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The paper deals with the problem of sustainable innovation development of the electric power system of Mongolia, taking into account the geographical position of the country on the border of a transport route between China and Russia. In the broadest sense between the Asian industrial region and Europe, the turnover between them is increasing every year. The main constraining factor on the way of this process is not electrified main railway line, passing through the territory of Mongolia. Shown the advantages of railway electrification to solve the problems of power supply industry and agriculture. The most important objective is the electrification of the transport route Sukhbaatar Ulaanbaatar-Zamyn-Ude, the length of 1111 km. It is shown that the realization of this goal will reduce rail route from Europe to Central Asia of 1,025 km. The forecast of development of transportation in the future. Along with this a forecast of the Mongolia’s electric power system, in which the traction electric load would be approximately 22%. Included the corresponding graph required the development of generating capacities in the Mongolian power system in order to adjust the available capacity to 3500MW by the year 2025. Proved significant advantages of electrified railway through improving electric locomotive in comparison with diesel locomotive. In contrast to the significant proportion of electrified railways of Russia on a direct current, proposed the path of traction power supply system 2x25kV. Following the example of other highly developed countries, it will go to the use of high-speed railways. Thus it is achieved balanced development of Mongolia's electric power system based on electrification of the transport corridor from Asia to Europe.