Raising electricity export is important because it helps ensure security (near the borders) and begets Iran higher bargaining power in negotiations in regional and international trade, vice president of Iran Electrical Industry Syndicate said.
“Power export is not merely an economic issue. Electricity is vital for modern societies and functioning economies. The more we export (power) to regional states, the more they will rely on us,” ILNA quoted Payam Baqeri as saying.
Iran is the largest exporter and importer of electricity in the Middle East. It exports power to Pakistan, Turkey, Iraq and Afghanistan. Azerbaijan and Armenia sell electricity to Iran under swap agreements.
Now that the energy sector is under US sanctions and trade between Iran and the rest of the world has been largely restricted, the electricity sector, which is not very easy to restrict, can become an alternative source of regional influence through regional inter-dependence, Baqeri added.
In his words, selling power (as a way to bypass hostile US sanctions) can also be a reliable source of forex revenue.
Energy experts say the power sector is crucial but yet not well studied wherein Tehran has demonstrated its willingness to build closer ties to neighbors. While the general trade in goods can be replaced—albeit at a certain cost—the construction of transmission lines and other infrastructure for electricity supply is a long-term commitment between neighbors.
Moreover, digital technology, communication infrastructure and industrial operations depend largely on a reliable and efficient supply of electricity.
“Access to affordable and efficient supply of electricity is critical. This explains why most countries prefer to set up power plants on their own territory and generate electricity by importing gas.”
There is a big difference between power and gas exports. Close to 30% of gas generated in the world is exported, whereas electricity export is much less. Put simply, electricity generation, as it is linked to security issues, is so crucial that countries do not want to depend on others for their power needs.
If gas import is interrupted for any reason, governments can replace it with another fuel to keep their power plants going, he said.
According to Baqeri, thanks to the abundance of gas most of which comes from the giant South Pars Gas Field in the Persian Gulf, Iran has high potential for generating electricity.
Unsustainable Policy
"Exporting value-added goods like electricity is more profitable than selling low cost natural gas. Exporting raw materials is no more a wise and sustainable economic strategy in today’s highly competitive world.”
Data from the Trade Promotion Organization of Iran show the government earned $4 billion from electricity export between 2013 and 2018. Iran exported over 42,926 billion kilowatt-hours of electricity to neighbors during the period.
Based on data from the Statistical Center of Iran, the state-owned National Iranian Gas Company and Iran Power Generation, Distribution and Transmission Company (Tavanir) exported 2.9 billion kilowatt hours of power to Iraq, Pakistan and Afghanistan between June and September 2019.
The figure was up 190% compared to the corresponding period in the previous year. Close to 309 billion kilowatt hours of electricity was produced in 2019, indicating a 6.1% rise compared to a year ago.
Revenue from electricity exports reached $41.5 million in 2018. The value of exported electricity increased by an average 4% for all exporting countries (US, France, Germany and Canada) since 2014 when electricity shipments were valued at $32.9 billion. Year over year, power exports grew by 13.8% from 2017 to 2018.
Iran's electricity industry (installed capacity 84 gigawatts) is 14th in the world in terms of output and 19th in consumption.
Iran’s electricity generation has made decent progress since 2004 through the expansion of combined cycle power plants, which use natural gas along with other supplementary fuels like mazut.
