IFC Invests in Ulaanbaatar’s Pioneering Municipal Bond to Support Mongolia’s Energy Transition

Ulaanbaatar, Mongolia, January 23, 2025—The Governor’s Office of the Capital City of Mongolia (MUB) has successfully issued its first over-the-counter (OTC) market bond through a private placement to the International Finance Corporation (IFC).  The proceeds will fund a new 50-megawatt Battery Energy Storage System (BESS) in Baganuur District, enhancing Mongolia's power supply reliability and supporting renewable energy integration.

This five-year bond marks the first non-sovereign guaranteed municipal bond to a foreign investor in Mongolia, freeing up valuable public funds and establishing a new asset class for attracting investments in sustainable infrastructure. Once operational, the BESS will provide uninterrupted electricity for up to four hours daily, benefiting 25,000 households. With nearly half of Mongolia’s population residing in Ulaanbaatar, the city faces growing energy demands amid challenges like air and soil pollution, traffic congestion, and the need for a reliable power supply.

“Ulaanbaatar is rapidly expanding, and we must ensure our energy infrastructure keeps pace. The Baganuur BESS is a significant step toward a greener, more resilient future for our city, as it enables integration of more wind and solar energy into use. By partnering with IFC and Envision Energy, we are demonstrating our commitment to harnessing innovative, world-class solutions that will benefit our growing population and help us meet our sustainability goals,” said Nyambaatar Khishgee, Mayor of Ulaanbaatar City and Governor of the Capital.

"Our latest research indicates that to achieve Mongolia's climate and development goals, an additional investment of more than $10 billion is needed over the next 25 years," said Matthieu Le Blan, IFC's newly appointed Resident Representative for Mongolia. "Public and private partnerships are essential for mobilizing the capital required to expand energy-efficient measures, including energy storage, which are key to accelerating Mongolia's energy transition. We remain ready to support the Municipality of Ulaanbaatar on its journey towards a sustainable future."

IFC’s investment also includes funding from the Canada-IFC Blended Climate Finance Program. This marks IFC’s first municipal investment in the Asia Pacific region and is part of the World Bank Group’s strategic engagement in Mongolia’s energy transition plan. Other initiatives include a comprehensive diagnosis of Mongolia's energy sector, funding for a 188 km, 220 kV double circuit transmission line from Baganuur to Choir, and a feasibility study for a 200MW grid-side battery storage project. Since 2021, IFC has been supporting MUB in exploring new ways to attract private sector participation in Ulaanbaatar’s sustainable infrastructure development program.

The BESS comprises 27 battery blocks with an advanced liquid cooling and battery management system, a new 110/35 kV substation and control building, over-head transmission line, expansion of the grid substation, and access roads. Ulaanbaatar City Development Corporation JSC will oversee the station’s operations moving forward.