How to Create Efficient, Reliable and Clean Electricity Markets: A Regulatory Design for Mongolia and Northeast Asia
Maidowski, Paul G.
2012
- Submitted in partial fulfillment of the degree Master of Arts in Law and Diplomacy at the Fletcher School of Law and Diplomacy. This paper develops a comprehensive proposal for how Mongolia's domestic power sector could be made more efficient, reliable and sustainable. The analysis is based on interviews in Ulaanbaatar. It reviews the literature on power sector reforms in small developing countries ... read moreand regional electricity markets. In a second step, a framework is proposed for a regional electricity market between Mongolia, Russia and China. In principle, this framework is applicable also to South Korea and Japan. The findings include that inadequate regulation has contributed to performance problems in every aspect of Mongolia's power sector, which remains a horizontally integrated monopoly. A lack of generation capacity was ignored for decades; as a result, supply is expected to fall critically short of demand for the coming 3 to 5 years. Mongolia possesses rich coal resources, but water scarcity, harmful emissions, high vulnerability to the effects of climate change, social constraints and the need for economic diversification will limit the future role of conventional technologies. Indeed, by exporting electricity from large thermal plants to China, Mongolia would "import" China's emissions and water use. In contrast, Mongolia's vast wind and solar resources could provide a large share of domestic electricity supply. They promise significant export potential and low long-term costs. A Northeast Asian electricity market might develop, based on economic and environmental benefits: China is interested in electricity imports from neighboring countries such as Mongolia and Russia in order to meet its carbon intensity and energy efficiency targets by 2020. First cross-border projects are being planned in Northeast Asia. Such regional electricity markets will likely develop in the future, based on large economies of scale and complementary peak demand patterns. Relevant examples are regional electricity markets in South East Europe, in the EU and Northern Africa (Desertec), and in the Greater Mekong Subre-gion. Due to Japan's high electricity prices, some even claim that it might be economically feasible to export electricity from wind, PV and CSP projects in Mongolia via Russia to Japan. However, numerous challenges let such a vision appear distant at best.read less
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