To encourage private power producers, the Renewable Energy and Energy Efficiency Organization (Satba) has changed the previous model that guaranteed electricity purchase for 20 years, managing director of the state-run company said.
“Based on the new model, the investment and its interest will return to investors within four years, which is equivalent to the purchase of electricity produced in about seven years,” Mahmoud Kamani was also quoted as saying by ILNA.
By paying their money back in four years, the owners of power plants will deliver the generated power to us for six to seven years, and after that, Satba has no obligation to buy electricity like the previous model, and the owners of power plants will deliver electricity to the Iranian market for a period of 20 years, he added.
Private companies have invested $1 billion in the expanding renewable sector, mainly solar and wind, but they should be encouraged to hold a bigger share.
Kamani said the new model will encourage private producers to play a more active role in the renewable sector.
Offering higher prices is also another incentive for investors, he added, noting that tariffs for different types of power stations increased earlier this year and reached 6 cents and 5 cents per kWh for photovoltaic power plants and wind farms respectively.
Iran has a diverse climate with vast windy lands and more than 300 sunny days a year, which make it ideal to tap into wind and solar power.
There are more than 115 large solar farms in the country and around 3,500 small-scale solar installations in cities and villages.
Rooftop Power Generation
Over 2,500 rooftop solar photovoltaic systems will be set up by next year, mainly in deprived and rural areas.
According to the Satba chief, the government's Economic Council has approved funding for projects to construct solar power stations to generate 4,000 megawatts.
“Of the total capacity [4 gigawatts], contracts to build PV stations with a capacity of 2,000 MW have been signed and the rest is waiting for their licenses,” he said.
“A major 600-megawatt PV power project in Kouhpayeh County in Isfahan Province started last December. Projected to cost $500 million, the project will be financed by Mobarakeh Steel Company, the largest steel company in Iran and the wider Middle East and North Africa region.”
Kamani noted that the Kouhpayeh PV Power Station will be the largest of its kind in Iran and is expected to become fully operational in three years.
According to the official, the first phase of the plan will add close to 100 MW to the national power grid by July.
“Currently, 1,000 MW of electricity are produced through renewable resources, which account for about 1% of the total power production capacity in the country [90,000 MW],” he said.
As per the plans, by June, 500 MW will be added to the renewables capacity, most of which will be from solar farms.
Electricity consumption in Iran has been rising by an average 6% per annum over the last two decades and the gap between supply and demand will keep widening unless more investments are made in the green energy sector that has been lagging behind fossil fuels, he added.
Kamani said more than 46,000 industrial units are operating in 820 industrial towns across the country, 93% of which are considered small, 4% medium and 3% large.
Industrial Towns
Of the total number of industrial towns [820], at least 100 have suitable infrastructures for the installation of rooftop solar panels covering 5,000 hectares, the Satba chief said.
He noted that unlike thermal power stations, the construction of solar PV farms is not time-consuming, nor does it require massive funding, and more importantly they are eco-friendly.
In other words, putting a gradual end to fossil fuel-based sources from the energy mix and replacing it with renewables are prudent decisions, because generating energy from natural gas and oil not only harms air quality, but power plants using fossil fuels also have low efficiency, given the huge volume of energy consumption.
The Satba chief said there is a direct link between economic growth and power output, such that the economy cannot boom without electricity.
“Satba plans to add 10 gigawatts to the current renewable electricity capacity of Iran in the next four years,” he said, adding that a total of 70 companies, including one foreign and 60 domestic ones, have announced their readiness to invest in renewable projects and hopefully, in the next three months, Satba can start signing contracts with them.
Kamani said the initial estimate is that about 7,500 MW of solar power plants and about 2,500 MW of wind farms will be built by 2026.
