Private Renewable Energy Companies Can Export Power

EghtesadOnline: In line with plans to attract investments for green energy projects, the private sector has been authorized to export electricity generated via renewables, head of Renewable Energy and Energy Efficiency Organization said Tuesday.

News ID: ۷۴۸۹۴۱

13 November 2019

“As per new regulations announced by Satba, affiliated to the Energy Ministry, financiers of wind energy projects can sell power to foreign buyers independently and the ministry will only act as a facilitator,” Mohammad Sadeqzadeh was quoted as saying by ISNA.

Elaborating further he said private investors will produce electricity and deliver it to the national grid because power cannot be saved. Moreover, private companies do not have access to transmission lines nor is it economically feasible to construct their own.

“The ministry is obliged to deliver private companies as much power as they will supply to the national grid that in turn can be exported via the eastern or western borders.” Financial Tribune quoted him as saying.

Needless to say, legal or natural entities themselves should do the marketing and the ministry will facilitate their work and help attract buyers, he added.

"The government will not profit from the ventures and investors will only be charged for land and transit fees. If they face problems in their export contracts, Satba will buy their electricity during the interrupted period,” Sadeqzadeh said.

Domestic and foreign investors can finance the projects either with or without a partner, he noted.

According to the official, the national grid has the capacity to help private firms sell 30,000 megawatts of electricity per year and this can be expanded on demand.

Prior to the plan, private companies were obliged to sell electricity to the state-run Tavanir (Power Generation, Distribution and Transmission Company) as it was the sole body in charge of exporting and distributing power.

$1 Billion Investment

According to the Energy Ministry, private companies have so far invested over $1 billion in the green sector.

Due to government funding constraints and financial pressures, private firms are contributing to the expansion of renewable energy in recent years.

The new policy (allowing private entities to export) is the second incentive offered to private investors in the last two months to encourage them to play a more active role in generating green energy.

It was last month that a new directive to raise tariffs was announced by Energy Minister Reza Ardakanian to encourage private producers.

The new tariffs are 4.9 cents per kilowatt, 5.7 cents per kWh and 4.4 per kWh for photovoltaic, wind and hydroelectric dam plants respectively, up 60% on average compared to previous fees.

The policy to raise prices comes at a time when some 200 companies active in the renewable sector are facing insolvency. Volatility in the currency market and the Energy Ministry's reluctance to allow fair and reasonable tariffs for electricity produced by private companies are among root causes why companies are averse to putting money in this industry.

Renewable energy sources in Iran has generated over 4.3 billion kilowatt hours of electricity since 2009.

If the same amount was produced by thermal power plants that consume gas as feedstock, 1.23 billion cubic meters of gas would be burnt. Producing electricity from green sources has helped the country reduce greenhouse gases by as much as 2.97 million tons in the ten years.

Renewable electricity has also helped save more than 950 million liters of water over the last decade. Iran's installed power capacity is about 82,000 megawatts, of which 850 MW comes from renewable sources including solar, wind, small-scale hydroelectric and waste-to-energy power plants and biomass factories.