Germans to Invest $120m in Yazd Solar Power Venture

"A German-Iranian firm aims to build 500 megawatts of new solar power capacity in the city of Meybod, Yazd Province," Amir Eslamnejad, an official at the unnamed company, was quoted as saying by IRNA on Wednesday.

Operations to build 100 MW of the capacity were expected to go underway on Thursday, according to the official who said the German side will fully finance the power project that is estimated to cost around $120 million.

"About 10 MW of the capacity are planned to join the power grid by the end of this fiscal year (March 20) and the rest will be launched by the end of the next fiscal," Financial Tribune quoted him as saying.

"About nearly 40% of equipment, including cables, distribution transformers and control systems, are planned to be supplied by domestic manufacturers. The venture will create 500 direct and some 3,000 indirect jobs."

In September, London-based renewable energy investor Quercus signed a $600-million deal to build a 600-MW solar power project in central Iran, the biggest renewable contract in Iran and one of the world's largest solar farms.

Germany and Iran both have populations of about 80 million, but share little similarities in the energy industry.

Iran meets more than 80% of its electricity demand from thermal power plants that run on fossil fuels while renewables account for a meager 420 megawatts, or less than 1% of its energy mix.

Germany houses over 38,000 MW of solar capacity alone, the world's largest installed photovoltaic power capacity, data show. China comes a distant second with 28 GW.

There is a huge potential in Yazd for solar power. The region receives a great deal of sunshine throughout the year and boasts vast desert plains. Yazd also is at the crossroads of several provinces, which makes it a preferred choice for electricity production and distribution.

Mohammad Sadeqzadeh, the head of Iran's Renewable Energy and Energy Efficiency Organization, said on Wednesday that foreign investors have proposed $4.1 billion worth of renewable power projects since last year's lifting of sanctions.

"Agreements on $1.5 billion worth of deals are being finalized," he said.

With an installed power generating capacity of 77,000 MW, officials say Iran needs to expand power generating capacity by 5,000 MW annually, or 20,000 MW in four years, to meet rising demand at home and expand its footprint in the regional energy market.

In roughly the same period, the installed power generating capacity of renewables, including wind and solar, is envisioned to increase by 5,000 MW.

According to reports, small-scale solar plants with a capacity ranging from 7 MW to 30 MW are operational or in different stages of development.

Sadeqzadeh said last month renewable energies should constitute 25% of new installed power capacity.