Call for Banking Support to Scale Up Renewables

EghtesadOnline: The prospect of meeting a sizable share of electricity demand through renewables requires a stronger support by banking system, a senior energy official said.

News ID: ۷۴۵۷۷۴

01 August 2018

"However, such a promise by the government has not been fulfilled by financial institutions," Mohammad Javad Mousavi, a board member of Iran Renewable Energy Association, was also quoted as saying by ILNA.

Mousavi noted that despite the government's promise to make the guaranteed purchase of power generated by renewable power plants, "banks are not cooperating with the projects", which is poisoning the renewables outlook.

To encourage investments in renewable energies, the government presented a 20-year guaranteed power output purchase plan to private companies. Depending on the region chosen by investors to set up renewable plants, they will be granted between five and 13 years of tax exemptions, Financial Tribune reported.

However, since a big share of renewable equipment is imported and because of recent issues over the looming US sanctions against the country, the private sector is reportedly facing problems in pursuing the plans.

The official added that the opening of letters of credit has been challenged and imports of renewable infrastructure have been halted for over three months.

"Electricity should be considered an essential commodity ... The imported solar equipment should be provided with subsidies," he said.

According to Mousavi, expansion and modernization of electricity grids, as well as significant changes to policies and operational practices should be high on the agenda.

There is tremendous demand for technical assistance to help the country make the transition to a renewable-friendly grid.

Private Sector

Mehrdad Davarifar, a senior advisor at the Renewable Energy and Energy Efficiency Organization (Satba), believes that to solve the problem, such projects should be turned over to the private sector.

Davarifar noted that the government is currently dealing with a bulk of economic and political issues, which have hampered its construction projects.

"The solution is to let the private sector have a stronger presence by financing the initiatives," he said.

Water shortage and its effects on reducing hydroelectric and thermal power plants’ generation have made the role of renewable power stations, which produce 70% of their annual output in the hot season without any water input, more prominent in Iran’s power sector.

Iran’s renewable power production capacity has reached 602 megawatts, while renewable power plants with a combined capacity of 472 MW are under construction nationwide.

The country 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.

Since July 2009, Iran has generated over 2.2 billion kilowatt-hours of renewable electricity, saving 494 million liters of water, as thermal power plants require water for electricity production.

Data revealed by Satba show wind, solar, hydropower, waste heat recovery and biomass power plants account for 45%, 35%, 16%, 2% and 2% of the total renewable electricity respectively.

Mohammad Sadeqzadeh, the head of the organization, told ILNA last week that private investments in the renewable sector are projected to reach 200 trillion rials ($4.7 billion) by the end of the next fiscal year (March 20, 2020).

"Private companies have invested 100 trillion rials ($2.38 billion) in the renewable power industry over the past two years," he said.

Sadeqzadeh stressed that about 1,500 small and 50 industrial renewable power plants have been launched in the country over the last two years.

The Energy Ministry says it hopes to launch 1,000 MW of renewable capacity a year through 2022 with the help of the private sector.