“Electricity generated with the help of DG systems has risen by 400 MW over the last 12 months and reached 1,100 MW,” Mostafa Rajabi Mashhadi was also quoted as saying by IRNA.
DG or on-site generation is electricity produced in small quantities near the point of use, as alternative or supplement to traditional centralized grid-connected power.
It reduces the cost and complexity associated with transmission and distribution, while helping offset peak electricity demand and stabilizing the national grid. Most small-scale units in Iran are powered by diesel.
As the Energy Ministry's plan is to put an end to building costly and conventional power plants, the construction of distributed generation plants has now become a priority.
“Several small-scale power plants with the distributed generation system joined the national grid in provinces [in 2019 and 2020], such as Kerman, Zanjan, Yazd and Khuzestan,” Rajabi said.
Tehran and Sistan-Baluchestan provinces have the highest (370 MG) and lowest (10 MW) DG capacities, respectively.
Urging private investors to help expand power production, he said the Energy Ministry buys electricity under a guaranteed five-year purchase scheme.
“To encourage investors in summer when consumption peaks, each kilowatt hour of electricity produced via DG power plants is purchased at a rate eight times higher than the tariff for power produced in thermal stations,” he said.
One kilowatt-hour of power is bought at less than one cent from thermal power plant owners.
According to the official, power from distributed generation has a wide range of application like supplying electricity to remote rural areas, providing backup to customers in the event of grid failure and supporting power during peak demand to help reduce network load.