Power Generation to Miss Target

Power Generation to Miss TargetPower Generation to Miss Target

Given the sharp rise in electricity consumption, Iran is predicted to fall short of power generation target in the near future mainly due to technical shortcomings, managing director of Iran Power Generation, Distribution and Transmission Company (Tavanir) said on Saturday.

"Unless technical challenges are met, scattered power outages cannot be helped," Arash Kordi also told ISNA.

"Plans have been made to inform the people on how to curb consumption by adopting appropriate measures all over the country."

Kordi noted that the Iranian government has to meet domestic demand and then embark on supplying surplus electricity to neighboring states.

This comes as the Energy Ministry on Friday said domestic electricity consumption in summer had a 2.7% jump compared with the same period of last year.

"According to projections, electricity consumption is predicted to witness a 7% rise next year," he said, adding that electricity consumption crossed a record high of 47,000 megawatts to reach 47,344 MW in summer.  

Despite being rich in energy resources, wastage and overuse of energy in Iran impose high costs on the national budget, not to mention the fact that the gap between water and electricity demand and supply continues to widen at a dangerous pace.

The financial burden is said to equal the total development budget estimated to be in the region of $8 billion annually, according to a report by Iran's Energy Efficiency Organization.

Underscoring the gloomy prospect of power industry due to severe financial constraints, Kordi said, "Unless the budget deficit is bridged by devising workable strategies, the future will hold nothing for this industry."

Mohammad Maleki, chairman of the board of directors at the Power Generation Companies Syndicate, said the Energy Ministry's debt to private power plants has reached a staggering $1.8 billion. Since power generation capacity needs to increase by 5-6% each year, huge investments are needed to meet the goals. 

"The present economic climate, however, discourages private investment, putting at risk the country's future power supply, especially in the industrial sector," Maleki said.

The private sector believes that producing and supplying electricity in Iran are not a very attractive venture due largely to the "low prices" and the government subsidies to consumers. Generating each kilowatt-hour of electricity costs 680 rials (about 0.027 cents) while it is being sold for 430 rials (about 0.017 cents).

Although 1,250 MW are to be added to the national power grid next year, Kordi believes this amount is definitely not enough to meet the country's rapidly growing need.

Surprisingly, no more power plants can be established due to the same budgetary problems.

Highlighting the systematic approaches to address the financial issues, the Tavanir chief hoped that drawing on the practical experiences gained in terms of curbing consumption, blackouts can be handled next year.

"Taking adequate measures to check consumption growth tops the ministry's list of priority," Kordi said, warning that difficult days are yet to come.

The construction of power plants has declined in recent years. Although the government has encouraged private enterprises to cooperate, their participation in energy projects has been affected mainly due to the lack of guarantee for the capital returns. Declining investments and the prevailing economic recession are among other challenges facing the key electricity sector.

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

Energy consumption in Iran is worrying and if the current trend continues, the total amount of energy generated in the country will have to be used domestically by 2025.

Tavanir plans to optimize consumption patterns in 38 industries, including cement, aluminum, plaster and foundry, in cooperation with the Ministry of Industries, Mining and Trade.