Subsidized Electricity Unsustainable

Subsidized Electricity Unsustainable  Subsidized Electricity Unsustainable

Illustrating the huge costs incurred by the government to produce and supply electricity, Hamid Chitchian, the energy minister, called on people to reduce electricity consumption.

"The fuel cost of producing every kilowatt hour of electricity is 7000 rials, add to this 850 rials for energy conversion, transportation and distribution. The total cost is 7850 rials for one kwh .Of this amount consumers hardly pay 494 rials," IRNA quoted him as saying Sunday in Khorasan Razavi Province.

Complaining about the un-sustainability of current subsidies for electricity and high consumption patterns of Iranian households, industries and other power-intensive sectors, the minister said "That is why electricity companies are on the verge of bankruptcy." 

Chitchian acknowledged that the situation is simply not acceptable and needs major overhaul because "paying such subsidies would indeed be tantamount to irresponsibility toward future generations."

On the same critical conditions long prevailing in Iran, he said "No rational person would burn expensive diesel to generate electricity…Regretfully when we want to move toward renewable energy there is a lot of resistance even in our own ministry." He did not reflect on the resistance nor say why there is opposition to the much needed renewables.


Prohibitive Cost of Diesel 

Referring to the studies carried out over the past two years on the prohibitive cost of  diesel consumed by the power plants between 2004 to2011, Chitchian said "we could provide people with 17 years of free electricity had we built wind turbines and exported the diesel.

Pointing out that one liter of diesel generates 3.7 kilowatt hours of electric energy, the minister said five percent of this amount goes for the power station's internal consumption, five percent is wasted within the transportation network, and 15 percent in the distribution network. In other words, 25 percent of the generated electricity is squandered before reaching the consumer.

Highlighting the importance of having recourse to advanced technologies in the electricity industry, Chitchian said, "Iran's electricity industry has fallen behind  global advancement during the past 8 years," 

It is reported that given the high consumption and cost of electrocute contracts have been signed for producing 944 MWs from renewable energy sources and new power plants.

The minister also announced the construction of a special renewable energy zone in Kho'af, in Khorasan Razavi Province. In addition to the 100MW wind farm, which is due to be completed by the end of March, other wind farms are planned in the zone. A total capacity of 475MW is projected for the zone, scheduled to be in place by early 2016.