Coal fired power plants operate at base regime thus, it is technically limited in operating in line with changes in demand and regulate its generation in a short period of time; The energy imported from Russia covers the system’s peak load and operates as the regulator of the system. Thus, energy dependency on Russia is expected to accelerate. For instance, import electricity transmission line has reached its technical capability; Currently, daily peak load and base load difference is picking up to 320 MW as household dominated electricity consumption growth surges.

In utilising hydropower, climate change and air pollution will be reduced which will contribute in supporting green development, and generating environmentally friendly clean electricity; Furthermore, it reduces the use of raw coal, emissions of greenhouse gases released into the air in particular important areas of Ulaanbaatar and other urban areas.

As the constantly renewable freshwater lake forms water, it would not only create large water reserve also increases the humidity of the region’s climate which would protect against desertification, create the opportunity to develop agricultural production and intensive farming activities. After the construction of the hydropower plant, formation of the lake would create favorable condition to develop tourism, water sports. Therefore the area has full potential of a development hub which would attract local and foreign tourists.

The peak load hydropower plant will the Mongolian first power plant with regulatory regime. The characteristics of the energy sector is that it generates according to the consumption momentum. The basis for sustainable energy system is that the system frequency to be stable. In order to configure the system frequency, the system requires to have backup power reserve capacity and also a regulator suited for consumption demand.

Increase the efficiency of the existing power plants as the hydropower plant maneuvering capability allows for eliminating Coal-fired power plants’ excess generation. Egiin goliin HPP only consumes 1% of its total generation for internal operations. In comparison, Coal-fired power plants use up to 20%.

Reduce import energy dependence. Since the Russian federation’s 220 kV double circuit electricity overhead transmission line came into operation in 1977, the central region integrated energy system (CES) has established import agreement and it is still in effect till today. In 2013, 325.3 million kWh electricity has been imported from the Russian federation that is 6.3% of the total consumption.

Decrease carbon emission. In accordance with the UN climate change convention and Kyoto protocol, Hydropower plant purpose is to reduce carbon emission. Mongolia has joined the convention. The main requirement of the convention is to generate power in compliance with environmental requirements and also assessed by avoided carbon emission per MWh. The hydropower plant annual 606 GWh electricity generation is estimated to avoid 709 thousand CO₂ annually. Based on the calculation of the Energy Research and Development Center of the Ministry of Fuel and Energy of Mongolia, an emission factor of 1.17 ton CO₂/MWh for coal-fired thermal generation has been utilised in the estimation. EGHPP Carbon abatement from developed countries is being studied at this stage. In reference to previous projects implemented in Mongolia, if the carbon abatement per ton carbon emission avoided is 4 Euros then EGHPP could earn 2.8 million Euros annually.