Iran: Private Sector Role Highlighted in Green Energy

EghtesadOnline: Due to government funding constraints and financial pressures, private companies have taken on the mantle of developing renewable energy, head of Iran's Renewable Energy and Energy Efficiency Organization (SATBA) said.

News ID: ۷۴۶۷۰۹

17 February 2019

"Since 2016 when the government called on the private sector to help develop renewables, installed capacity has risen by 70%," Seyed Mohammad Sadeqzadeh said, ISNA reported on Saturday.

Renewable energy production was around 300 megawatts in 2016. Now it is close to 750 MW and plans are underway to boost it further by 200 MW before the fiscal year is out in March.

Admitting the adverse effects in the past several months of currency market volatility on renewable energy market, experts say the less the government is involved in green energy expansion, the better it will be and produce the desired results, Financial Tribune reported.

"As per the Energy Ministry proposal to raise  prices of electricity it buys from private power plants, the parliamentary body responsible for reviewing the budget bill, the Majlis Joint Commission, has approved more funds to this end in the next budget (March 2019-20)," he said, but did not provide details.

Expressing discontent with the existing low tariffs (8 cents/kilowatt), Sadeqzadeh noted that there is huge potential for harnessing renewable energy and increasing the tariffs would help win private sector trust and assist in infrastructure development.

The official added that the cost of producing renewable energy in Iran, similar to many other countries, has plunged 2.5 times in two years.

Production of one megawatt of solar energy in Iran cost $1.5 million in 2016, but has declined to $600,000 at present, SATBA reported.

Drawn by Profit

Lower costs have encouraged private companies to increase investment in solar power and as a result the share of renewables in the domestic energy mix has increased from 0.2% of total power output two years ago to about 1% now.

More than 80% of the domestic electricity needs are supplied by thermal power plants and renewables account for 750 megawatts. The share of renewable power is planned to reach 5% by 2022.

Globally there are three key enablers -- price and performance parity, grid integration and technology -- that allow renewable energy sources (notably solar and wind) to compete with conventional sources on price while matching their performance, according to a report by the International Renewable Energy Agency (IRENA).

Another factor that has helped renewables grow faster in Iran is indigenizing the production of equipment and tools.

“Close to 85% of the equipment, including photovoltaic panels, cables and transformers, are manufactured by domestic companies,” the senior official said.

Iran imported machinery and equipment from Germany, France, Spain, China, South Korea, Cyprus and the UAE in the past. Five PV panel manufacturing companies are now active in the country.