Baatarmunkh B. : Renewable Energy Will Become the Key Driver of Rapid Development

21 Jul Baatarmunkh B. : Renewable Energy Will Become the Key Driver of Rapid Development

Our conversation with Baatarmunkh B., CEO of Newcom Group, continued regarding the renewable energy projects undertaken by the company over the past three decades. “We are working with huge ambition towards exporting new energy to the region and Asia,” said Baatarmunkh B.

Two decades ago, “Newcom” didn’t just talk about new energy; they took concrete steps and successfully accomplished their first renewable energy project. This marked a pivotal realization that Mongolia’s natural resources can be harnessed for energy production. Moreover, “Newcom” played a pioneering role by establishing a new industry and introducing fresh concepts and standards. Could you please provide further insights into the projects that initiated this new era of energy exploration, endeavors, and innovative initiatives?

The founders of our company have always placed great significance on environmental protection, as it aligns with their personal vision and values. Through their inquisitive nature, they discovered that Mongolians could harness the inherent power of wind for our benefit.

Twenty years ago, we realized that renewable energy would play a significant role in combating global warming and promoting sustainable development in Mongolia. Thus, driven by the belief that renewable energy would shape the future of the world and actively contribute to the growing momentum in this field, Newcom made the strategic decision to venture into renewable energy, initiating our first “Salkhit Wind Farm” project in 2003. It took us a span of 10 years to successfully implement the project, which began generating Mongolia’s first wind energy. During the 10 years of project implementation, we conducted extensive research and assessment of wind resources, created a comprehensive wind resource database, explored wind turbine technology, selected the most modern technical equipment suitable for Mongolian conditions, and cooperated with the government to establish a legal framework in the field of renewable energy.

Salkhit wind farm marked a significant milestone as the first major investment by the private sector in the renewable energy field, during a period when there had been no substantial investments made in the traditional energy sector in Mongolia for thirty years. While the development of the first project required ten years, the “Tsetsii” wind farm project commenced its operation in 2012 and successfully began generating electricity in 2017.

Starting something new is inherently challenging, particularly in circumstances where understanding and information are lacking. You must have faced numerous challenges along the way.

Indeed, there were many challenges. “Our founders were often told, ‘Mongolia is a coal-based country and will solely rely on coal. Why are you discussing wind farms?’ However, we firmly believed in the abundance of wind resources in Mongolia, capable of producing sustainable and environmentally friendly energy. Despite our limited knowledge, we made sincere efforts to learn, study, and diligently pursue a path aligned with the global practices.

The establishment of government policy and legal regulations in the field of renewable energy was crucial. In 2007, the adoption of the Law on Renewable Energy in Mongolia marked the initial steps towards shaping the legal framework. Project financing presented another significant challenge, requiring extensive research, analysis, and implementation efforts. In order to meet the project financing requirements, it was necessary to have a database of on-site wind assessment spanning a minimum of five years, as well as ensure that the wind resource assessment met the standard requirements and were objectively evaluated by a foreign professional organization.

Consequently, it conveyed a positive message both nationally and internationally, showcasing the possibility of developing renewable energy and establishing wind farms in Mongolia. We remain dedicated to upholding and expanding upon the principles and concepts we embraced twenty years ago.

Just as we have discussed the challenges faced thirty and twenty years ago, it is likely that Newcom’s ambitious goals for the next three decades will also present their own set of challenges.

With a strong desire to actively work towards our ambitious goals, we seized the opportunity to join the esteemed “Dii Desert Energy” organization as its 100th member, marking our initial stride towards progress. This organization comprises the world’s leading companies in the renewable energy sector.

Mongolia’s proximity to China and its abundant renewable energy resources were the key factors behind the organization’s invitation, as it recognized Mongolia’s potential to become a significant regional player in new energy development. The organization has demonstrated a strong commitment to fostering regional renewable energy networks and wind farm projects. This commitment spans various areas, including investment, policy formulation, infrastructure development, and support initiatives.

Our south neighbor has conducted extensive research and is prepared to implement projects in the renewable energy sector. However, they express concern about the lack of clarity in the government’s policy, frequent changes in decisions, and the difficulty in carrying out work efficiently and engaging in consistent negotiations.

With Mongolia’s ambitious goal of becoming an exporter of renewable energy and driving significant economic development, the present time presents an ideal opportunity to commence this endeavor. Following the global impact of the COVID-19 pandemic, there has been a substantial surge in support for sustainable development worldwide. What was once merely discussed a few years ago has now translated into tangible capital investments. Contracts worth billions of dollars are being negotiated and executed for renewable energy projects across the globe. Concurrently, China’s rapid development and soaring energy consumption have resulted in power shortages in various regions. These circumstances create a promising opening for Mongolia. By formulating a specific and precise policy, the government can unlock favorable opportunities for the country’s renewable energy sector.

What type of policy and legal framework should the government establish?

Currently, there is a lack of clarity and a detailed plan for energy export. A policy should not be merely an opinion but a written and approved document that provides stability. It is crucial to have a responsible entity in charge of implementing the policy and addressing the challenges of volatility and uncertainty. The government must fulfill its obligations by implementing previously concluded agreements, as contracts are established through mutual agreement and their execution plays a vital role in achieving desired outcomes. Another challenge relates to exchange rate fluctuations. There is a common belief that the domestic market in Mongolia is unable to bear the cost of renewable energy. However, this is not primarily attributed to the financial burden, but rather underscores the necessity for liberalizing energy tariffs in the market. At the 100th anniversary meeting of the energy industry, former President Ochirbat P. emphasized the vital role of tariff liberalization, stating that without it, investments would be hindered, and the development of the energy sector would be compromised. The Minister of Energy has echoed this sentiment, underscoring the significance of tariff liberalization. Given these compelling remarks, it is clear that a comprehensive policy, legal framework, and roadmap must be established to effectively tackle these challenges.

The tariff of small-scale renewable energy plants tends to be higher, while larger capacity plants have a lower unit cost. Therefore, we should be focused on constructing large-scale renewable energy power plants, with a significant market potential overseas. By exporting 5 GW of energy to China, the tariff can be reduced, attracting financing and investment and providing a substantial boost to the economy. Although 5 GW may seem insignificant to our southern neighbor, it represents a significant number for us, being 3.5 times more than our domestic peak load. Therefore, renewable energy export policy and support is needed. Hence, there is a need for an export policy and support for renewable energy. This approach will establish a foundation for the rapid development of renewable energy, enabling us to meet domestic needs and export the surplus at a low cost. It is crucial to coordinate policies between the two countries at the government level and develop a favorable legal environment. By involving the private sector, mega projects can be undertaken without straining the state budget.

Can you please share information regarding global advancements in environmental sustainability and the current trends in sustainable energy development?

Throughout the past two centuries, humans have been engaged in the production of goods through the combustion of fuel and the consequent emission of smoke. There is a universal understanding and acknowledgment that persisting with this practice in the coming years poses a substantial threat to both our planet and the human race. Energy serves as the fundamental requirement for all forms of production. Presently, there is a growing inclination towards finding solutions that enable us to address the challenges of our existence without causing harm to our environment.

Furthermore, there is a strong movement to avoid carbon dioxide-emitting products, and ongoing discussions on imposing taxes on such items. During a recent international renewable energy conference held in the United Arab Emirates, I had the opportunity to engage with executives from some of the world’s leading companies. During our discussions, it became evident that developed and industrialized nations will encounter challenges in constructing renewable energy plants due to land constraints. Consequently, they will need to acquire renewable energy credits from other countries that have the capacity to generate renewable energy.

It Is crucial to recognize the significant opportunity that lies before us. Mongolia, for instance, has the potential to produce environmentally friendly energy and trade renewable energy credits, while also fostering industrialization. There are numerous possibilities for producing a wide range of goods and services using renewable energy sources. Technological advancements continue to make these solutions more compact and feasible, even extending to modes of transportation such as airplanes. Taking a proactive approach, we are actively exploring innovative methods to compensate for our logistical limitations.

Renewable energy holds the key to present-day utilization and will act as a major catalyst for rapid economic development. This key will unlock subsequent industries, making it essential for the government to focus not only on domestic problem-solving but also on energy exports. Scientists and researchers suggest designating the southern region as a production zone and the northern region as a conservation zone, taking advantage of the abundant mining and renewable energy resources available. Proper utilization of these natural resources can drive production growth.

A year ago, construction began on a net-zero production park in Inner Mongolia’s Ordos province. Inner Mongolia was chosen due to its similarities with Mongolia in terms of abundant renewable energy resources. However, there is a prevailing sentiment that the quality is better in Mongolia, leading to considerations of building such parks in Mongolia itself. By developing such parks independently, Mongolia can compete on the international stage. The country possesses several advantages, including world-leading reserves of renewable energy and rare earth minerals, as well as proximity to the world’s largest market. It is a fortunate combination that presents unique opportunities.

Moreover, the global community is actively addressing the challenges associated with renewable energy development. One of the drawbacks of renewables is their intermittent nature, as they rely on factors like sunlight and wind. However, efforts are being made through technological advancements, particularly in energy storage systems, to address this issue. As technology advances, the costs associated with this solution are decreasing.

Over the past two decades, there has been significant cost reduction, especially in the case of wind and solar power plants. Costs can be further reduced by liberalizing tariffs and improving investment conditions.

In the future, hydrogen is expected to play a significant role, similar to renewable energy today. While widespread transportation and trading of hydrogen are not yet feasible, the concept of localized production and consumption is gaining momentum. Producing hydrogen within our own country and leveraging it for diverse industrial applications appears to be a viable option.

Furthermore, the renewable energy sector is witnessing the emergence of innovative technologies. Rather than directly converting sunlight into electricity, certain projects are utilizing sunlight to heat and liquefy substances such as salt, thereby extracting and storing thermal energy for future utilization.

How do you envision the future of “Newcom” in the next 30 years?

After Mongolia transitioned to a market system three decades ago, Newcom made significant efforts to establish the necessary foundations for our country’s development. The current global landscape presents us with favorable circumstances to leverage the emerging opportunities in the high-tech industries, and advance our progress.

Having dedicated three decades to establishing the groundwork for high-tech development, Newcom is now entering a phase of intensive development. A clear and favorable legal environment is imperative for our progress. The successful implementation of projects such as Salkhit and Tsetsii has proven the realization of our ambitions. We are now focused on further developing our core business in renewable energy and expanding our presence to the region and Asia. Our ultimate goal is to make energy a formidable economic force and position it as a valuable export commodity.

We aim to contribute to the advancement of our country through the development of high-tech industries. By 2030, we have ambitious plans to establish ourselves as the leading company in our industry and region. Additionally, building on the success of the Mobicom project, we are initiating research and collaborations with partners to develop a digital business that can match the impact of Mobicom. Our goal is to export Mongolia’s intellectual capabilities to the global stage. By 2040, we envision expanding our operations not only within the region but also worldwide. Looking ahead to 2050, we are driven by the vision of diversifying our portfolio and venturing into new industries beyond our current scope of operations.

Do you believe that Newcom Group has made a significant contribution to the training of personnel and managers in the past 30 years?

At Newcom, we value our human resources and have consistently made investments in our personnel. As we strive for innovation, embrace new technologies, find innovative solutions, and explore alternative approaches, our employees are continuously engaged in learning. We prioritize the development of our human resources and have been dedicated to incorporating globally acclaimed skills and expertise. This guiding principle has guided us for the past three decades and will continue to shape our approach in the future.

Over the years, Newcom has partnered with various foreign and domestic directors and experts. At the management level, individuals who have held managerial positions have achieved remarkable success in their respective fields, with some venturing into entrepreneurship. It is inspiring that Newcom instills in its employees the belief that Mongolians can make valuable contributions to the development of both the country and the world.

You have lived and worked in many countries. How do you evaluate the strengths and weaknesses of Mongolian people?

Historically nomadic Mongolians possess certain weaknesses. They often struggle to unite and collaborate effectively, and their communication and planning skills are generally weak. However, these weaknesses can also present opportunities. Mongolians possess unique qualities and benefits that set them apart. During my time at Eznis, our Japanese director frequently emphasized this point. For instance, we were able to import two different types of new aircraft within a year, whereas it typically takes other countries’ airlines 5-6 years to import just one plane. Importing a brand-new aircraft is not a simple purchase; it involves solving numerous associated problems. This process includes managing equipment, maintenance, various training programs, contracts with international organizations, and document preparation. The process involves choosing, examining, and importing the aircraft, as well as establishing and maintaining collaboration with the Civil Aviation Authority (CAA) upon its arrival.

Despite our limited understanding of the process, our determination pushed us to proceed and ultimately make it happen. The Japanese director observed and experienced the challenges we faced and remarked that there is no task we cannot accomplish. Mongolians possess a quick problem-solving ability and fearlessness. Just like Mongolian sumo wrestlers who triumph at the edge of the sumo ring, Mongolians exhibit a similar mindset. Living harmoniously with nature in this harsh climate for thousands of years has endowed Mongolians with the capacity for independent thinking, mental flexibility, boldness, hard work, and the ability to undertake significant endeavors.

During my tenure as an aviation instructor in the United States, I was recognized as the top instructor. Initially, I predominantly taught foreign teachers and students, but later I also had domestic students, including those requiring additional attention. My approach as an instructor revolved around problem-solving. This perspective extends beyond my personal experience and reflects the belief in the potential of Mongolians to surpass perceived limitations and find ways to accomplish the seemingly impossible.

Source by: Mongolian Economy