1. DRAFT OF ENERGY CONSERVATION LAW OF MONGOLIA AND STUDY OF THE ELECTRICITY AND HEAT (DESIGNATED) CONSUMERS S. TSETSGEE Member of Working group in Energy Authority Ulaanbaatar 2012.05.16

2. Relevance energy efficiency and energy conservation:  Increasingly important topic from a social, economical and environmental perspective.  The working group in the Energy Authority drafted the Energy conservation Law for Mongolia with support from GIZ. The draft of Law was presented to the Ministry of Mineral Resources and Energy in 2011.

3. Economical justifications for an energy conservation law:  Support a sustainable economic development,  Promote energy efficiency and energy conservation,  Save money for consumers of energy,  By adopting the concept “Saved energy is a source of energy”, new business opportunities in the energy sector will be created  Develop an energy services market 3

4. Environmental justifications for an energy conservation law: - Climate change, - Emission reduction - СО 2 - Increase renewable energy penetration in energy system of Mongolia - Clean Development Management (CDM) - Bilateral Offset Credit Mechanism (BOCM) 4

5. Public and social justifications for an energy conservation law:  Integrated state policy on energy conservation,  Innovation to promote a know- how based economy,  Increase the number of employment opportunities,  Capacity building - arrange and organize training of personnel and specialists in the techniques for efficient use of energy and its conservation; 5

6. Specific characteristics of the energy conservation:  Consumer’s willingness and economical criteria are key factors for energy efficient investments  Various supportive policies and regulations including tax and rebate preferences  New business opportunities for experienced organizations and specialists 6

7. Opportunities to conserve energy The energy conservation is not aiming at limiting the consumption. Energy conservation means providing it efficiently.  Concept for the activities of all level of the institutional organizations and consumers the related with energy conservation  Using high technology and modern equipments to promote research and development in the field of energy conservation; 7

8. Implementation of the Energy Conservation Law  Advice of energy auditing,  Introduction of energy managers,  Energy conservation building codes;  To create integrated database for the annual report, information and promotion of the energy usage and its conservation. 8

9. Draft of Energy Conservation Act: Focusing on consumer innovation and voluntary work, and necessary power of State to enforce efficient use of energy and its conservation, the working team has considered principal elements in the draft of the Energy Conservation Law One of this expression is: '‘Determine and designate the consumers with high energy consumption and intensity''

10. Determination of the Designated Consumers: 10 Mongolian Integrated Power System : - Central Energy System, (793,4 МВт) - Eastern Energy System, (36 МВт) - Western Energy System, (12МВт) - Altai-Uliastai Energy System(11 МВт) Designated consumers include: - Companies that generate, transmit and distribute energy with a special license - End users of heat and electricity

11. Graphic of daily peak load in Central Energy System 11 Mongolian Integrated Power System : - Central Energy System, (793,4 МВт) - Eastern Energy System, (36 МВт) - Western Energy System, (12МВт) - Altai-Uliastai Energy System(11 МВт) Designated consumers include: - Companies that generate, transmit and distribute energy with a special license - End users of heat and electricity

12. The power plants in CES are using 15.14% (653.2 mil.KWh) of total generated electricity for their internal consumption. This value means that the plants are using 49,5 gm lignite coal for 1 kWh electricity generation, in other words they burnt 66406.5 t actual coal a year. If we are reducing internal consumption of Thermal Power Plant by only one unit (down to 14.14% or 43.19 mil.KWh), then we are saving 5114.5 t actual coal a year. Energy balance of the TPP in the CES in 2011: Parameter mil.KWh 125 833,8685 644,73 101 543,1266 194,1134 594,04 313 809,6 value mil.KWh 19 268,6144 859,0410 778,249 672,528 586,4653 164,7 percent % 15,31%21,13%13,24%18,66%21,24%15,14% mil.KWh 106 565,2540 785,72 690 764,9216 521,5106 007,63 660 644,9 GCal 164 102,01 847 839,03 128 831,0453 630,0521 674,06 116 076,0 electricity gr/kWh 591,30363,65305,05438,80315,59329,84 heat kg/GCal 192,60179,68174,40196,60184,79179,02 electricity t 63 014,8196 659,1820 817,893 489,033 454,61 207 435,4 heat t 31 607,7332 014,1545 653,089 205,096 398,11 094 877,9 electricity t heat t kCal/kg 3 454,03 479,03 295,43 645,04 085,43 406,3 t 105,3921,71 096,084,643,22 250,8 Plant efficiency % 21,20%37,80%40,34%28,00%40,48%37,91% Rate of the installed capacity % 71,90%57,60%65,57%63,30%58,30%62,0% Fossil fuel calorific value Heat distribution Electricity distribution Energy sale own consumption Fossil fuel consumption Coal consumption 191 492,01 067 594,7 Source: Energy Regulatory Authority ErdenetTotal Unit TPP-2TPP-3TPP-4Darkhan heavy oil consumption 4 733 040,1 Coal calorific value/ avarage 2 899 685,0351 877,8222 390,6

13. Transmission and distribution loss of CETCO in 2011 : Loss of transmission and distribution in the CETCO is 17.12% or 658.1 mil.KWh amount of electricity. If we are reducing loss of transmission and distribution in the CETCO by only one unit (down to 16.12% or 38.3 mil.KWh), then we are saving 25980.5 ton actual coal a year on the Thermal Power Plants.

14. The electricity worth 205.3 thousand kWh will be economized in case these consumers’ consumption is economized by 15%. Electricity consumers of the Central Energy System : Company Consumer Energy consumption thousand kWh 1 UB EDN15160 975,0 1972 669,0 102153 664,4 180115 849,0 11836471 727,2 12152974 884,7 2 EB EDN3774 102,8 14 454,7 46 506,6 116 805,9 442952 622,5 4448844 492,5 3 BN EDN6151 541,8 13 321,3 715 215,4 117 949,3 252635 286,3 2551213 314,0 4 DS EDN9242 738,8 311 454,8 1629 566,5 149 979,0 261357 929,6 2655351 668,7 5 Khuvsgul erchim suljee0- 0- 0- 32 302,1 13277 289,1 13309 591,2 6 Bayankhongor erchim suljee0- 0- 0- 1663,9 6925 869,4 6936 533,3 7 Nolgo0- 0- 0- 32 302,1 97 289,1 129 591,2 8 Erchim tugeekh suljee16 553,0 310 833,3 35 217,5 0- 57715,6 6423 319,4 9 Erdenet amidral0- 0- 0- 1599,5 4355 119,5 4365 719,0 10 UBTZ15 019,6 13 788,0 710 713,0 1711 698,9 162621 001,4 165252 220,8 Total351 340 931,0 28106 521,1 139220 883,4 241158 149,8 25550664 849,6 259932 491 334,9 5000,0 thousand kWh and above 3000.0-5000.0 thousand kWh 1000.0-3000.0 thousand kWh 500.0-1000.0 thousand kWh 500.0 ???.???? thousand kWh Source: Energy Regulatory Authority

15. Thermal energy consumers of the Central Heating System in UB:

16. It is difficult to measure consumers’ actual consumption due to the insufficient measurement of consumption of thermal energy. Therefore we consider that first of all the consumers that have thermal energy consumption above 1500GCal and project load above 2.0 Cal/h annually, should be selected as the “designated consumer”. Classification of organizations that use centralized thermal energy in Ulaanbaatar city :

17. Summarizing the results of energy conservation: 17

18. THANK YOU FOR THE ATTENTION