Iran: Power Grid Synchronization With Iraq by Yearend

EghtesadOnline: Power grids of Iran and Iraq will be synchronized by the end of 2019 and Tehran will help reduce power loss in the neighboring country the following year, chairman of the Export Committee of Iran Electricity Industry Syndicate said.

News ID: ۷۴۸۷۴۳

20 October 2019

Iraq's power loss during distribution is over 50%. “According to a bilateral contract, this volume will drop to 30% by the end of 2020,” Payam Baqeri was quoted as saying by Mehr News Agency.

“There is also a plan to increase the efficiency of Iraqi power plants and raise power generation capacity by the end of 2021,” he added.

Iran's maximum electricity export to Iraq is 1,500 megawatts (subject to seasonal fluctuations), Financial Tribune quoted Baqeri as saying.

Gas export to Iraq is 4.4 million cubic meters per day, which allows the Arab neighbor to produce at least 1,000 MW of electricity.

According to official data, 82% of Iraq's electricity is generated by thermal power plants that use gas as feedstock. This volume is expected to reach 84% by 2027.

New Waiver

The US has granted Iraq another 120-day waiver that will allow it to continue to import Iranian electricity and natural gas despite US sanctions.

It is the fifth waiver the US has issued for Iraq since Donald Trump announced new sanctions on Iran’s energy exports last year. After an initial 45-day waiver, the US State Department issued two 90-day waivers in a row followed by a 120-day waiver in June.

Iraq’s Electricity Minister Luay al Khateeb said last month that Iraq now has production capacity for 18,000 MW, up from 12,000 MW last year, but still below peak demand that could reach about 25,000 MW in summer and is rising every year.

The minister said the power sector needed investment worth at least $30 billion to upgrade the ageing grid.

Baghdad has often said it needs at least two years to find an alternative source to replace Iranian gas and power.

Iraq will launch three new thermal power plants in the next two years. As for feedstock (gas), it has turned to collecting associated petroleum gas from its oil fields.

The initiative will help it acquire gas for the power plants after their contracts with Iran expire.

Iraq relies heavily on Iranian energy for feed its dilapidated power grid that is in dire need of rehabilitation.

Years of war, civil strife, terror attacks and the US invasion in 2003 almost destroyed its power infrastructure creating a whopping 7,000 MW deficit.

Domestic Industry

Iran is the largest exporter and importer of electricity in the Middle East and plays a central role in the region with installed power generation at 82,000 MW.

It exports power to Pakistan, Turkey, Iraq and Afghanistan. Under swap deals, Iran exports electricity to Armenia and Azerbaijan in winter and imports when domestic demand soars in summer.

Iran’s power industry is present in 40 international markets as exporter of goods and services under engineering, procurement and construction contracts.

Iranian companies are active in Iraq and Syria as the two biggest markets. They have 58 projects in other countries, namely Turkmenistan, Afghanistan, Azerbaijan, Armenia, Pakistan, Tajikistan, Uzbekistan, Sri Lanka, Uganda, Nigeria, Ethiopia, Oman and India.

Trade Promotion Organization of Iran data show the government generated $4.1 billion from electricity exports between 2013 and 2018.

Iran exported over 42,926 million kilowatt-hours of electricity to neighbors during the period while domestic companies signed overseas water and power projects worth $5.1 billion.

The country's income from power export surged to a record $2.5 billion in fiscal 2016-17, over 98% of which came from technical and engineering work overseas.