Ageing Power Plants Becoming a Liability

EghtesadOnline: Replacing old and outdated power plants, namely the Rey power station in south Tehran, is a compulsion.

News ID: ۷۴۸۹۴۸

13 November 2019

Power plants with a combined production capacity of 3,000 megawatts have long outlived their usefulness and should be either phased out or renovated, local news wires say.

Officials including Mohsen Tarztalab, head of Iran’s Thermal Power Plants Holding Company warn that if rehabilitating the ageing plants is delayed further their maintenance costs will rise to the detriment of the highly subsidized energy sector and the treasury.

Referring to the Rey Power Plant’s low efficiency (less than 35%), he said the facility has been in service for more than four decades. The estimated useful life of an electricity plant is around 20 years, according to Financial Tribune.

After negotiations with East Asian firms to attract investment to decommission 3,000 MW from decrepit power plants failed due to the US sanctions in 2018, the government proposed contracts with domestic contractors and paying them in crude oil instead of cash. Senior energy officials including Oil Minister Bijan Namdar Zanganeh say this is not doable.

The aspiration to decommission ageing plants appears to be a tall order (at least for now) because the government has been struggling hard to plug its ballooning deficit and the private sector is not interested due to the bloated bureaucracy and not being sure about the mechanism to receive money once the projects are completed.

According to Tarztalab, Iran's long-term plans to boost electricity output from the current 82,000 MW to 120,000 MW cannot be realized unless new power plants come on stream and old plants are renovated.

Pointing to TPPHC's role in meeting power demand, he said at least 85% of Iran's electricity needs are met by thermal power plants.

Rey Power Station has 23 units that generate 810 MW a year.