Oliver Belfitt-Nash in Ulaanbaatar -

By the autumn of this year, 31 state-of-the-art wind turbines will dot the horizon 70 kilometres from the capital of Mongolia. The farm's 50-megawatt (MW) capacity will represent just half a percent of the country's growing electricity demand, but from these humble beginnings could develop an industry with the power to radically alter Asia's energy future.

Mongolia's abundance of space and 300 days of sun and consistently windy steppes create an ideal environment for renewable energy. As such, the gears are already turning for a project 200 times the size to stretch across the Gobi desert, aiming to export clean energy across an "Asian Super-grid" all the way to Japan. "Mongolia is an energy heaven - and not just for coal," says Bayanjargal Byambasaikhan, CEO of Newcom Group, one of the country's leading conglomerates. "We have rich energy sources below ground, but also above the surface."

Mongolia's coal exports rose 26% from the previous year, delivering 21.1m tonnes to China out of its estimated 160bn tonnes of reserves. Thermal coal provides almost all of the domestic energy demand, and is the go-to fuel for stoves in the traditional ger houses that surround the capital city. For miners, the cash comes thick and fast, but for the residents of Ulaanbaatar the costs are all too clear, with 1 in every 10 deaths attributed the thick winter smog.

Developing cleaner energy resources like wind is a priority then. $120m is being pumped into this wind project, with $2 in every $3 lent coming from the European Bank of Reconstruction and Development (EBRD), Dutch Development Bank (FMO) and Millennium Challenge Corporation (MCC). General Electric will supply the materials and Newcom will manage the farm. "We have been measuring the Gobi's potential for three years now and we have some good wind down there," says Byambasaikhan. "Placing a turbine 25 metres to the right can make a big difference when catching the wind channels and we have mapped each turbine's location."

Going with the flow

Wind energy's popularity has boomed over the last few years due to its cheap operational costs, quick construction times and minimal impact on the environment. One in every 40 lights around the world now turns on because of wind generators, up 27% on average for the last five years. China overtook the US in 2010 to become the world's leading wind energy supplier, with 4% of its energy demand coming from wind power, or a whopping 62 gigawatts (GW).

Now Mongolia is getting on board. "Power generated from coal costs 6-7 cents per kilowatt-hour, and can rise up to 10 cents/kWh during peak hours," says Tumentsogt Tsevegmid, chief representative of General Electric in Mongolia. "Wind will cost 9.5 cents on this scale, and mines are now paying 40-50 cents on their power from diesel generators! We estimate it will take 13 years to break even on this project."

While sceptics watch coal sales rising faster in Mongolia than ever before, some attractive economic motives are gathering behind wind energy over traditional forms of power generation. "Just do the math," says Byambasaikhan. "We're building 50-MW wind for $120m, and a 450-MW coal plant will cost $1.4bn in Mongolia." This makes wind around a third cheaper to build and a lot faster too. Even with Mongolia's infrastructure limitations, the farm is expected to be completed by the end of summer this year, and construction has only just begun.

For Newcom, this project is just the beginning. The company recently signed an agreement with Softbank, a Japanese telecommunications conglomerate, to cooperate on forming an "Asian Super-grid", stretching from India to Japan and down to Indonesia. Mongolia's role will be to scale up its wind and solar farms to create a multi-GW system across the Gobi desert, ready for export. "We estimate there is 2.6 terawatts of potential wind and solar energy in Mongolia," says Byambasaikhan. "Even 10% of that would be huge."

The future of Japan's nuclear industry is in doubt after the Fukushima disaster, and the government is scrambling to find alternative sources. Newcom and Softbank's agreement could provide that alternative down the road. "The off-taker for Newcom's 50-MW Salkhit project is the Mongolian state grid," says Tumentsogt, "but to be competitive we need international buyers."

As is often the case in Mongolia, infrastructure deficiencies are the biggest reality check for any dreams. Over the border in China where roads and railways can support much larger operations, a similar project is estimated to cost two-thirds of the price. Mongolia's government is behind on its railway expansion plans, on which many mining projects will rely. "Infrastructure is costing me," says Byambasaikhan. "It's no easy feat to transport over 40-metre-long blades across a dirt track. We have already laid a 28-km high voltage line, but there is a lot more to do if we expand."

But for all the potential hiccups, Newcom's green vision is fuelling a wave of optimism that Mongolia can move beyond its reliance on coal. "We just have to make sure politics don't get in the way," says Byambasaikhan.