The Energy Regulatory Commission (ERC) held its annual report meeting for 2022, which was conducted online and attended by license holders and state-owned organizations. The purpose of the meeting was to present the budget performance and outcomes of the Energy sector in accordance with the Energy Law. A total of 170 representatives from license holder companies participated in the meeting.
In 2022, Mongolia's total electricity consumption reached 10.3 billion kWh, which increased 5.8% or 564.3 million kWh compared to 2021. Domestic production accounted for 79.1% or 8.18 billion kWh of the total consumption, while imports contributed 20.9% or 2.16 billion kWh. Renewable energy generation reached 748.9 million kWh, which is 9.2% of the domestic production. Thermal energy production also increased by 1.28 million Gcal or 8.5% to 16.3 million Gcal compared to the previous year.
The peak load /winter/ of the central region integrated power grid reached 1474 MW. However, the combined heat and power plants operated at full capacity without backup equipment, highlighting concerns about energy supply and sufficiency. These issues have become a challenge in recent years, as they are crucial for the country's security and sustainable development.
Considering various factors affecting the cost of energy, such as increased prices of spare parts and fuel, exchange rates, and changes in the consumer price index, tariffs for entities and industries were increased by 28% in 2022 in accordance with consumption levels, to ensure that the gradual increase in electricity tariffs had the least impact on small and medium enterprises. Specifically, the electricity price was raised by 14% for consumption below 5,000 kWh and by 28% for consumption above. This approach aimed consumers to control their electricity consumption and implement regulations for efficient energy utilization.
Furthermore, the period until the construction and operation of a new generation, and in the coming years, there is a need and requirement to compensate for the shortage of sources and to intensify the saving activities and to achieve results. To tackle these challenges and discuss problems, opportunities, and potential solutions, the Energy Regulatory Commission organized an industry-wide conference titled "Energy Sufficiency and Saving" in 2022.
As a result, comprehensive "Demand management" activities and plans were proposed and approved by the Minister of Energy. These activities include improving the legal framework for Energy Conservation Law, implementing regulations to reduce electricity consumption during winter peak load, organizing promotional activities to promote energy-saving habits among consumers and the public, and creating conditions to ensure consumption growth through energy saving.
Moving forward, the ERC is focused on implementing the following activities:
Incorporating incentive-based regulatory mechanisms into the "Methodology for setting electricity and heat tariffs."
- Establishing a system to calculate heat tariffs for license holders involved in heat distribution and provision, considering factors like their load, number of users, capacity, network, and equipment.
- Maximizing the use of the "E-license" system to ensure transparent and efficient regulation of licenses in compliance with the Law on Licenses
- Implementing the Single-Buyer Model this year to regulate the cash flow of thermal energy payments for heat distribution and supply license holders in Ulaanbaatar.
Eventually, to improve economic stability and energy efficiency, it is planned to create a tariff system for increasing household electricity bills, to introduce time of use electricity tariffs for household consumers, and to increase heat tariffs in a regional manner.
