Where energy in Mongolia and Inner Mongolia as a developing countries are concerned, various studies have indicated that efficiency in energy supply and end-use in the industrial sector is still only at one-half to two-thirds of that achieved with the benchmark best-practices applied in the industrialized nations. There are a number of clearly identified barriers to improve energy efficiency at the micro level. The major ones are given below:

• High preference for channelling investment towards production related equipment and infrastructure. The cost of implementing energy efficiency is often perceived as daunting and difficult to justify in terms of return on investment, especially when energy tariffs are not conducive.

• Selection of oversized equipment to meet "worst-case" requirements, leading to inefficient part-loading.

• Preference for low-initial-cost options as against life-cycle costing for energy consuming equipment, often sacrificing energy efficiency. Low initial cost considerations also favour a proliferation of lower-efficiency, second-hand equipment, especially in SMEs.

• Aversion to risk of new technologies.

• Lack of technical knowledge amongst energy equipment buyers.

• Vendor sales pressure.

• Inadequate skills in operation and maintenance.

• Apprehension about energy supply and quality, especially in remote areas.

• Tendency to extend equipment service life by recycling or repair. This may save initial costs but leads to low energy efficiency when the quality of repair or recycling work is lower than that of original manufacture. Examples of areas where inefficiency can 'creep in' in this way are:
   

  • inefficiently rewound motors;

  • use of recycled lubricants and transformer oils;

  • use of reconditioned bearings;

  • impeller trimming carried out locally.

In order to develop a comprehensive and integrated approach, which targets the sustainable economic and environmental friendly development of the SMEs in industrial clusters the strategy and concept of ESCO service set up is suggested. In order to be able to execute the project several issues need to be addressed.

• Effective energy management: Almost all the SME’s do not have a position/team responsible for energy efficiency, lack of

• Energy efficient techniques: Most of the energy consuming equipment being used are outdated and ineffective, limited information on modern equipment producers in Europe,

• More and better skilled service providers: in Mongolia and Inner Mongolia limited number of potential ESCOs are capable of developing EE/ESCO projects,

• Reliability of data; so far, little reliable data on energy efficiency equipment vendors, performance and methodology are available,

• Comprehensive Policies: the enforcement and impact of this Strategy concerning development of ESCO services remains limited,

Objectives

The overall objectives are:

• Reinforcing the private sector for a new ESCO business development opportunities

• Contribute to the gradual improvement of Mongolian and Inner Mongolian SMEs’ production efficiency and environmental performance

• Contribute and promote the Asia Invest program in Mongolia

• To facilitate Asia wide principle of Asia Invest program

• The specific objectives are:

• Enhancing foreign direct investment prospects

• Upgrading the capacity, skills and energy efficient equipment know-how of Mongolian and Inner Mongolian potential ESCOs through dissemination of information regarding energy efficiency, ESCO operations and performance

• The exchange of best practice in energy efficient techniques, ESCO operations, emphasis on the Project’ relevance in facilitating EU-Mongolia and EU-Inner Mongolian trade relations and cooperation

• Creation of commercial and sustainable ESCO service

• Development and implementation of EE/ESCO projects

Actors and donors

• Asia Invest

• Mongolian National Chamber of Commerce and Industry (MNCCI)

• Centric Austria International (CAI)

• China Council for the Promotion of International Trade, China Chamber of International - Commerce Inner Mongolia (CCPIT)