Iran's Energy Ministry Pledges to Support Foreign Investment

EghtesadOnline: Iran will strongly support domestic and foreign investments in its power industry, Energy Minister Hamid Chitchian said, as the country pushes for raising the share of renewable energy and add thousands of megawatts to its power generation capacity over the next decade.

News ID: ۷۳۵۲۶۵

22 July 2016

Speaking on the sidelines of the 4th Iran Wind Energy Conference in Tehran on Wednesday, Chitchian appeared to reassure international companies that their investments are safe and protected and that their efforts in Iran will bear fruit.
He also said his ministry will not back out of an agreement with a Turkish firm on building power plants in Iran, Mehr News Agency reported.
"Iran has clear rules to attract and promote foreign investments. Legislation was passed in 2001 to promote such investments and the presence of international investors is part of our declared economy policy," he said. "We have no legal restrictions on attracting foreign investments" and rebuilding the economy with the cooperation of friendly countries and companies, the minister said
According to Financial Tribune, reports last month said the Turkish energy company Unit International had reached a $4.2 billion deal with Iran's Energy Ministry to build seven natural gas power plants in what was announced as the biggest investment in Iran since the lifting of sanctions in January.
The power stations, to be built in seven separate regions of Iran, would have a combined installed capacity of 6,020 megawatts, according to a statement by the company.
However, sections of the local media critical of the government of President Hassan Rouhani slammed the agreement, claiming that the Turkish enterprise is a general contractor that builds hotels and lacks the experience in power plant construction.
Iran has opened up its energy market to the outside world after financial and trade restrictions related to its nuclear program were eased in January following a historic deal with the six world powers (the five permanent members of the United Nations Security Council plus Germany) in July 2015.
Push for Renewables
Chitchian said the ministry is offering attractive terms and conditions for investment in renewable energy, which has been largely neglected at the expense of fossil fuel power plants over the past four decades.
The terms include the Energy Ministry's guarantee to purchase the electricity from renewable plants at a higher price than that of thermal plants under 20-year contracts, up from the previous five-year deals.
Moreover, the ministry will pay up to 30% extra for the output from renewable units that use domestic technology and equipment.
Around 61,000 MW, or more than 80% of Iran's 75,000-MW output, is generated from thermal plants. In addition, around 12,000 MW come from hydroelectric plants and 1,000 MW from nuclear power.
The share of renewable energy in global power generation will rise to over 26% by 2020 from 22% in 2013, a remarkable shift in a very limited period of time, according to the International Energy agency.
Iran signed a document of the Paris Climate Conference last year to produce up to 7,500 MW from renewables. It plans to add 1,000 MW of clean energy—mostly from solar and wind—each year by 2021 that coincides with the last year of its 6th five-year economic development plan. Chitchian also called for tapping into Iran's capacity to produce power from hydroelectric plants. "We have an installed hydroelectric capacity of 11,500 MW that enables us to meet electricity demand during the peak hours."
The world's total installed power capacity of renewables stand at around 147,000 MW, according to Chitchian.
Iran is an attractive market for investment in renewable energies in view of its diverse climate and geography. The country has vast open lands for power generation from wind turbines and enjoys more than 300 sunny days throughout the year in its hot and arid regions to promote solar plants.