Incentives for Investors in Small Power Plants

Incentives for Investors in Small Power PlantsIncentives for Investors in Small Power Plants

The Energy Ministry is granting facilities to investors in small-scale power plants that operate at a capacity of less than 25 megawatts, said energy deputy minister.

"The measure is to attract investments in small-scale electricity generation and accelerate plant construction as it can be done with a budget as small as 30 billion rials ($90,000)," Houshang Falahatian was quoted as saying by Moj News Agency.

According to Falahatian, the new protocol guarantees a five-year natural gas supply to small plants free of charge, where they are treated as state facilities.

"They could be instrumental in times of crisis, help industrial parks function more expediently, reduce power wastage and boost the country's average energy production," he said.

There are few takers for investing in large-scale power plants since they require huge finances. Smaller ones, on the other hand, do not require large amounts of funding or a working capital, but enjoy a large market demand.

Proximity to end-user resulting in potentially fewer transmission losses and energy waste is another merit of such plants.

Noting that the peak energy demand stood at 4,660 MW last year but hit 5,177 MW this year, the official said an additional 5,000 MW power plant is needed each year to cover all sectors in the country.

Earlier this month, managing director of Iran's Power Generation, Distribution and Transfer Company (Tavanir), Arash Kordi, announced that his company has relinquished some authority to all provinces in a new scheme to invite private sector investment and boost private investor interest in the power generation sector.

Under the plan, the government guarantees to purchase up to 2,700 MW of energy produced by small-scale plants within the next 20 years.

There are now two large power plants in Kerman Province with a nominal capacity of 2,300 MW for meeting the provincial demand. A combined-cycle power plant produced 1,600 MW and another in Kahnouj City produced 324 MW of energy over the summer.

The first unit of the combined-cycle power plant in Sirjan with a capacity of 500 MW will enter the distribution grid in March 2016, the second one in June and the steam unit in mid-2017. Iran plans to increase power production capacity from combined-cycle power plants by 8,000 MW in the foreseeable future to reduce dependence on hydrocarbon resources and curb pollution.

According to energy officials, about 10% of the country's total power output comes from hydroelectric plants and plans call for extracting more electricity from clean resources.

Iran’s electricity industry ranks 14th in the world and first in the Middle East in terms of electricity generation with an installed capacity of 74,000 MW.