Lucrative Market Awaiting German Solar Panel Makers

Lucrative Market Awaiting German Solar Panel MakersLucrative Market Awaiting German Solar Panel Makers

“Made in Germany” should mean money for companies tapping into Iran’s underdeveloped but potentially enormous solar market, according to a government-commissioned report.

With economic sanctions against Iran lifted, German solar firms have a “huge sales” opportunity, said BSW Solar, a Berlin-based industry group, Bloomberg reported.

Iran has reinstated 20-year power purchase agreements and set feed-in-tariffs at “highly profitable” rates of around $0.33 per kilowatt-hour, according to the 134-page report paid for by Germany’s Foreign Office.

“The political will in Iran to realize success in this market is abundantly clear,” report's author and BSW head, Joerg Mayer, said. “What counts now for German firms is the speed and determination to build business relations” with Iran.

“German companies are among the most trustworthy companies in Iran,” said the BSW report, which collaborated with the Tehran-based Iran-Wind Group to collect data.

While commercial ties between Iran and Germany shrank under a decade’s worth of nuclear sanctions, German industry still holds a favored position built on more than four centuries of trade. Business has begun to return with commercial ties rising 27% to €2.7 billion in 2014, according to the Foreign Office. Germany is Iran’s largest European trading partner. Iran’s government set its renewable energy target in 2012 and had just 150 megawatts of clean power plants operating last year. Some 80% of Iran’s territory, where the sun shines on average 300 days a year, is particularly suited for solar power, according to the study.

“In many cases, it’s cheaper and easier to install than other renewable technologies,” said M.M. Warburg analyst Arash Roshan-Zamir in an email reply to questions.

While Iran’s government has so far focused on installing wind power, “there is massive potential for solar,” he said.

Most solar panels currently deployed are Chinese-made and Iran is trying to attract investors to create a polysilicon industry supported by the country’s large reserves, the report said.

Nominal power generation capacity stands at around 74,000 MW, with 61,000 MW coming from thermal power plants, 12,000 MW from hydroelectric plants and 1,000 MW from nuclear power.

An Iranian official said in November that the country had already attracted German investment for a 1,250-megawatt solar plant.