Cheap Fossil Fuels Hinder Renewables Development

EghtesadOnline: The key factor hindering renewable energy development in Iran is hefty subsidies granted to fossil fuels, making electricity output of power plants running on natural gas unreasonably cheaper than renewables, managing director of Iran Renewable Energy Association said.

News ID: ۷۴۵۶۹۷

23 July 2018

“Heavy subsidies prevent power plants’ optimization and efficiency, raise electricity consumption in households, industrial and agriculture sectors and discourage private sector investors from embarking on ventures in the renewable industry,” Seyyed Moslem Mousavi was also quoted as saying by ISNA on Sunday.

Mousavi added that although these measures are aimed at supporting subscribers, they do not benefit the country.

“If fossil fuel prices were reasonable, not only would energy consumption decline, but summer blackouts would also not become a thorny issue,” Financial Tribune quoted him as saying.

According to Mousavi, the current price of generation and distribution of each kilowatt-hour of electricity is 700 rials (1.6 cent) for consumers.

This is while it costs the industry up to 3,000 rials (7.1 cents), which is making the power sector bankrupt.

The official said studies show peak power consumption and peak renewable production take place simultaneously at noon and in the afternoon.

“During these hours, Iranians use about 21,000 megawatts of electricity to run their cooling systems, a part of which can be provided by photovoltaic and wind power plants across the country to reduce the load and avoid outages,” he added.

Mousavi said some domestic companies have produced silicon solar cells in limited volumes, while some other firms have recently embarked on the production of solar panels using imported solar cells.

“The industry cannot make added value, unless it indigenizes the mass production of solar cells,” he said.

Mohammad Sadeqzadeh, the head of Renewable Energy and Energy Efficiency Organization, also known as Satba, said this month that private companies have invested 100 trillion rials ($2.38 billion) in the renewable power industry over the past two years.

Sadeqzadeh expressed optimism over the future of renewable power production, which presently stands at 500 megawatts.

This volume, he said, would reach 1,000 MW by the end of the current fiscal (March 2019).

The Energy Ministry says it has plans for 1,000 MW of renewable capacity a year through 2022 with the help of the private sector.

Iran has a diverse climate of vast windy lands and more than 300 sunny days a year, which makes it ideal to tap into wind and solar energy.