The agreement was signed with Solar Power Plant Project Management Company, a consulting and project management firm, and Solar Sanat Firouzeh, an equipment supplier, on Saturday, IRNA reported.
The MoU concerns the bank's finance amounting to $70 million for building a 50-MW solar power plant.
According to Mostafa Azad, a member of Iran Electrical Industry Syndicate, the agreement is aimed at facilitating the private sector's involvement in developing the sector, Financial Tribune reported.
"As per the agreement, the firms can receive loans with five-year installments," he said, noting that the debts will be repaid via the Ministry of Energy from the revenues gained by the newly installed plant.
Domestic firms active in the solar power generation sector have to deal with clients directly. This has become a nuisance, discouraging many players from entering the field.
With a national energy system that chiefly runs on fossil fuels, Iran looks set to unlock some of its tremendous clean energy potential through investment in the private sector.
Such solar ventures are important stepping stones in Iran's clean energy program to raise the meager capacity of renewables to 5,000 MW by 2022, the end of its Sixth Five-Year Economic Development Plan.
All renewable sources, including solar and wind, make up only a fraction (450 MW) of Iran's installed power generating capacity of around 75,000 MW. The country relies on hundreds of mostly aging thermal plants to meet its electricity demand.
Azad noted that the current project is just an initiative to a broader $850 million scheme on renewables.
"Some 550 contracts for the development of small power plants have been signed with private companies … We have the capacity of implementing 2,500 domestic plants per month," he said. Iranian and foreign investors are increasingly embarking on the construction of renewable power plants.
According to Mohammad Sadeqzadeh, the head of Renewable Energy and Energy Efficiency Organization—a state-owned entity also known as Satba—foreign investors have submitted investment proposals worth $3.6 billion to develop renewable projects.
Iran has pledged to slow climate change by promoting cleaner energies. In December 2015, 195 nations, including Iran, signed an agreement at the Paris Climate Conference to move away from fossil fuels with the goal of limiting a rise in average global temperatures to well below 2 degrees Celsius.