Private sector to develop renewable energy sector in Iran
Private sector to develop renewable energy sector in Iran
Renewables account for about seven percent of Iran’s total power generation, versus natural gas’ 90 percent share.

TEHRAN (Iran News) – Private sector to develop renewable energy sector in Iran.  Renewables account for about seven percent of Iran’s total power generation, versus natural gas’ 90 percent share.

Based on Iran’s Sixth Five-Year National Development Plan (2016-2021), the country was aiming for 5,000 megawatts (MW) increase in renewable capacity to meet growing domestic demand and expand its presence in the regional electricity market.

But in the final year of the plan, only one-fifth of the figure has been achieved.

Iran was supposed to become a regional hub in the field of energy in the past Iranian calendar decade (March 2011-March 2021), but evidence shows that the country is facing a shortage even in the supply of electricity inside the country, an issue that many believe that could be achieved by developing renewable energy and increasing efficiency of the thermal power plants.

After the Joint Comprehensive Plan of Action (JCPOA), known commonly as the Iran nuclear deal, in July 2015, many foreign delegations came to Iran for making investments and constructing renewable power plants in the country.

However, following the re-imposition of the U.S. sanctions, foreign investment in the country’s renewable industry has fallen significantly.

Two weeks ago, Energy Minister Ali Akbar Mehrabian said his ministry welcomes foreign investment in the country’s renewable energy industry.

Speaking in the Second Belt and Road Energy Ministerial Conference which was held by the National Energy Administration of the People’s Republic of China (NEA) through video conferencing, Mehrabian said: “The current government has a four-year plan to increase the capacity of the country’s renewable power plants by 10,000 megawatts.”

Referring to Iran’s potentials and capacities in the renewable energy industry, the official announced the country’s readiness to attract investment to develop the renewable energy industry for a green and inclusive energy future in Iran.

According to the former Energy Minister Reza Ardakanian, the country has great potentials in the field of renewable energies and can have a significant role in developing the region’s market for such energies.

“Relying on the high potential of renewable energy sources, including solar, wind, biomass, geothermal, etc., the Energy Ministry has planned good measures in order to implement new policies for creating positive changes in the development of the country’s renewable energy sector,” Ardakanian has said.

In early January, the official mentioned improving the utilization of various renewable energy sources as one of Iran’s macro plans to meet part of the growing needs of the country’s energy portfolio, and said, “Relying on the high potential of renewable energy sources, the Ministry of Energy has planned various measures with the aim of materializing the upstream policies of the country’s development plans.”

Supporting the private sector to develop renewable energy through a 20-year guaranteed renewable electricity purchase contract is one of the mentioned measures.

And on Monday, the head of Iran’s Renewable Energy and Energy Efficiency Organization (known as SATBA) said that in line with the plan for generating 10,000 megawatts (MW) of electricity from renewable sources through domestic and foreign investment, the private sector has already announced its readiness for generating 32,000 MW.

Speaking in a news conference, Mahmoud Kamani said that the private sector’s readiness in this due is expected to rise for generation of 60,000 MW.

In the past, there was a route for the construction of renewable power plants in the framework of guaranteed purchase in which electricity generated from renewable power plants was purchased at a price set by the Ministry of Energy, he said, adding that this method is problematic due to lack of resources, which is why the Ministry of Energy has defined a new model for the development of renewable energy.

Noting that the payment of guaranteed purchases has not been stopped, but has faced a problem, he said in the new model that has been called for, according to Article 12 of the Law on Removing Barriers to Production, the investor receives the amount of investment and profit within six years after construction of the power plant.

“We will receive electricity from these power plants for six years, and after that, investors can offer their electricity on the stock exchange for up to 20 years”, he added.

The official went on to say, “We are currently in the call stage. After collecting the applications, the contracts for the construction of the power plants will be fully concluded.”

Saying that 900 MW of renewable power plants have been built in the country so far, he said of this figure, 310 are wind farms, 390 are solar farms and the rest are the small hydropower plants, biomass and expansion turbines.

Elsewhere in his remarks, Kamani announced, “Our next activity is domestic production of equipment in renewable energy sector”, adding: “Because the construction of these power plants in the country has been done in a small volume, power generation has been proportionally limited, while to increase installation capacity, we have issued call to launch a chain of these power plants.”

The installed capacity of renewable power plants in the country is only seven percent of the total capacity of the power plants. This figure is very low, because the average figure in the world is 30 percent, even in some countries up to 80 percent, while in some countries the date for the end of using fossil energy has been set.

“In our country, it is possible to establish 100,000 megawatts of solar capacity and 40,000 megawatts of wind farms capacity, but we have not reached 1,000 megawatts yet”, according to the SATBA head.