The current production capacity of small-scale power plants with distributed generation systems in Tehran, Alborz and Qom provinces is 270 megawatts and plans are underway to increase the capacity to 1,000 MW, said the project manager of distributed generation systems at Tehran Regional Electric Company that manages power generation in the three provinces.
“Small-scale power plants have many benefits, the most important of which is helping maintain the stability of the power grid in the summer. They also play a key role in reducing environmental pollution, decreasing network losses and increasing energy efficiency,” the Energy Ministry’s news portal also quoted Razmara Zakerifar as saying.
"Currently, a number of complexes in the private sector not only produce their own electricity through small-scale power plants, but also earn money by selling the excess electricity to the national grid,” he added.
Moreover, 100 development projects are underway across Iran to add 2,700 MW to the production capacity of DG power stations.
According to the Energy Ministry’s data, DG or on-site generation power plants nationwide have a capacity of 1,200 MW and as soon as the new projects become operational, the capacity will witness a 125% growth.
DG systems currently account for about 2% of Iran’s total power generation that has reached 90 gigawatts. It meets key requirements in an optimized electricity system, namely security, improved efficiency, high system reliability, affordable energy cost and low environmental impacts.
Few companies are able or willing to invest in large-scale power projects due to the huge investments involved, the ministry said, noting that smaller units do not need large amounts of funding and have adequate market demand. Proximity to end-users and less transmission loss or energy waste are other advantages of DG plants.
DG 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 offsetting peak electricity demand and stabilizing 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.
Tehran and Sistan-Baluchestan provinces have the highest (370 MW) and lowest (10 MW) DG capacities, respectively.
Urging private investors to help expand power production, 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 higher than the tariff for power produced by thermal stations.
One kilowatt-hour of power is bought at one cent from thermal power plant owners.
Power from distributed generation is supplied to remote rural areas, provides backup to customers in the event of grid failure and supports the power grid during peak demand to help reduce network load.
Proximity to end-users and lower transmission loss or energy waste are other advantages of DG plants.
As per the MoU, several small-scale power stations will be constructed in different parts of the southwestern province, each with a maximum production capacity of 25 MW.
