$257m Allocated for DG Power Plants

$257m Allocated for DG Power Plants$257m Allocated for DG Power Plants

An estimated $257 million will be allocated for the construction of power plants with distributed generation (DG) system in the next Iranian calendar year (starting March 2015), an official at the energy ministry said, Mehr news agency reported Tuesday.

Seyyed Reza Mirza-Zadeh Hosseini said, "The National Development Fund of Iran (NDFI) has allocated $31 million for the construction of power plants with distributed generation system, and a further $257 million will be invested for 35 such plants with a total capacity of 430 MW."

NDFI is the country's sovereign wealth fund, founded in 2011 to save a part of oil and gas revenues for productive investment for future generation.  The present capacity of DG power plants in Iran is approximately 550 MW, of which, 350 MW is linked to the national power grid, and the remainder is consumed locally by industrial units.

Distributed generation, or DG, refers to electricity that is produced in small quantities near the point of use. It reduces the cost, complexity, and inefficiency associated with transmission and distribution, while offsetting peak electricity demand and stabilizing the local grid.

The energy ministry has guaranteed the purchase of every kilowatt-hour (kWh) of electricity from such plants for $0.03 over the next five years. It has purchased a total of 2,600 MW of electricity from plants with the DG system.