Iran Expanding Electricity Capacity Via Foreign Funds

A slew of foreign investors have agreed to build thermal power plants in Iran in what would raise the country's electricity generating capacity to more than 80,000 megawatts, an official at the Thermal Power Plants Holding Company of Iran said.

"Iran has signed agreements with Turkish investors to develop 5,000 MW of new power capacity," Jamshid Sojdei, an official in charge of the TPPHC contracts, was quoted as saying by ISNA on Friday.

Last year, Turkish energy company Unit International signed a preliminary agreement with the Energy Ministry, worth $4.2 billion, to build seven power plants in Iran. The agreement, initially set for seven power stations with a total output capacity of 6,000 MW, was downscaled in February to two plants with 2,000 MW in capacity.

"Two power stations with a combined output capacity of 2,000 MW are planned for construction in the cities of Saveh (Markazi Province) and Zahedan (Sistan-Baluchestan Province) using Turkish funds," Sojdei said, adding that the construction site of the projects have been approved.

According to TPPHC chief, Mohsen Tarztalab, Unit International will be given the green light to develop the other 4,000 MW "if it shows good performance" in Saveh and Zahedan projects.

The Turkish firm will construct a 1,200-MW plant in Saveh, 100 kilometers southwest of Tehran and an 800-MW plant in Zahedan.

"Negotiations are also underway with three companies from South Korea, Japan and France to finalize agreements to develop 3,500 MW in new electricity production capacity," Sojdei added.

Over the last two months, the construction of more than €500 million worth of power plants has commenced in Iran, including a 540 MW combined cycle power plant in Zahedan at a cost of €300 million and a 451-MW combined-cycle unit in the city of Andimeshk, Khuzestan Province, with an estimated cost of €250 million.

--- Reliance on Thermal Plants

The new projects will increase Iran's installed power generation capacity to more than 80,000 MW. Iran is the largest electricity producer in the Middle East with an installed capacity of around 76,000 MW. Its electricity industry ranks 14th in the world in terms of output and first in the Middle East.

Oil and gas-rich Iran largely depends on its fossil fuels for power production. More than 80% of the country's electricity output come from thermal plants that burn natural gas or petroleum products for power generation.

In addition, 12,000 MW come from hydroelectric plants and 1,000 MW from the sole nuclear power plant in Bushehr, south of Iran.

However, renewable energy resources have had a meager share in the country's push to expand power production capacity over the last four decades.

Iran, a country with diverse climate and huge potential to harness energy from wind and sun, has an installed renewable capacity of 240 MW, or barely about 0.33% of its total installed power capacity.