To boost power supply during the hot summer, the production of distributed generation (DG) power plants has increased by 90% compared to last year.
Mostafa Rajabi Mashhadi, spokesman of Iran Power Generation, Distribution and Transmission Company (Tavanir), said electricity generated with the help of DG systems has risen by 400 MW over the last 12 months and reached 2,000 megawatts, ISNA reported.
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 stabilizes 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 DG 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.
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 eight times above 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 Tavanir spokesman, 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.
DG systems also fulfil key requirements in an optimized electricity system, namely security, improved efficiency, high system reliability, affordable energy cost and low environmental impacts.
Rajabi concurred that few companies are able or willing to invest in large-scale power projects due to the huge investments involved, adding that smaller units do not need large amounts of funding and have market demand.
Proximity to end-users and lower transmission loss or energy waste are other advantages of DG plants.
Settling Debts
Rajabi noted that the Energy Ministry is expected to settle its $100 million debt to owners of small-scale plants in summer.
“We are aware of their financial problems. The ministry is doing all it possibly can to repay the debts,” he said.
“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.”
The spokesman stressed that 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 invested in small-scale power plants to help meet rising demand,” he said.
“For the construction of a big power plant, the government needs at least $500 million, while a small-scale station [25 MW 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.
