Capturing the Sun in the Land of the Blue Sky Providing Portable Solar Power to Nomadic Herders in Mongolia Migara S. Jayawardena, A. Salvador Rivera and Chrisantha Ratnayake DECEMBER 2012 72683 SUMMARY T he Renewable Energy and Rural Electricity Access Project (REAP) helped the Government of Mongolia (GoM) successfully complete its ambitious, National 100,000 Solar Ger Electrification Program. The Pro- gram provided a vast, dispersed community of over half a million nomadic herders with access to modern forms of electricity through portable solar home systems (SHS). The REAP was funded by the World Bank includ- ing grants from the International Development Association (IDA), Global Environment Facility (GEF) and the Government of the Netherlands. Mongolia is a geographically vast coun- time, herders had limited or no access try covering over 600,000 square miles to modern electricity services. but has a relatively small population of In 2000, the Government of Mongo- less than three million people. About lia (GOM) began the National 100,000 1.2 million of Mongolia’s citizens live in Solar Ger Electrification Program, an the urban capital of Ulaanbaatar, while ambitious initiative to improve the lives the remaining population is widely of about half a million herders by pro- dispersed throughout the country with viding modern electricity services. The a large number residing in sparsely program provided photovoltaic solar populated, rural areas. A quarter of the home systems (SHS) that were portable population is composed of herders who in design making the systems adaptable lead a nomadic existence. This nomadic to the nomadic lifestyle of herders and lifestyle is a legacy of thousands of years complementing their traditional way of of traditional culture and is dependent life. Through grants from several donor upon a harmonious co-existence with nations, the GoM had provided over nature. The per capita income in Mon- 30,000 herder families with SHSs by The findings, interpretations, and conclusions golia at the start of the millennium was 2005. Despite this progress, the herder expressed in this paper are entirely those of about US$470 per year, with income electrification effort was beginning to the authors and should not be attributed in amongst herders even lower. At the stagnate. The GoM recognized that any manner to the World Bank Group, to members of its’ board of executive direc- tors or the countries they represent, or the • Migara S. Jayawardena is a Senior Energy Specialist at the World Bank and was the Government of Mongolia. Task Team Leader of the REAP from 2008–12. • A. Salvador Rivera is a Lead Energy Specialist at the World Bank and was a previous Task Team Leader of REAP from 2006–08. • Chrisantha Ratnayake is a power engineer consultant who worked on REAP and former World Bank staff. THE WORLD BANK 2 considerably more effort was necessary under REAP. The SSCs provide critical buy-down subsidy. Although the pri- not only to keep the program on track after-sales care and maintenance within vate sector was an important element but to scale-up implementation in order reasonable proximity to herders—ser- that complemented the GoM Soum to achieve the National 100,000 Solar vices that would otherwise require costly Administration Network, the relatively Ger Electrification Program target. travel to the capital in Ulaanbaatar. The small size of the Mongolian market In 2006, the World Bank agreed to availability of such services dispersed and the limited financing capacity of assist the GoM to scale-up its efforts to across many rural areas is vital for maxi- the private dealers made it difficult to electrify nomadic herders through REAP. mizing and sustaining the benefits of achieve sufficient economies of scale. The aim of REAP was to add 50,000 the SHS program. Therefore, the GoM through REAP, SHSs to the existing total so that the The SSCs also played a crucial role competitively procured large batches of National 100,000 Solar Ger Program that helped address a key challenge to SHSs to secure “bulk� prices that were could reach around 80,000 systems in providing rural electricity access in Mon- then sold through the public distribu- total. The World Bank was able to bring golia. Successful herder electrification tion networks of Soum Administrators to this effort its experience with suc- was predicated on the development of and privately owned SSCs—forming a cessful rural electrification initiatives in the widest possible sales distribution unique public-private partnership in other countries to help redesign some network that could reach the widely the supply of SHSs in Mongolia. The key aspects of the program as well as dispersed population in Mongolia’s vast lower costs that resulted from the bulk adapt new features to accommodate landscape. The 50 SSCs, with at least procurement were passed through to challenges unique to Mongolia. one in each of Mongolia’s 21 provinces/ the benefit of the herders. Specifically, the REAP included aimags, served as an important conduit Through considerable efforts of the a cost sharing mechanism with the for promoting and selling SHSs through- GoM and all others involved, REAP has herders that expanded the program for out the country. The SSCs, which are pri- exceeded its original targets by almost maximum impact. Under this arrange- vately operated, were selected, trained, thirty five percent, and has helped ment, the herders had to purchase the and certified under REAP to ensure they the GoM successfully complete the SHSs, but given their limited income, maintain adequate qualifications and National 100,000 Solar Ger Electrifica- the project provided a subsidy to cover knowledge to service the SHS industry tion Program by 2012. As a result, more roughly half of the cost of the systems, in Mongolia. Most SSCs sell the SHSs than half a million people covering making them more affordable. A gener- bundled together with other consumer between 60–70 percent of Mongolia’s ous grant provided by the Government electronics and appliances that could nomadic herder men, women, and of the Netherlands augmented GoM be used by herders with electricity. As children, now have access to modern funds, helping to finance the initial a result, the project helped create new electricity that enriches their lives while procurement of SHSs and to provide business opportunities and commercial preserving their cultural traditions. Of the buy-down subsidy. The recovered markets that previously did not exist. course, there are still some 200–300 funds were in turn used to cover the REAP also continued to utilize the exist- thousand of the herder population costs of additional systems which fur- ing GoM Soum Administrative Network that still lack access to electricity, so ther helped scale-up the implementa- that was organizationally far reaching. there is still much work to be done. The tion of the National 100,000 Solar Ger SSCs often partnered with one of 342 hope, however, is that the systems and Program. The equipment sold under village/soum administrations to further institutions developed under REAP will REAP were also inspected for quality extend their reach to herders located continue this effort of bringing electric- and certified to meet stringent stan- in even more remote areas. ity to nomadic herders throughout the dards enabling herders to purchase Village/Soum Administrators would country. The GoM’s National Renew- them with confidence. An extensive accept orders and then help distribute able Energy Plan (2005–20) is aiming awareness campaign assured herders SHSs to herders upon receipt of the for universal connectivity by 2020. As could make an informed choice in the systems. Under REAP, 10 of the SSCs Mongolia currently experiences an purchase and maintenance of a SHS. were also certified as private dealers, economic boom from the exploitation Each system included a warranty in who would self-finance the wholesale of its mineral wealth, efforts such as the event a defect was found following procurement of SHSs directly from the herder electrification can help ensure the sale. The SHS could be returned market in line with established stan- that this important community, which for a replacement at one of 50 Sales dards. These certified, private dealers connects the country to its rich history, and Service Centers (SSCs) that were would then sell the systems at a discount can maintain their way of life without established throughout the country based on the herder’s eligibility for the being left behind. 3 Background rugged and nomadic way of life. It is said that the Mongolian herder survives Mongolia is a vast, landlocked country in the winter and thrives in the sum- covering an area of over 600,000 square mer. In Mongolia, winters are harsh miles. Despite its geographical size, with temperatures dropping to as low Mongolia’s population is only about as –30 degrees Celsius, and the cold 2.8 million people. Of this popula- weather lasts for most of the year. As tion, approximately 1.2 million people a result, the land is barren most of the reside in the capital, Ulaanbaatar with time with scarce vegetation. Therefore, another estimated 600,000 people liv- herders have little choice but to roam ing in other small urban centers. The the vast rural countryside in search of remaining population is geographically pastures where livestock can graze. dispersed over large swathes of rural Herders frequently relocate with all of areas across Mongolia with a small their belongings including the portable proportion of them living in village tents they use for housing, commonly settlements or hamlets called soums. referred to as Gers, as they go in search A unique feature in Mongolia is that of pastureland. However, they are in about 700,000–800,000 people living regular contact with the local villages Light powered by solar electricity. in rural areas, or about a quarter of the or soums to which they are registered Photo credit: Stephan Bachenheimer/World Bank total population, are nomadic herders. for conveniences including restocking Mongolian herders lead a lifestyle supplies, community activities, adminis- that is a legacy of ancestral genera- trative matters etc. Given their nomadic tions and traditional culture. This life- lifestyles, herders do not have access to live a life of self sufficiency. Most of style is epitomized by a harmonious basic infrastructure and other services, their energy needs are met through the co-existence with nature. Yet it is a including electricity; the herders largely burning of coal, firewood, or dung, and FIGURE 1 Map of Mongolia RUSSIAN FEDERATION 0 100 200 300 Kilometers Lake Baikal 0 50 100 150 200 Miles Ulaangom Sühbaatar Olgii Mörön Jargalant Darhan CHINA (Khovd) Erdenet Bulgan Uliastai H ULAANBAATAR Kherlen an A ga (Choibalsan) yn Erdenebulgan Zuunmod Öndörhaan l (Tsetserleg) M t ts Baruun-Urt Esonbulag a . (Altai) Arvaiheer Choir y Bayankhongor Mandalgovi CHINA M o Sainshand u n t a Dalandzadgad i r t MONGOLIA n s e IBRD 39711 DECEMBER 2012 s D e This map was produced by the Map Design Unit of The World Bank. i The boundaries, colors, denominations and any other information shown on o b this map do not imply, on the part of The World Bank Group, any judgment G on the legal status of any territory, or any endorsement or acceptance of such boundaries. Source: The World Bank. 4 when available, kerosene and candles, are not left behind in country’s rapid traditional way of life. Despite their for heat and lighting. economic expansion. This must be done nomadic, rural lifestyle, by utilizing Life in the rest of Mongolia, such as in part by ensuring they have access the portable SHSs, herders can realize the capital, Ulaanbaatar, stands in stark to modern amenities and services that the many benefits of electricity; from contrast to the herder’s rural existence. would improve their quality of life. lighting to connection to an extended The Mongolian economy, which had outside world through radio, television a Gross Domestic Product (GDP) of NATIONAL 100,000 and, in increasing instances, to greater about US$1.1 billion at the start of the SOLAR GER communication using mobile phones Millennium, has recently experienced ELECTRiFICATION through the growing cellular network rapid growth.1 Buoyed by a large min- PROGRAM in the country. ing boom resulting from international The National 100,000 Solar Ger demand for the country’s vast mineral In 2000, the Government of Mongolia Electrification Program got off to an wealth, Mongolia experienced an eco- (GoM) embarked on an ambitious pro- initial slow start, but with the assistance nomic growth rate of 17.2 percent in gram to provide modern electricity to of several bilateral donor countries, the 2011—one of the fastest in the world. its large herder population which could program picked up some pace between Sustained economic growth swelled be adapted to their nomadic way of 2002 and 2006 to successfully distribute real GDP to over US$8.5 billion by life. The goal of the National 100,000 nearly 33,000 SHSs to herder families, 2011 with per capita income at around Solar Ger Electrification Program (The as illustrated in Figure 2. These SHSs US$3,000. However, the benefits of the Program) was to electrify over 500,000 were funded through bilateral grants growing economy do not always reach herders and their families. Mongolia is and distributed to remote locations the large proportion of the population often referred to as the “Land of the through the existing GoM network of that make up the rural communities and Blue Sky� due to its clear skies that Soum Administrators. However, since traditional herders. Ulaanbataar, which provide an unusually high number of the costs recovered from herders were is characterized by the typical hustle brightly sunlit days in a year, even dur- not always leveraged to further expand and bustle of a large urban center, is ing winter months. It is estimated that the program, the pace of implementa- distinctly different from the serene, over 2/3 of the country receive high tion was beginning to stagnate as the sparsely populated, rural environment levels of incoming solar radiation in bilateral grant funds depleted. The where economic activity is scattered the range of 5.5–6.0 kWh/m2 per day.2 Soum Administration network needed across wide distances. Therefore, it is a The average number of sunny days in to be complemented with additional development imperative that these rural Mongolia exceeds over 250 days a year. channels to scale-up implementation communities and herder populations Therefore, harnessing solar energy is as well as to progressively reach more a useful way to provide electricity to remote herders. Aftercare services herders that is also a clean and renew- within reasonable proximity to herders able source making it more sustainable were also significantly lacking, bringing Solar power providing lighting inside a over time. Providing portable solar into question the long-term sustain- Mongolian ger. ability of the program.3 The GoM was home systems (SHS) is a practical way Photo credit: Stephan Bachenheimer/World Bank determined to scale-up implementa- of technology adapted to meet the lifestyle needs of a nomadic herder tion of the National 100,000 Solar Ger that frequently relocates. Herders can Electrification Program, and requested quickly dismantle the portable SHS at assistance from the World Bank. The the same time they breakdown their objective was to have the World Bank Gers and then re-install them once transfer global knowledge from suc- they reach the next destination where cessful rural electrification efforts in their livestock will graze. These por- other countries while accommodating table SHSs help provide electricity to needs specific to the challenging cir- herders while helping preserve their cumstances in Mongolia. 1 The economic information presented in this paragraph is based on World Bank data. 2 Mongolian Institute for Sustainable Economic Development. 3 Adiyabat et al, A Study on the Evaluation of Solar Home System Viewed by Users – A Case of Nomadic Families in Mongolia, IIEE Renewable Energy, 2006. 5 administrators. Since herder incomes FIGURE 2 Implementation of the National 100,000 were limited, affordability was a key Solar Ger Electrification Program challenge that needed to be addressed. Therefore, the systems were either pro- 110,000 REAP vided free of charge or sold at a lower 100,000 begins 100,146 90,000 price than it would have cost had the 80,000 78,330 SHSs been purchased through the mar- # SHS Delivered 70,000 67,873 ket. Where costs were recovered, these 60,000 funds were absorbed into the GoM 50,000 40,000 budget instead of being re-deployed 30,000 32,922 towards purchasing additional SHSs. 20,000 In other words, the recovered funds 10,000 1,132 were not effectively leveraged to further 0 expand sales. Although those who were 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 fortunate to receive the subsidy ben- Year efited from the SHS purchases, a large Source: Ministry of Mineral Resources and Energy, Mongolia. number of herders were left without access to electricity due to limitations in available funding. As the bilateral RENEWABLE would rely on lessons from successful donor funds depleted, implementation ENERGY AND RURAL international experience from rural of the program began to stagnate. The ELECTRICITY ACCESS electrification schemes in other coun- National 100,000 Solar Ger Electrifica- tries such as China,5 Bangladesh,6 and PROJECT tion Program, while benefitting many, Sri Lanka,7 that have been supported was falling short of its goals. The Renewable Energy and Rural by the World Bank. The REAP was An important feature under Electricity Access Project (REAP) was approved by the World Bank’s board REAP was to craft a cost recovery designed to help scale-up the imple- of executive directors on December 19, scheme commensurate with most mentation of the National 100,000 Solar 2006. It helped scale-up the implemen- herder incomes, and ensure that the Ger Electrification Program, among tation of the National 100,000 Solar Ger collected funds were re-mobilized other goals.4 In particular, the World Electrification Program and enhanced towards further expanding the sale Bank would assist the GoM to redesign its impact, as illustrated in Figure 2. of additional SHSs to more herder certain aspects of the National 100,000 families. The Program continued to Solar Ger Electrification Program to Leveraging Herder recognize that affordability was a major achieve its goals in a timely and sus- Payments for Maximum challenge, and that some cost buy- tainable manner. More specifically, Impact down or discount was necessary in the World Bank would help the GoM Prior to REAP, the SHSs that were pro- order to expand utilization of SHSs leverage available funding to maximize vided through the National 100,000 among herders. The objective was scale, enhance the distribution network Solar Ger Electrification Program were to achieve an appropriate balance to reach herders in more remote and mostly funded through grants from between cost recovery and affordability isolated areas, and ensure that the bilateral donors. The systems were that met the economic circumstances benefits of the program are sustained then sold to herders mainly through of the herder population in Mongolia. over time. The design enhancements the GoM’s network of village/soum Under REAP, the National 100,000 Solar 4 The REAP also helped fund improvements in soum electrification including the rehabilitation of mini-grids and investments in Renewable Energy Technology (RET) hybrid systems to power many of them; and strengthen the institutional capacity within Mongolia to implement renewable energy projects and policies. 5 Renewable Energy Development Project (REDP)financed by the World Bank in China. 6 Rural Electrification and Renewable Energy Development Project (RERED) series funded by the World Bank in Bangladesh. 7 Energy Services Delivery Project and Rural Electrification and Renewable Energy Development Project in Sri Lanka funded by the World Bank. 6 FIGURE 3 Scaling-Up and Expanding Reach of the Herder Electrification Program RUSSIAN FEDERATION 0 100 200 300 Kilometers HÖVSGÖL Lake Baikal 0 50 100 150 200 Miles UVS BAYAN- ÖLGII DARHAN- UUL ORHON CHINA SELENGE DORNOD ZAVKHAN BULGAN ARHANGAI ULAANBAATAR KHOVD KHENTII TÖV GOVI-ALTAI ÖVÖR- SÜKBAATAR KHANGAI GOVISÜMBER DUNDGOV' CHINA BAYAN- KHONGOR DORNOGOV' Legend—SHS Delivered: = 5,000 units under REAP ÖMNÖGOV' IBRD 39712 DECEMBER 2012 This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on = 5,000 units under this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of 100,000 Solar Ger such boundaries. Electrification Program Source: Ministry of Mineral Resources and Energy, Mongolia. Ger Electrification Program would for the subsidy, the World Bank facili- the country, as illustrated in Figure 3. provide a fixed subsidy set at US$160 tated a grant of US$4 million from It was more than double the almost per system for units with a capacity the Government of the Netherlands,8 33,000 systems sold previously from of 50 watts or more and US$80 per which augmented the GoM funds that 2000 to 2005. It is not a coincidence systems that are smaller in capacity. were allocated in the national budget that by leveraging approximately half The subsidies covered approximately for the same purpose.9 The remaining the costs, the Program doubled its’ half the cost of an SHS. To help pay costs of SHSs under REAP would be expansion! It is common practice in paid by the herders. However, the internationally successful rural electri- recovered funds were now channelled fication programs to recover costs to back to the Program to cover the the most reasonable extent possible. Mongolian ger with a cost of SHSs. The result was a signifi- Not only does it enable a project to Solar Home System panel. cant scale-up in the number of SHSs maximize the impact of often limited Photo credit: The United Nations/ sold, as illustrated in Figure 2. Under funds, but there is evidence of greater Eskinder Debebe REAP, over 67,000 SHSs were sold as “ownership� and “value� placed on a part of the National 100,000 Solar the equipment by rural customers. Ger Electrification Program reaching This can lead to efforts at better care herders in every province/aimag in for equipment, including after-sales 8 The Government of the Netherlands provided a total grant of $6 million through the World Bank for REAP. $4 million was allocated towards funding the SHS subsidy while the remaining $2 million contributed to the development of Renewable Energy Technology (RET) systems in village level off-grid small distribution systems. 9 The subsidy funds were further augmented later with a reallocation of $290,560 from the International Development Association (IDA) grant in REAP to meet increasing demand for SHSs amongst herders. 7 servicing, leading to more sustainable the country. This Soum Administration benefits for the electrification program. Network proved to be instrumental in kick-starting the National 100,000 Solar Expanded Rural Reach of Ger Electrification Program. Although Electricity Services herders roam the country side and Many rural communities in Mongolia do not stay in one location, they are are in remote and isolated areas in still associated 12 with a soum near what is commonly referred to as the which they usually camp during the “countryside�. Often, these commu- short summer months. This existing nities reside in sparsely populated institutional arrangement, established and distant areas, which is a driving in every soum, is a useful modality to factor in why it can be uneconomical reach distant herders. It is common for A herder inspecting a solar home system before purchasing at a Sales to connect them through conventional herders to visit Soum Administrators and Service Center. electricity grids. Therefore, many small when they are camped near the village Photo credit: Stephan Bachenheimer/World Bank rural villages or hamlets (soums)10 rely to deal with administrative and other on isolated mini-grids with its own small matters. The National 100,000 Solar power generation source to provide Ger Electrification Program utilized electricity to its residents, often for only the Soum Administrative Network to few hours a day.11 Electrifying nomadic promote SHSs by raising their aware- ness and physically distributing the Service Centers (SSCs) across the coun- herders is an even bigger challenge systems to herders in their jurisdiction. try to complement the soum network since they are mobile and roam far Although Soum Administrators were not and expand the reach of the National beyond remote soums into further specialized generally in energy related 100,000 Solar Ger Electrification Pro- isolated areas in search of land for graz- matters, and in particular photovoltaic gram. The SSCs were existing private ing. Although portable SHSs present technology, coverage increased as they entities throughout Mongolia that were an electrification solution adapted to understood the importance of pro- selected through local advertisements, a mobile population, many herders are moting this national effort that would and then trained and certified by the difficult to reach given their migratory benefit many of their constituents. REAP Project Implementation Unit lifestyle. Ultimately, to provide modern Given its success, the REAP retained (PIU). They were local businesses that electrification solutions to nomadic the Soum Administration Network as were mostly engaged in electrical and herders, a far reaching network was a key distribution channel, and looked electronic related services in rural areas needed to inform them about portable to build upon it to further scale-up in which they operated. Many SSCs electrification options, take orders, process payments, distribute the sys- coverage and reach. tems, and to train them to install the units in their mobile dwellings. It is Network of Private Sales and Service also important to familiarize herders Centers (SSCs) : Prior to REAP, the with the operation of SHSs, and make National 100,000 Solar Ger Electrifi- after sales repairs and maintenance as cation Program relied solely on the available as possible. GoM’s network of soum administra- tors. However, in order to scale-up the Soum Administrator Network: The program and reach more herders, the GoM already had a network of admin- REAP was designed to also enlist the istrators that were based in each of support of the private sector. REAP set the 342 soums scattered throughout out to establish a network of Sales and 10 A soum is a rural administrative area that is comparable to a small village usually Owner of a private Sales and Service made up of between 150 to 200 dwellings/residences. Centers established under REAP 11 A separate component in REAP helped rehabilitate a number of mini-grids and install showing his equipment. Renewable Energy Technology (RET) systems in rural soums. Photo credit: Migara Jayawardena 12 Mongolian herders are required to formally register with a Soum Administration based on their association. 8 found it enterprising to sell SHS and such transactions would require a could self-finance the purchase of provide electricity to herders as it cre- costly trip to the capital in Ulaanbataar, SHSs. They could then proceed to ated a substantial market for associated which, for most herders, would be reach herder populations without consumer electronics and appliances. too far and unaffordable. Despite this access to electricity in remote areas As a part of the REAP, 50 SSCs were wide network of SSCs, there are some in order to sell the systems. Herders established throughout Mongolia with herders that are still too remote given purchasing SHSs from private dealers at least one in each of the twenty one the geographic scale of Mongolia. In received the same subsidy of US$80/ provinces/aimags in the country, as such cases, many SSCs work with Soum US$160 per unit that was extended illustrated in Figure 4. The number of Administrators to extend their reach. to systems sold through the GoM’s SSCs in a given province reflected its The Soum Administration Network Soum Administration Network and market size for SHSs. For example, due is used to raise herder awareness, other SSCs. In the absence of the to the relatively small herder population take orders, and distribute systems subsidy, sales by private dealers would in Orhon province/aimag, it has one upon payments. The SSCs serve as have been constrained due to the SSC while a more populated province/ a distributional hub using the Soum limited income of most herders and aimag such as Arhangai has four. This Administrators as an extension of their the resulting lack of affordability; and extensive network of SSCs proved to business enterprise to help them reach uncompetitive compared with subsi- be instrumental in connecting with distant herders. It is a public-private dized SHSs sold through other outlets. herders who were potential customers partnership that has been highly effec- Administratively, dealers could collect for SSCs and selling much of REAP’s tive in widening the coverage of the the subsidy that they passed on to bulk-procured SHSs. network for delivering SHSs under the herders through the discounted sales For many herders, a sales outlet National 100,000 Solar Ger Electrifica- price, from the GoM upon confirmation with knowledgeable and well-trained tion Program. of sale. However, private SHS dealer staff was within proximity. Herders only Under REAP, 10 of the SSCs were markets in rural Mongolia were at an needed to travel a relatively small dis- also certified as private SHS dealers. embryonic stage. Therefore, the aim tance to the nearest SSC to purchase It was envisaged that small private was to initially pilot the development SHSs or get one repaired. Previously, providers with sufficient incentives of a private dealer network that would FIGURE 4 Extensive Network of Sales and Service Centers (SSCs) Network RUSSIAN FEDERATION 0 100 200 300 Kilometers Lake Baikal 0 50 100 150 200 Miles UVS HÖVSGÖL BAYAN- DARHAN- ÖLGII UUL ORHON CHINA SELENGE ZAVKHAN BULGAN DORNOD ARHANGAI ULAANBAATAR KHOVD TÖV KHENTII BAYAN- ÖVÖR- SÜKBAATAR GOVI-ALTAI KHONGOR KHANGAI GOVISÜMBER DUNDGOV' CHINA DORNOGOV' ÖMNÖGOV' IBRD 39713 DECEMBER 2012 = Sales and This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on Service Centers this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Source: Ministry of Mineral Resources and Energy, Mongolia. 9 complement the existing sales of SHSs in order to enhance the impact of the that were procured and financed by National 100,000 Solar Ger Electrifica- the GoM. Expansion would depend tion Program. on the capacity and speed at which the private market could grow. The ten Certification of Quality Standards: It is private dealers certified under REAP common global practice, when intro- proved to be a useful complement to ducing technologies such as photovol- the Soum Administration Network and taic SHSs for electrification programs, other SSCs, since these companies to incorporate some mechanism to specialized in the technology and ensure the quality of the products were willing to pre-finance their SHSs being distributed. In many remote and inventory until the final sale to herders. rural areas in Mongolia, herders have Herder transporting a newly purchased solar home system to his ger. However, private dealers’ capacity to little access to information that would Photo credit: Stephan Bachenheimer/World Bank finance was limited, leading to the enable them to differentiate the qual- purchase of SHSs from manufactur- ity and reliability of various SHSs that ers in relatively small volumes. The may be sold in the market. The nascent limited size of the wholesale purchases state of the market for SHSs means prevented many private dealers from that there is little historical informa- taking advantage of economies of tion related to the past performance scale and lower prices. Bulk purchases of different products that consumers by the GoM proved to be more effec- can rely on to make informed pur- tive at securing the most competitive chases. The information that is easily pricing, which was important given available to herders is asymmetric. that affordability of SHS for herders Therefore, the SHS equipment sold is a key consideration. through REAP were required to meet The expansive distribution net- internationally recognized technical work of private dealers, SSCs, and standards and were rigorously tested Soum Administrators together with for performance. Bulk purchases were the support of the GoM formed public- tested at the manufacturer as well as Herders assembling a ger along with private partnerships that proved to be upon receipt. Certified private dealers solar home system. highly successful in serving herders in were also required to maintain high Photo credit: Stephan Bachenheimer/World Bank even the most remote areas in Mon- quality standards and confirm compli- golia. This was critical because the ance by subjecting equipment to tests success of the National 100,000 Solar at a project laboratory. All systems sold Ger Electrification Program depended through the project also included a critically upon the availability of the limited warranty. As a result, herders, widest possible distribution network for who spend about an entire month of maximum reach. Utilizing an expanded income to purchase SHSs, can buy network of public and private chan- systems sold through the REAP with nels, REAP was able to distribute over confidence. 67,000 SHSs, making a vital contribution that helped achieve the target of the After-Sales Care: Another key aspect National 100,000 Solar Ger Electrifica- of sustaining the benefits of SHS’s is tion Program. to make after-sales care and services readily available and affordable. Over Ensuring Quality and time, like most electronic equipment, Reliability SHSs require care and maintenance. Battery and controller for solar home system. REAP introduced several other mea- Servicing the SHS module, repairing Photo credit: Migara Jayawardena sures that successfully reflected tried or replacing the controllers, or replac- and tested international experience ing batteries are common after-sales 10 at least one SSC in each province/ achieve the target established in the aimag, herders have convenient access National 100,000 Solar Ger Electrifica- within reasonable distances when SHSs tion Program. require maintenance and repairs. It maximizes the benefits of the SHSs sold IMPACTS OF HERDER through the National 100,000 Solar Ger ELECTRIFICATION Electrification Program and beyond. PROGRAM REAPing Results The National 100,000 Solar Ger Electri- The changes introduced by REAP to the fication Program successfully achieved design of the National 100,000 Solar its goal in 2012. Through the program, Ger Electrification Program contrib- the GoM distributed 100,146 SHSs, A ger with solar home system and satellite dish. uted to scaling-up its implementation providing modern electricity services and meeting its targets. Commencing to over half a million herders and their Photo credit: Migara Jayawardena at the end of 2006, REAP was origi- families. It reached herders in all twenty nally designed to add 50,000 SHSs one provinces/aimags in Mongolia to the approximately 33,000 systems covering 342 villages/soums; and in that were already distributed by the Ulaanbataar, as illustrated in Figure services without which the systems GoM’s program. The remaining 17,000 5. Based on the national statistics for could become inoperable. Prior to SHSs to achieve the national target of 2010, the National 100,000 Solar Ger REAP, repairing SHSs would usually 100,000 SHSs were expected to be Electrification Program has connected require a trip to the capital in Ulaan- implemented by the private dealers an estimated seventy four percent of baatar, which, as stated previously, is and SSCs on an ongoing basis following Mongolia’s herder population. Very few financially untenable for many herders. the completion of REAP. Instead, due herders had access to electricity prior to However, the SSCs that were estab- to an aggressive effort by the GoM to the GoM initiative in 2000. It is common lished under REAP are fully trained scale-up, REAP exceeded the project now to see solar (photovoltaic) panels and certified to perform these basic target by almost thirty five percent by outside most herder dwellings/gers maintenance and repair services. With selling over 67,000 systems; and helped when travelling through the Mongolian FIGURE 5 Distribution of SHSs by Province/Aimag Name of Province/ # of soums Total SHS Name of Province/ # of soums Total SHS Aimag reached sold Aimag reached sold 1 Arkhangai 19 8,323 12 Orkhon 3 512 2 Bayankhongor 20 7,645 13 Umnugobi 17 3,512 3 Bayan-Ulgii 14 6,398 14 Uvurkhangai 19 6,757 4 Bulgan 16 4,729 15 Selenge 17 2,658 5 Govi-Altai 20 7,722 16 Sukhbaatar 13 3,824 6 Govisumber 3 234 17 Tuv 26 4,031 7 Darkhan 4 434 18 Khovd 18 6,658 8 Dornod 15 2,067 19 Khubsgul 24 11,744 9 Dornogobi 13 1,336 20 Khentii 19 3,617 10 Dundgobi 15 3,818 21 Uvs 15 5,664 11 Zavkhan 24 7,296 22 Ulaanbaatar 8 1,167 Total 342 100,146 Source: Ministry of Mineral Resources and Energy, Mongolia. 11 countryside. As a result, many herders cellular phones, amongst other items. It are experiencing an improvement to is a market that would not exist in rural their quality of life. Herders with SHSs Mongolia at the current scale without now use electricity for lighting instead the availability of electricity for these of sub-optimal options such as kero- herders. There is evidence that these sene or candles. Since solar power is consumer electronic products are also a clean and renewable energy source, improving the business prospects for it presents an environmentally friendly herders. Radios and televisions, which option for meeting herder electrification enable herders to stay connected to needs.13 The availability of electric- the “outside world� is serving as a ity is also providing herders with an conduit for information. It has become opportunity to listen to radio as well an important medium for obtaining as view television using satellite dishes. weather and other market informa- There is also increasing penetration of tion. Weather reports enable herders A herder family gathering under the cellular phones amongst14 the herder to navigate and adapt to harsh and lights in their ger. population, made possible due to the changing weather conditions such as Photo credit: The United Nations/Eskinder Debebe availability of electricity for charging heavy rains, dust storms and extreme the equipment. The proliferation of winters that may be exacerbated due technology in rural areas is reducing to impacts of climate change. Such herders’ isolation and connecting them information is critical for better livestock to a wider world. management that lead to enhanced towards advancing income-generating The National 100,000 Solar Ger security and improved livelihoods for economic activities in rural Mongolia. Electrification Program is also stimulat- herders. Even other World Bank proj- As rural incomes grow, there is evidence ing economic activity. There is greater ects15 that are designed to improve that there is increasing demand from private participation in the distribution rural livelihoods are relying on televi- herders for SHSs with higher (wattage) and sale of SHSs in Mongolia as a result sions, for example, to communicate capacity for use with additional devices of the certified private dealers and to herders about opportunities for and equipment such as refrigerators. network of SSCs that were established insuring against livestock losses due As Mongolia’s mineral resources drive under REAP. It has expanded what was to inclement weather. There are also its economic growth at a breathtaking initially a nascent market in rural areas. increasing instances of cellular tele- pace, the various efforts to support However, a much larger effect is the phones being used to arrange business development in rural areas, particu- economic opportunities that are cre- transactions, for example, for the sale larly for nomadic herders, becomes ated due to the increase in demand of cashmere during the season—an increasingly important. It is one way to from herders for consumer electronics. important source of income for many ensure that these traditional cultures The availability of electricity has created herders. Although a primary objec- are not left behind in the economic a vibrant market of over half a million tive of the electrification effort was to boom, and that modern amenities herders for purchasing light bulbs, directly improve the quality of life for can be adapted to meet the needs of radios, satellite dishes, televisions, and herders, the SHSs are also contributing a herder’s way of life. 13 In addition to its local environmental impact, the SHS distributed through the National 100,000 Solar Ger Electrification Program are estimated to help avoid 12,498 tonnes of carbon dioxide (CO2) annually making a modest contribution to benefit global climate change. 14 The Information and Communication Infrastructure Development project supported by the World Bank is increasing cellular coverage in Mongolia, including in rural areas, made possible due to the increasing availability of electricity. 15 Index Based Livestock Insurance Project that is funded by the World Bank. The dissemination of the results of the Renewable Energy and Rural Electricity Access Project (REAP), including this paper, is made possible due to financial support from the Asia Sustainable and Alternative Energy Program (ASTAE), which is a multi-donor trust fund program administered by the World Bank. ASTAE also funded the production of an accompanying video documentary that provides a visual illustration of the impact of REAP and its contribution to the Government of Mongolia’s National 100,000 Solar Ger Electrification Program. Previously, ASTAE funds played an important role in providing technical assistance to support the implementation of REAP during its inception. THE WORLD BANK