Iran's Energy Ministry Sees Huge Potential in Renewables

Iran's Energy Ministry Sees Huge Potential in Renewables
Iran's Energy Ministry Sees Huge Potential in Renewables

Iran is planning its first tender for utility-scale renewable-energy projects by the yearend as it gets ready to embrace and promote green energy that has the potential to attract $12 billion in investment.

The nation wants to install 5 gigawatts of renewable energy in the next five years and an additional 2.5 gigawatts by 2030, Iran’s Energy Minister Hamid Chitchian told Bloomberg in an interview in London this week.

Re-opened to investors following last year’s nuclear deal, Iran has been courted by international green power investors at the same time as it boosts oil production for export.

“We’re not going to use the money from oil in that sector at all,” Chitchian said. “All the investment will be done by the private sector, including local and foreign companies.”

At least 150 trade delegations from around the globe have visited Tehran in the six months since economic sanctions were dropped.

The Energy Ministry is already in talks with some of the world’s largest renewable-energy players including Vestas Wind Systems A/S and Siemens Wind Power Ltd., Chitchian said.

Vestas’ chief sales officer, Juan Aratuce, said last month that Iran could be an important new market for wind energy. Automaker Iran Khodro Co. is negotiating with South Korea’s LG International Corp. to jointly develop electric vehicles. Most of Iran’s power plants are over 40 years old and need to be renovated and repowered, he said. The government is planning to invest a total of $50 billion in its electricity system in the next 10 years.

The ministry has set 12 plans to promote active investment in renewable energy sources, depending on the type of technology and the size of the power plant. That system will be kept for projects under 100 megawatts, according to Bloomberg.

Iran will tender 1 gigawatt of wind and as many as 3 gigawatts of solar, likely in several stages, Chitchian said. It is also seeking to build biomass and geothermal plants and swap natural gas for electricity with Armenia.

It may also add solar to its system of energy swaps, which before the sanctions were lifted, allowed the country to trade crude for refined products.

Under a so-called “solar for service” program, developers and land owners would split cash flows generated from power sales. Iran currently generates 80% of its power from natural gas and wants to raise that figure to 90% by the end of next year.