Iran will resume power exchange with Turkey in the near future based on a back-to-back letters of credit system, Iran’s energy minister said.
“The system has made it possible for the two sides to trade off close to 600 megawatts of power on a daily basis,” Ali Akbar Mehrabian was also quoted as saying by IRNA.
Under a new swap deal, Iran is expected to export 600 MW of electricity to Turkey in winter every day and will import the same volume when domestic demand soars in summer, he added.
Back-to-back letters of credit consist of two letters of credit (LoCs) used to finance a transaction. A back-to-back letter of credit is usually used in a transaction involving an intermediary between the buyer and seller, such as a broker, or when a seller must purchase the goods it will sell from a supplier as part of the sale to his buyer.
Iran suspended power export to Turkey in 2016 over financial disputes, he added.
According to the Turkish newspaper Daily Sabah, due to torrential rains, most dams in Turkey are full, which explains why electricity generation via hydroelectric dams has maximized, but it is still interested in exchanging power.
“Exchanging electricity with neighbors tops the Iran Power Generation, Distribution and Transmission Company’s priority,” the minister said.
“Iran needs to synchronize its power grid with that of Turkey and Russia because otherwise it has to invest billions of dollars to build new power stations to bridge the widening gap between supply and demand that has reached 10 gigawatts.”
Mehrabian noted thatr Azerbaijan and Armenia also supply close to 700 megawatts to Iran under a swap agreement.
In 2018, Azerbaijan, Russia and Iran created a working group to conduct feasibility studies to synchronize their power systems, which is completed.
The trilateral workgroup included 18 people (six from each side) with a mandate for undertaking a feasibility study on integrating the power systems of the three Caspian states to create the North-South power corridor.
To help accelerate the synchronization of Iran’s power grid with those of Azerbaijan and Russia, the three neighboring nations discussed the details of an ongoing project via videoconference in March.
The three sides scrutinized feasibility studies on the synchronization plan conducted by Monenco Iran Consulting Engineers, a leading global provider of professional engineering and consulting services.
Established in 1973 as a joint venture between the private sector of Iran and Montreal Engineering Company of Canada, the company was commissioned to devise a plan to link the three countries’ power grids.
Monenco Iran Consulting Engineers has extended engineering and consultancy services in different fields across Iran and in the Middle East, Southeast Asia, Africa and the Commonwealth of Independent States.
