“Slow growth of renewables is due to a variety of reasons, including fluctuations in currency rates in the past year plus lack of interest among investors due to the low purchase price of electricity (until October),” IRNA quoted Jaffar Mohammadnejad Sigaroudi as saying.
In 2015 the Energy Ministry set reasonable tariffs to buy clean energy produced by private firms. The move produced results and was a key factor in attracting local and foreign investment in renewables.
However, rampant inflation at times leaning on hyperinflation, and the new US economic sanctions announced in 2018, tripled import costs of most equipment including photovoltaic inverters, panels and cables. As a result, many companies lost interest in further investment, Financial Tribune reported.
The US re-imposed tough new economic restrictions after Donald Trump unilaterally withdrew from the landmark 2015 nuclear deal in May of last year. The first round of sanctions came into effect in August 2018 before tougher restrictions on the oil and banking sectors were imposed last November.
Law has also required ministries, government agencies and corporations, NGOs, banks and municipalities to meet at least 20% of their power needs from renewables. But this remains a tall order though some steps have been taken to increase the share of green energy.
More than 80% of Iran’s electricity demand is met by thermal power plants that run on fossil fuels. Of the total 82,000 megawatt capacity, 900 MW comes from renewables.
Higher Tariffs
However, with the stabilization of the currency market this year and rise in the purchase price of electricity, it is expected that the expansion of renewable will gain momentum.
Lately, the guaranteed purchase price paid by the government for renewable power generated by private companies has, on average, increased by 65%.
By offering higher prices, the government is trying to encourage private firms to invest in renewables because such firms played an important role in the development of green energy in the recent past.
Private companies have invested $1 billion in the gradually expanding renewable sector, mainly solar and wind. Due to government funding constraints, private firms are expected to play a bigger role in promoting clean energy if the purchasing prices are reasonable.
“The big increase in tariffs has been for small-scale solar installations. Accordingly, the rate of electricity purchase from rooftop solar units is the highest to attract households to install solar panels,” Mohammadnejad Sigaroudi said.
Another incentive was a government scheme that guaranteed the purchase of green power for 20 years, he added.
There are more than 115 large solar farms in Iran, and 3,560 smaller installations in cities and villages.
Iran 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 power.
According to Energy Ministry data, green energy figures show 44% is from solar, 40% wind power, 13% small hydroelectric plants, 2% geothermal and 1% biomass.