In an announcement Friday, the ADB said that the renewable energy loan would help Mongolia develop a 41-megawatt distributed renewable energy system that uses solar photovoltaic and wind power. It will also use advanced battery storage technology and energy management systems. Photovoltaic refers to a way of directly converting light from the sun into electricity.

The ADB said the project would supply clean electricity to around 260,000 people living in “remote and less-developed towns in western Mongolia.” It added that, at the moment, these communities were reliant on expensive and “high-polluting carbon-intensive electricity.”

The ADB’s funding of $40 million is being backed by grant co-financing, with $14.6 million coming from the Strategic Climate Fund under the Scaling Up Renewable Energy Program in Low-Income Countries.

A further $6 million will come from the Japan Fund for the Joint Crediting Mechanism, which is a single-donor trust fund set up in 2014. It is supported by the Japanese government and managed by the ADB. The Mongolian government is making a contribution of $5.6 million.

“These projects will support the government’s efforts to raise the share of renewable energy, decrease carbon dioxide emissions, and improve public financial resource mobilization and management,” Yolanda Fernandez Lommen, the ADB’s country director for Mongolia, said in a statement Friday.

Headquartered in the Philippines, the ADB was set up in 1966. Its operations in 2017 amounted to $32.2 billion, with $11.9 billion in co-financing.

In November 2017, the ADB approved a $44.76 million grant to finance the construction of a 20-megawatt on-grid solar photovoltaic plant in Afghanistan.

At the time, the ADB said the new facility would boost renewable energy generation and supply in the country, producing at least 43,000 megawatt hours of solar power.