique.
Calculation in accordance with the formula below produced a build margin (BM) of 0tCO2/MWh.

EFgrid,BM,y = Build margin CO2 emission factor in year y (t CO2/MWh) =0

Net quantity of electricity generated and delivered to the grid
EGm,y = = 16,221
by power unit m in year y (MWh)
EFEL,m,y = CO2 emission factor of power unit m in year y (t CO2/MWh) =0
Taishir
m = Power units included in the build margin
Hydro
Most recent historical year for which electricity generation
y = 2012
data is available

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Step 3: The combined margin (CM) was derived from the calculated operating (OM) and build
margins (BM).

Weighting and averaging with an operating margin (OM) ratio of 0.75 and a build margin (BM)
ratio of 0.25 and calculation in accordance with the formula below produced a combined margin
(CM) of 0.6tCO2/MWh.

EFgrid,OM,y = Operating margin CO2 emission factor in year y (t CO2/MWh) = 0.8

EFgrid,BM,y = Build margin CO2 emission factor in year y (t CO2/MWh) =0
WOM = Weighting of build margin emissions factor (per cent) = 0.75
WBM = Weighting of operating margin emissions factor (per cent) = 0.25

Updates of Default Values

As the country of Mongolia works toward mitigating power shortages in the future, it is likely that
development of new power sources will be promoted. In addition, the government has plans to link
all of the four national grids into a single unified energy system (Mongolian Integrated Power
System).
Since, depending on progress with these government policies, it cannot be denied that calculations
of the volume of emission reductions based on default values set at the point when the methodology
is approved may prove to be fluctuate, in the course of implementation of said methodology, the
project participants will monitor (verify) the power generation track record publicized by the
National Dispatch Center every year and, in cases where significant changes are noted, such as the
connection of other grids or new power plants, reviews of default values will be proposed based on
decisions (on the need for reviews) by the joint committee. Regarding procedures for the decisions
on (approval of) numerical values at such times, details will need to be elucidated separately by
entities such as Japan/Mongolia Joint Committee.

c. Calculation of GHG emissions (including reference and project emissions)

c.1. Method of Calculation of Reference Emission Volume
Reference emission volumes in this methodology are calculated by monitoring the volume of power
supplied to the grid by the project and multiplying this volume by the substitute grid emission
factor.
The operator may select one of the following as the emission factors of the grid substituted by the
project before the commencement of the project validation process. If option 2 is selected, reference
emission volume will be calculated with the conservative factor (5%) discounted.

Option 1: The default value set in the methodology (0.6tCO2/MWh)

Option 2: The combined margin fully based on the latest versions of grid emission factor tools12
will be calculated and the result adopted as the project eigenvalue.

12
Tool to calculate the emission factor for an electricity system
http://cdm.unfccc.int/methodologies/PAmethodologies/tools/am-tool-07-v4.0.pdf

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Option 1 Default Value
RE y EGRF , y EFCO2, default, y
Description of Data
RE,y Reference emission volume for year y (tCO2/year)
EGREF,y Volume of power supplied to the grid by the projects (MWh/y)
EFCO2,default,y Default emission f actor replaced/consumed by the project (tCO2/MWh)

Option 2 Project Eigenvalue

RE y EG RF , y EFCO2,specific, y (1 CF )
Description of Data
REy Reference emission volume for year y (tCO2/year)
EGREF,y Volume of power supplied to the grid by the projects (MWh/y)
EFCO2,specific,y Default emission factor replaced/consumed by the project (tCO2/MWh)
CF Maintenance factor (5)

c.2. Method of Calculation of the Project Emission Volume

The project emission volume in this methodology is calculated by monitoring the power consumed
incidental to implementation of the project and multiplying said volume by the emission factor of
the grid concerned. The formula used for this calculation is shown below. The applied factor is
identical to that used for calculation of the reference emission volume when Option 1 is selected.

Option 1 Default Value

PE y EC AUX , y EFCO2, default, y
Description of Data
PE,y Reference emission volume for year y (tCO2/year)
ECAUX,y Volume of power supplied to the grid by the projects (MWh/y)
EFCO2,default,y Default emission factor replaced/consumed by the project (tCO2/MWh)

Option 2 Project Eigenvalue

PE y EC AUX , y EFCO2, specific, y
Description of Data
PE,y Project emission volume for year y (tCO2/year)
ECAUX,y Volume of power from the grid consumed by the project (MWh/y)
EFCO2,specific,y Project eigenfactor of the grid substituted/consumed by the project (tCO2/MWh)

c.3. Volume of Reduction of GHG Emissions

The GHG emissions reduction volume in this methodology is the difference between the monitored
reference CO2 emission volume and the project emission volume.
ERy = REy - PEy

Description of Data
ERy GHG emissions reduction volume for year y (tCO2/year)
REy Reference emission volume for year y (tCO2/year)
PEy Project emission volume for year y (tCO2/year)

For solar power generation, normally, the rated panel output multiplied by power generation
efficiency and the intensity of solar radiation is taken as the projected volume of power generated
before project initiation. The calculated projected volume of power generated is shown below.
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 JCM Feasibility Study (FS) 2013 Final Report

Volume of power generated (kWh) = Intensity of solar radiation (kWh/m2) Solar power
generation system capacity (kW) Coefficient of loss Standard irradiance (kW/m2) Angle of
inclination correction

In this calculation, for the purposes of trial calculation of emission reduction volume of greater
accuracy, the projected volume of power generated was calculated based on the specifications of
panels manufactured by Sankou Seiki and power conditioners manufactured by Toshiba
Mitsubishi-Electric Industrial Systems Corporation (TMEIC) under consideration for introduction
to the project.
As a result of the above, project annual average solar radiation intensity is 13,021,819 (kWh/year).

In addition, trial calculation of adherent power consumed by air conditioning and power control
devices (e.g. power conditioners) in buildings is 45,864 (kWh/year).

The emission reduction volume is calculated as shown below. It should be noted that the default
value is used for the emission factor value.

(Reference emission volume)

RE y EGRF , y EFCO2, d e f a, yu l t
= 13,021,819 (kWh/year) 0.0006 (t-CO2/kWh)
= 7,813.09 (t-CO2/year)

(Project emission volume)

PE y EC AUX , y EFCO2, default, y
= 51,996 (kWh/year) 0.0006 (t-CO2/kWh)
= 31.19 (t-CO2/year)

(Emission reduction volume)

ERy = REy - PEy
= 7,813 (t-CO2/year) 32 (t-CO2/year)
= 7,781 (t-CO2/year)

The annual emission reduction volume of the project was calculated as 7,781 (t-CO2/year).

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 JCM Feasibility Study (FS) 2013 Final Report

(2) Development of JCM Project Design Document (PDD)

a. Project Implementation Structure and Project Participants
Mongolia Japan

Japanese Government
Local Government Altai International Subsidies
Consortium
License
Ministry of Energy
Land rights JV Saisan Co., Ltd Bank (Japan)
Unigas/Local entities/ Loan
myclimate Japan
Altai Uliastai Grid
Sale electricity
Construction Operation support
Sankou Solar Mongolia Maintenance (Construction/Maintenance) Sankou
Photovoltaic
panel
Technical transfer Localization

Fig. 3-1: Project Structure

A joint venture (JV) established between Unigas and Mongolian entities is envisaged for
implementation of the project. Said joint venture will construct a solar power generation facility in
the Taishir region of Mongolia and operate a solar power generation business. The established joint
venture will incorporate power generation operators in Mongolia into the organization with the aim
of realizing the smooth operation of the project.
It is envisaged that Unigas will ensure a stake of 51% in the joint venture, thus assuming the role of
leader in the operation of the project. The project comply with the business policies of both Unigas
and its parent company, Saisan, and the intention to invest has been confirmed. In addition,
myclimate Japan also plans to make partial investment in the venture.

b. Timing of Commencement of the Project and Duration of Implementation

See g. Toward project realization (planned schedule and possible obstacles to overcome).

c. Ensuring Consistency with Eligible Criteria in this Methodology

Conformity to the seven Eligible Criteria set out in the MRV methodology is described below.

Eligible Criteria 1
The project activity is generation of mega-solar scale power (more than or equal to 1,000kW output) in Mongolia.
Status of Conformity
It is expected that this solar power generation project will produce power on the scale of 10MW and therefore
complies with Eligible Criteria 1.

Eligible Criteria 2
The project activity is the installation of a new solar power generation system at a site where there has been no
mega-solar scale power generation system, or capacity addition to the existing solar power generation system.
Status of Conformity
The project will introduce a new solar power generation system in the Altai Uliastai grid, and therefore complies with
Eligible Criteria 2.

Eligible Criteria 3
The electricity generated by the project will be supplied to Altai Uliastai Regional Energy System in Mongolia to
replace existing electricity generation. If there is any use of electricity imported from connected electricity systems
located in other countries, this particular electricity will not be replaced by the project.
Status of Conformity
Electric power generated by the project will be linked to the Altai Uliastai Grid and replace power produced by
existing connected power generation systems. Moreover, since this study has revealed that the Altai Uliastai Grid
configuration mainly comprises renewable energy (produced by the Altai hydro-electric power plant) and power
supplied by diesel generators, the project complies with Eligible Criteria 3.

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 JCM Feasibility Study (FS) 2013 Final Report
Eligible Criteria 4
The solar power generation system installed in the project measures net electricity supplied to the grid.
Status of Conformity
The solar power generation system introduced by this project will be equipped with a meter to measure net power
supplied to the grid. The project therefore complies with Eligible Criteria 4.

Eligible Criteria 5
The solar cell in the system have obtained: (i) a certification of design qualifications and safety qualification set by the
IEC (International Electrotechnical Commission), and/or (ii) any other national certifications that fully complied with
the IEC.
Status of Conformity
The solar cells in the solar power generation system introduced by this project are manufactured by Sankou Seiki Co.,
Ltd. Since Sankou Solar Mongolia, the manufacturers subsidiary in Mongolia, manufactures solar cells locally, use of
its products will enable realization of reductions in transportation costs.
Since the products of Sankou Solar Mongolia are approved under International Electrotechnical Commission (IEC)
performance and safety standards, or national standards fully conforming to the same 13, the project complies with
Eligible Criteria 5.

Eligible Criteria 6
The solar power generation system installed in the project including power conditioner(s) in the system should have
minimum conversion efficiency of 98%.
Status of Conformity
The power conditioners planned for use in the project are manufactured by Toshiba Mitsubishi-Electric Industrial
Systems Corporation and feature a conversion efficiency of 98.6%14, thus conforming to Eligible Criteria 6.

Eligible Criteria 7
The solar power generation system installed in the project is produced by a manufacturer from the country where there
is: (i) a measure in place for reuse and recycle of equipment in the system after service life or (ii) an initiative for
preparation of recycle and reuse measure underway. (Eg., PV Cycle 15)
Status of Conformity
The solar power generation system introduced by this project is made in Japan. As stated above, the Photovoltaic
Appraise Society in Japan has launched a service under which it collects unwanted solar power generation panels from
its member companies and ordinary households for disposal. 16 Therefore, the project complies with Eligible Criteria
7.

d. Project Emissions Sources and Monitored Points

The source of GHG emissions arising from the implementation of the project will be system power
used in the course of the project. The main emissions are produced by power consumption of the
power conditioner and air conditioner.To calculate the volume of power used relating to the two
types of project emissions above, it will be necessary to monitor not only purchased power, but also
net power supplied to the grid in order to calculate the volume of GHG reductions.

e. Monitoring Plan
The monitoring plan is set out below.
No. Monitored Items Monitoring Method Frequency Data Storage Person in Charge
Measured by the meters measuring Measurement will Power generation
Volume of power
power sold to the grid company. be continuous and Stored until 2020 facility monitoring
supplied to the
1 Conformity to sales slips and aggregates will be in data and paper supervisor (also in
grid by the
receipts will be checked each recorded at least medium form charge of
project
month. every month. maintenance)
Conformity to sales slips and
Volume of power
2 receipts will be checked each Once a month As above As above
purchased
month.

13 http://www.sankou-solar.jp/catalog/sangyo/index.html#page=1
14 http://www.tmeic.co.jp/product/power_electronics/conversion/renewable_energy/solar/sw_500e/index2.html
15 http: //www.pvcycle.org/
16 http://pvn24.com/20130719-01-4072.html

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 JCM Feasibility Study (FS) 2013 Final Report
The existence of new renewable
Altai Uliastai energy generating equipment will
Person responsible for
3 grid power be checked based on values Once a year As above
monitoring
source mix announced by the National
Dispatching Center.
Project Only ex post (after the fact)
eigenfactor of selection will be allowed and,
grid during the monitoring period, the
4 Once a year As above As above
substituted/consu latest publicized data will be used
med by the to perform recalculations every
project year.
*Data obtained from monitoring will be stored in data format (e.g. CD-ROM, USB) and on paper media for the duration of the JCM project (envisaged
to last until 2020).

f. Assessment of Environmental Impact

Through advanced case studies and hearings conducted with the Mongolian Ministry of
Environment and Green Development, the entity with jurisdiction over the project, it has been
verified that the project is targeted by the same system. The same system was established under the
Law on Environmental Impact Assessment (2007). Based on hearings conducted with the
Mongolian Ministry of the Environment, there are two main environmental impact assessment
processes. The first is a review process that takes approximately two weeks and the second is a
monitoring process. We have verified that these processes require letters from the local government
and will entail confirmation of issues including introduced technologies, environmental impact
prevention measures and land permits and usage rights in the target area.

g. Comments from Stakeholders

Stakeholder Ministry of Energy
Supervisor Mr. BAYARBAATAR Tsendsuren (Ministry of Energy, Policy Implementation and Coordination
Department, General Director)
The following reasons for the wish of Ministry of Energy for the project to be implemented in this region have been given. (1)
(Thermal Power Plant Number 5 is scheduled for construction) According to the Master Plan, the aim is for consolidation of
power supply in the east of Mongolia by 2025, but stable power supply in the west remains an issue. (2) The Taishir
hydro-electric power plant (11MW) is currently capable of generating no more than approximately 3 4MW due to falling
water levels and (3) Future demand for power for mining in the region is foreseen.
*During the second site survey, thanks to the support of Mr. BAYARBAATAR Tsendsuren, two experts from the Ministry of
Energy joined the survey team in Daishir.
Stakeholder Ministry of Energy
Supervisor Makhbal TUMENJARGAL (Ministry of energy, Department of Strategic Policy and planning Specialist)
*Section with jurisdiction over JCM within the ministry
Makhbal TUMENJARGAL commented that it is understood that this is a significant project for Mongolia and that support will
be provided as much as possible.
Stakeholder Altai Provincial Office
Supervisor Provincial Governor AMAGALANBAYAR
The following comments were recorded: Since realization of this project will enable coverage of power supply within the
region using solar energy and eliminate dependency of the Central Energy Grid, the project offers significant merits. Full
support will be provided for the acquisition of permits for land in the town of Daishir, which has been selected as a candidate
area for the project.
Stakeholder Altai Uliastai Grid
Supervisor Company President, Mr. CHINBAT
The following comments were recorded: Increasing demand for electric power in the region and growing opportunities for
renewable power generation make the implementation of this solar power generation project a highly-significant undertaking
and both the Altai Uliastai Grid and the Taishir Hydro-electric Power Plant will extend their full support for the project.

Overall, high expectations have been expressed for the project, and both the Ministry of Energy and the Altai
Provincial Office have promised their support for the project.

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 JCM Feasibility Study (FS) 2013 Final Report

(3) Project development and implementation

a. Project planning
a.1. Status of Project Development
The project schedule are shown below.
FY2013 FY2014 FY2015

Category Procedure Jul - Sep Oct - Dec Jan - Mar Apr - Jun Jul - Sep Oct - Dec Jan - Mar Apr - Jun Jul - Sep Oct - Dec Jan - Mar

1. Study/Design procedures 1-1. Basic study

1-2. Overview design

1-3. Detailed design

1-4. Feasibility Study (Study of solar radiation, geology and connected systems)

2. Permit procedures 2-1. Procedure for Ministry of Energy Approval of FS Results

2-2. Procedure for power plant land usage permit

2-3. Procedure for establishment of power generation company

2-4. Environmental impact assessment

2-5. Acquisition of power plant construction license

2-6. Feed-in-tariff system (FIT) price adjustments

2-7. PPA (Power Purchase Agreement)

2-8. Acquisition of power generation (power sale) license

3. Fund procurement 3-1. Provisional calculation of costs

procedures 3-2. Study of fund procurement methods

3-3. Fund procurement

4. Construction procedures
4-1. Civil engineering and foundation construction

4-2. Materials procurement

4-3. Equipment installation work

4-4. System linkage

5. Launch of operations 5-1. Launch of operations

Fig. 3-2: Schedule up to Project Realization17

The status of project development comprises the following three perspectives.
(1) Specification of the Power Generation Project Implementation Entities
It is envisaged that the project implementation entities will comprise of Unigas and joint venture
bodies such as local entities. Unigas, the principal entity in the joint venture, has expressed its
intent to implement and make capital investment in the project, and thus established itself as the
principal project implementing entity.
(2) Procedures for the Acquisition of Permits
This study has identified the procedures for acquiring the various permits required the
implementation of the solar power generation project in Mongolia. Details will be set out later in
this document.
(3) Overview Design18
During the second site survey, the project implementation site located in the Daishir region of
Govi-Altai Province was observed, and coordination with linkage to the Altai Uliastai Grid,
selection of land, identification of equipment to be introduced and overview design have been
performed. The equipment to be introduced during the project and layouts are shown below.
1 2 3 4 5 6 7 8

Water level line

A A

Stock Room

B B

Electrical Room
C C

Entrance

D D
Alternate path

E E

F F

Taishir 10MW PV Plant A3 1/100

19
Fig. 3-3: Solar Panel Layout Fig. 3-4: Layout of Power Conditioners in the Building

17
Prepared from hearings with the Ministry of Energy
19
A site area of 16ha will be required for the solar power generation project.

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 JCM Feasibility Study (FS) 2013 Final Report

a.2. Capital Planning

a.2.1. Procurement of Funds
The results of provisional calculation of the funds required for the project are shown below.
Initial investment: 1,852,230,960 yen
Operating cost: 25,875,000 yen/year

The status of studies into the financial arrangements of approximately 1.9 billion yen required for
the project is detailed below.

(1) Loans from Banks in Mongolia

While interest of loans extended by financial institutions in Mongolia has been decreasing in
recent years, the rate is still extremely high at approximately 15%, rendering the use of such
loans impractical for the project.
(2) Loans from banks in Japan
It is planned that the project will be financed through loans from financial institutions in Japan.
Studies are underway into the procurement of a loan from a financial institution in Japan by
Saisan, the parent company of Unigas, and providing the funds thus acquired to Unigas in the
form of a loan.
(3) Invest from project participants
Studies are also underway into the investment from project participants.
(4) Use of JCM Scheme
As means of financial arrangement for the project, studies are underway into the use of the
Equipment Subsidies for Projects using the Joint Crediting Mechanism (JCM).

a.2.2. Provisional Calculation of Project Profits

Electric power generated by the solar power generation facility realized by the project will be sold
to the Altai Uliastai Grid in accordance with the feed-in-tariff system with the aim of realizing
profitability. The outlook is for production of 13,021,819 kWh/year of electric power. The result of
multiplying the amount of power generated produced by the provisional calculation by the
minimum purchase price of 15 cents under the feed-in-tariff system of Mongolia shows the
potential for an annual income from sales of 195,327,285 yen20. The income and expenditure
forecast is set out below.

(1) In the case of that JCM equipment subsidy can be acquired: IRR24.4% (Feasible)
(2) In the case that JCM equipment subsidy cannot be acquired: IRR13.9% (Not Feasible)
*Both are based on an assumed exchange rate of 1 dollar = 100 yen
*It is assumed that the purchase period under the feed-in-tariff system would be the same as the project duration of 20 years.

b. MRV structure
The planned general MRV framework relating to the project is shown below.

20
Calculations based on an assumed rate of 1oo yen to the dollar

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 JCM Feasibility Study (FS) 2013 Final Report

Fig. 3-5: MRV Structure

Monitoring will be performed by JV, the project principal. myclimate Japan Co., Ltd. will use the
data collected by the project principal to prepare documents required for JCM-related procedures. In
addition, it is planned that Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. will handle matters
such as project registration and coordination with the Joint Committee (JC) pertaining to procedures
for credit issue.

c. Permission and authorization for the project implementation

c.1. Permits pertaining to Land Rights
The site (16ha) selected for the implementation of project through the study is flat land located at N
464301.58 longitude and E964029.53 latitude at an elevation of 1798.6m, and features almost
no gradients and no obstacles that would block sunlight. The area is also more or less free from the
effects of wind. The land surface is made up of tough sand and the straight-line distance to the
Taishir hydro-electric power plant is approximately 3km.
Although usage rights must be obtained through a bidding process to borrow land owned by the
government, it was verified during hearings with the Ministry of Energy that bidding would not be
required for the project.
With the support of the Ministry of Energy, the Altai Provincial Office is already moving ahead
with procedures for usage of the land and it is expected that application to secure the land will be
filed in the next fiscal year.

c.2. Permits relating to the Power Generation Project

Regarding the procedures for acquiring the necessary permits for the study conducted during this
fiscal year, with the exception of the power generation license, procedures will be commenced in
FY2014 with the aim of commencing the solar power generation project in January 2016.
Procedures for the acquisition of permits relating to the power generation project are detailed below.
The necessary permit are shown in a.1. Status of Project Development

c.3. Permits relating to Import and Export

It is possible that power conditioners may be imported from Japan for the project. Tax rates and
procedures for such imports and exports in Mongolia are set under customs laws. Since a rate of 5%
is currently applied to almost all goods imported into Mongolia, it is likely the same tax rate will be
applied to the project.

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d. Japans contribution
d.1. Equipment introduced during the Project
Broadly speaking, products introduced during the solar power generation project fall into two
categories of technology. The first is solar power generation panels and the second is power
conditioners. The equipment scheduled to be introduced during the project is listed below.
Photovoltaic Panel
Status of
Panel Output Conversion
Manufacturer (country) Mode Number Conformity to
(W) ratio (%)
Eligible Criteria 5
Sankou-Seiki Co.,
SSM242BP60 242 13.6
Ltd.21 (Japan)

(Merits of Introduction of the above Product)

The solar power generation panel under consideration for adoption in the project is manufactured by
Sankou-Seiki Co., Ltd. Since Sankou Solar Mongolia, the companys subsidiary in Mongolia,
manufactures this product locally, use of the companys products will reduce the costs of
transportation.
Observation of the local plant of Sankou Solar Mongolia during this study verified that products are
manufactured in line with Japanese technology and quality control systems.
The product manufactured by Sankou Solar Mongolia offer the following advantages: (1) High
weight tolerance (540kg/m2 (resistance to snow accumulation)), (2) Conformity to IEC standards
and (3) Product warranty applicable in Mongolia (1 year + 10-year module output warranty
(Minimum guarantee of 90% output with guarantee of addition or replacement of module if output
falls below 90%)).
Moreover, ownership by Sankou-Seiki of a local subsidiary in Mongolia offers the following
advantages: (1) The ability to provide speedy after-sales service including product warranty, (2) No
transportation, import or export costs and (3) The ability to keep down product prices by
manufacturing products locally in a country where production costs are low.
Power Conditioner
Operating Status of
Rated
Model Conversion Conditions Conformity
Manufacturer (country) Output Dimensions (mm)
Number Ratio (%) (Ambient to Eligible
(kW)
temperature) Criteria 6
Toshiba Mitsubishi-Electric Industrial
Systems Corporation (TMEIC) PVL-0630E 630 98.6 -20-50 W1,900D700H1,900
(Japan)

(Merits of Introduction of the above Product)

Compared to the products of competitors, the operating environment of power conditioners
manufactured by TMEIC (Toshiba Mitsubishi-Electric Industrial Systems Corporation) features a
wider range of operating temperature (Capable of operating in an ambient temperature of -20 -
50 at an elevation of 2,000m), making them suitable for stable operation in Mongolia, a country
characterized by highlands and extreme differences in temperature. Moreover, the product is

21
Sankou-Seiki Co., Ltd. is a Japanese manufacturer with a local subsidiary and plant in Mongolia, the products of which are
scheduled to be used on the project.

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 JCM Feasibility Study (FS) 2013 Final Report

smaller than the products of competitors and, at only 1,300kg, the body is lightweight, offering the
prospect of reducing costs incurred by transportation and installation (building foundations and
building floor space).

d.2. Predominance of Japanese-made Technology

The main equipment to be used for the solar power generation project has been studied and the
following Eligible Criteria set. (1) Solar power generation panel (Conforming to IEC standards and
national standards based on the same) and (2) Power conditioner (conversion ratio of 98% or
higher). Comparison of the performance and price range of each of the devices with products
manufactured in other countries revealed that products manufactured in Japan offer top-class
performance and a price range competitive with that of products from other countries.
While there have been an increasing spread of large-scale solar power generation projects and solar
power generation technologies in recent years, almost no long-term studies have been conducted. It
is likely that large-scale solar power generation presents risks that have not yet come to light. Thus,
it is highly important to structure operation, maintenance and monitoring systems for long-term
stable and safe operation of the plant. In this point, the plant operated by Saisan in Japan, install the
remote monitoring system and this system will be applied to this project. The operation techniques
of mega-solar plant, which is software aspect, could be the predomination of Japanese-made
technology.

e. Environmental Integrity
Typically, it is believed that mega-solar projects have almost no environmental impact on the
surrounding area. The surrounding area is a wilderness featuring only the Taishir hydro-electric
power plant. In addition, because solar power generation facilities are enclosed in fences, no
particular impact on wildlife in the area is foreseen.
Environmental impact will be assessed in greater details during the environmental impact
assessment scheduled to be implemented in the next fiscal year.

f. Sustainable development in host country

f.1. Environmental Contributions
Reduction of Greenhouse Gas Emissions
Taking this project as a starting point, the increasing replacement of coal-dependent energy
supply will promote the reduction of greenhouse gases.
Improvement of serious Air Pollution
The realization of this project will increase the ratio of renewable energy power generation, thus
helping to free the country from its dependence of cola-driven thermal power generation and
contributing the reduction of air pollution in Mongolia.

f.2. Social Contributions

Realization of stable Power Supply
As the demand for power grows, the realization of stable power supply by renewable energy

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 JCM Feasibility Study (FS) 2013 Final Report

generation projects such as the one proposed in this document will have a beneficial effect on the
economic development particularly of the mining industry, the main industry of Mongolia.
Mitigation of Health Hazards posed by Air Pollution
The spread of renewable energy airing from this project and others will contribute to the
improvement of the health of Mongolian citizens who are threatened by air pollution from
substances such as PM10 and PM2.5, suspended particulate matter known to present hazards to
health.

f.3. Contributions to the Economy and Technology

The Promotion of the Renewable energy Industry and the Creation of Employment
The realization of this project will lead to the potential of promoting renewable energy industry
and creating employment in Mongolia in solar cell module manufacturers, related components
manufacturers and ancillary construction contractors.
Transfer of Japanese Technology
The promotion of the renewable energy industry in Mongolia presents the strong probability of
forays into the country of Japanese companies. As more Japanese companies become involved in
the field of renewable energy, it is probable that more Japanese will be transferred to Mongolia.

g. Toward project realization (planned schedule and possible obstacles to be overcome)

g.1. Project Schedule
The project implementation schedule elucidated by this study is shown in a.1. Status of Project
Development. It is anticipated that the solar power generation facility will be put into operation in
January 2016 with a project duration of 20 years.

g.2. Future Prospects and Issues

This study has verified that there is a high possibility for realization of the project. It is believed that
issues entailed in the project include ensuring the continuity of the feed-in-tariff system of
Mongolia.Because this study has been premised on a purchase period of 20 years for the project
with no changes to current prices under the feed-in-tariff system of Mongolia, the destruction of the
premise of continuity of said system would present a major business risk to the project.
According to hearings conducted with the Energy Regulatory Commission, the entity with
jurisdiction over the feed-in-tariff system, there are actual cases in which a period of 20 years has
been agreed to under the system. It is fair to say that the system could be flexible to a certain extent.
Based on the foregoing statements, a proposal composition study will be conducted in F2014 and
discussions and adjustments made with the entities with jurisdiction in Mongolia. At the same time,
the PPA procedure will be implemented within FY2014 to secure the purchase price and period of
validity that will affect the project revenue.

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