A memorandum of understanding for the construction of 150-megawatt small-scale power plants has been signed between the Khuzestan Regional Electricity Company and Safat Energy Yazd Company (Safatco).
As per the MoU, several small-scale power stations with distributed generation (DG) systems will be constructed in different parts of the southwestern province, each with a maximum production capacity of 25 MW, ISNA reported.
Khuzestan Regional Electricity Company is committed to meet all the requirements of implementing these projects, including the identification of proper sites where power plants are going to be built and guaranteeing the purchase of the generated electricity.
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.
One kilowatt-hour of power is bought at less than one cent from thermal power plant owners.
Safatco will have to start work on the project as soon as possible so that at least 75 MW of the capacity will be ready by next summer.
Based in the central Yazd Province, Safatco has been active in power and petroleum sectors for over 13 years. Its operations include the construction and maintenance of steam and gas turbines, compressors, generators and cooling systems, among others.
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 power distribution, while helping offset peak electricity demand and stabilizing the national grid.
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.
The advantages of DG systems include reducing losses in the transmission and distribution networks, eliminating the need for transmission network, the simultaneous generation of electricity and heat, and lowering the emission of hazardous pollutants.
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.
The production capacity of small-scale power plants has reached a record high of 1,100 megawatts at the peak of consumption this summer.
