ULAN BATOR, Mongolia, March 22 (UPI) -- Construction on Mongolia's first wind farm is to start next month.

The $100 million Salkhit -- "windy mountain" -- project, 40 miles southeast of Ulan Bator, Mongolia's capital city, is expected to generate nearly 5 percent of Mongolia's current electricity demands.


Scheduled to be fully commissioned by the end of the year, Salkhit will be the third-largest power plant in the country and produce about 168.5 million kilowatt hours of electricity, while avoiding 185,500 tons of carbon emissions, said developer Mongolian investment firm Newcom Group.

Under an agreement signed last November with Newcom, GE will supply 1.6 megawatt wind turbines for the project.

About the size of Alaska, Mongolia has a vast untapped potential for wind energy, via its sparsely populated plains and wind corridor along the Gobi desert. As of 2008, the country's total installed wind power capacity was 2.42 megawatts, all off-grid, says the Mongolian Wind Energy Association.

Data from the National Renewable Energy Center of Mongolia indicate the country has enough good-to-excellent wind resources to produce more than 2,550 terawatt hours per year. That estimate increases to more than 8,123 terawatt hours annually when moderate-level wind resources and rural power capabilities are included.

The South Gobi region is estimated to have more than 300,000 megawatts of wind power potential.

One of the fastest-growing economies in the world, fueled by exploration of its rich natural resources such as coal and copper, Mongolia's electricity demand is expected to double in 15 years.

"People always explain to me that 80 percent of our territory is covered with coal. Well, yes, but 100 percent is covered with wind," Newcom Chief Executive Officer Bayanjargal Byambasaikhan told The New York Times.

Because it is Mongolia's first major wind power project, he said Salkhit experienced some delays while new legal and regulatory frameworks were developed and it has cost nearly 40 percent more than a comparable project in the United States.

"The rest of the energy sector is all state-owned. We are essentially breaking a monopoly," Byambasaikhan said, adding that he is confident the facility will run smoothly and he aims to boost wind capacity in the country 20 times by 2025.

GE has said that its participation in Salkhit underscores the company's "commitment to grow in one of the most challenging yet fastest-growing emerging regions." Last May, GE opened a representative office in Ulan Bator.

In 2010 GE and Newcom signed an agreement to explore alliances in key areas such as energy, water, mining, aviation, railway, lighting and healthcare.