Iran’s renewable energy market blinks at investors

April 11, 2016

TEHRAN – While Iran is sitting on giant, yet unburnable fossil fuel reserves, there are increasing calls from within the country for a shift to alternative energies.

The pro-change camp cites environmental concerns as well as shrinking conventional fuels, saying it is necessary to have the lovely alternatives in the country’s energy mix.

All these concerns have up till now resulted in less than 200 megawatts (MW) of eco-friendly energy being generated in Iran.

However, with the country’s re-engagement with the global community following an agreement with the West over its nuclear program, it seems that on horizon will be more lamps fed by electricity from renewable energies.

 

“Currently, almost 200 MWs of electricity is generated from alternative resources, mainly from solar and wind ones. A key point here is that not only the governmental sector is involved in the projects, but also the private sector has stepped in and this is good news.”

 

Due to the country’s status change in the international scene, it has become easier to get cutting-edge technology and attract foreign dollars.

If provided, Iran can turn well into a renewable energy heaven considering the territorial characteristics of the sunny country, where suntanned faces get cooled down by gusts of wind.

In what follows, the Tehran Times releases an interview with Jafar Mohammadnejad Sigaroodi, the deputy chief for planning and development at the Renewable Energy Organization of Iran (SUNA), to hear from him more details about current and future status of renewable energies in Iran, the home of the Sun. 

TT: Would you please give us a general picture of renewable energies in Iran?

A: At the outset, I would like to thank the Tehran Times for the interview. SUNA is the right organization that can give a general yet exact assessment of the country’s current and future status of renewable energies. Generally speaking, Iran has high potential for renewable energy generation, meaning that in long-run, it can count on the capacity as an effective and reliable source of energy supply. Of course, the country sits on colossal reserves of fossil fuel, as well.

More than two decades ago, SUNA was established as a branch of the Energy Ministry to focus more seriously on renewable energies. At first, it was a bit difficult to justify the need for such organization as the main emphasis was on fossil fuels. However, from the very beginning, SUNA conducted key research works, feasibility studies, as well as technological projects related to different types of renewable energies including solar, wind, geothermal, and biomass.

But back to your question regarding the current status of renewable energies in Iran, our studies indicate a technical capacity of 35,000-40,000 megawatts (MW) from wind sources. But, practically, it is roughly estimated that some 20,000-25,000 MWs are cost-effective. In terms of solar capacities, suffice to know that as much as the country’s current electricity generation capacity (which is technically about 74,000 MWs) can be generated from central plains of Iran! As regards other renewable alternatives, we have also good capacities.

TT: What is the country’s current renewable energy generating capacity in the aggregate?

A: As I said earlier, over the past years, the major focus has been on generating energy from fossil-fuel power plants. However and happily, the country has also moved towards renewable energies. Currently, almost 200 MWs of electricity is generated from alternative resources, mainly from solar and wind ones.
A key point here is that not only the governmental sector is involved in the projects, but also the private sector has stepped in and this is good news. In order to encourage more investment in alternative energies, the government has recently pushed through new regulations that sweeten investment in the sector, meaning that more output from the renewable sector in the country is in the offing. For example, according to the newly introduced guaranteed purchase scheme, the government will give the private sector a 20-year guarantee to buy its generated electricity.

TT: Foreign investment in Iran’s renewable energy market is key to flourishing the sector. What are SUNA’s priorities for future international cooperation? 

A: Iran’s renewable energy market is quite lucrative and attractive. Considering the post-sanctions era, in our talks with a number of international brands active in the field of renewable energies from Germany, Spain, Denmark, and Italy, the Ministry of Energy and SUNA look for transfer of technology and economic flourishing.

These are important as Iran has educated, skilled workforce and more importantly, the renewable energy sector is in its infancy in our country. So, any international collaboration should make inroads into the two domains. We have already taken measures to achieve this in our plans. For example, as part of the guaranteed purchase scheme envisaged for the sector in Iran, we have included an article in the document, based on which foreign investors can sell their electricity to Iran at a 15-percent higher rate provided that they construct plants using equipment manufactured in Iran. We have also encouraged foreign partners to manufacture parts of their equipment in Iran.

TT: Many foreign investors have given the green light to enter Iran. As you already mentioned, the country’s renewable energy sector has high potential for foreign investment. What are some other incentives that you have included in the new document you referred to above?
A: As I already noted, in addition to the guaranteed purchase plan and the 15-percent advance, we have considered other incentives. Notably, future contracts will allow foreign partners to export electricity which they generate in Iran from renewable sources. We have facilitated the permit issuance process which investors need to go through including permits demanded by the Department of Environment.
Moreover, based on the talks held between ministries of energy and economy, foreign investment in the sector will be guaranteed. This is an important step as it is a cause of concern for many foreign investors.

TT: Development is not achieved overnight. Have you envisaged a long-term roadmap for renewable energies?

A: Certainly, you’re right. To make progress, short-term-, middle-term, and long-term blueprints are required. Although we need more studies to give a better picture of our future plans, for the time being it has been clearly stated that as many as 5,000 MWs of energy should be generated from renewable energies by the end of the 2020-development master plan depicted for the country. I’m very upbeat about actualizing the goal given that both the Energy Ministry and SUNA are seriously pursuing their plans in the sector. 
 

(The interview is conducted by Ali Kushki)

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