The Energy Ministry is expected to settle its $100 million debt to owners of small-scale plants next month, spokesman for the state-run Iran Power Generation, Distribution and Transmission Company (Tavanir) said.
“We are aware of their financial problems. The ministry is doing all it possibly can to repay the debts,” Barq News quoted Mostafa Rajabi Mashhadi as saying.
Small-scale power plants including combined heat and power plants (CHP) are among the cheapest sources of electricity and were built by private companies with little help, if any, from public financial resources or the National Development Fund of Iran, Rajabi Mashhadi said.
The government is struggling with budget deficits and “is unable to build big and costly power plants. Instead the private sector has risen to the occasion” and has invested in small-scale power plants to help meet rising demand, he added.
“For the construction of a big power plant the government needs at least $500 million, while a small-scale station (25MW or lower) costs $10 million.”
Small-scale plants, known as standalone or off-the-grid systems, is usually used in remote and rugged regions where it is difficult and highly costly to extend transmission lines.
Although the Energy Ministry is obliged to purchase electricity from small-scale power plants for five full years “the problem was that they did not buy our electricity for more than six months in 2020 and did not clear the debt,” Ehsan Sadr, the head of Iran CHP Association, said
“We are aware of the financial constraints of the ministry, but the pressure is hurting investors.”
Cogeneration or combined heat and power is the use of a heat engine or power station to generate electricity and useful heat at the same time.
A CHP plant works based on the supply of high temperature heat from a biomass boiler or fossil fuel driven boiler. The high temperature heat drives a gas or steam turbine-powered generator and the remaining heat is then used for local application.
Small stations help preserve the environment. While establishing a major power plant with a capacity of 500 MW requires at least 50 hectares of land, a 25MW power plant occupies less than 0.3 hectares.
