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Cooperatives Inept at Building Micro Power Plants

Cooperatives Inept at Building Micro Power Plants  Cooperatives Inept at Building Micro Power Plants

Private sector experts warn that the involvement of cooperatives in the construction of micro power plants will bring about negative consequences for the economy, the Persian daily Forsat Emruz reported.

The ministry of energy has recently issued an announcement, inviting cooperatives whose charters include investment in power plant construction, to become engaged in building small power stations for distribution and micro-generation of electricity.

Distributed generation (DG) has considerable benefits, like reducing energy losses, because the electricity is consumed at the same place as it is produced, while the surplus can be sent to the grid.

Yet, private sector professionals believe cooperatives involvement in power plant construction has more disadvantages than benefits.

  Low Quality Turbines

Involvement of small industries and cooperatives in power plant construction might lead to the import of turbines with short life cycles and low efficiency, private sector experts warn. The process will not only result in fuel wastage, but also waste investments made in the sector.

If cooperatives intend to build power plants with DG, they should be required to participate in the Iranian Energy Conservation Society (IECS) in the first place, the deputy director of the energy committee at the Iran Chamber of Commerce, Industries, and Mines (ICCIM) told Forsat Emruz.

Characterizing the devised model by the ministry of energy for constructing DG power plants as appropriate, Arash Najafi said the ministry better ask for advice of the private sector before implementing such projects.

On the other hand, describing micro generation power plant construction as a specialized task, former deputy of Iran Electrical Industry Syndicate told Forsat Emruz that the cooperatives need to merge and make larger companies before they participate in the construction of power plants.

In a bid to prevent the import of various turbines, the government needs to determine a framework for cooperatives before they get involved in construction of power plant, said Ali Akbar Soheili. "That's because providing such products with after-sale services would be a very difficult task," he added.

However, Najafi believes that "by employing combined heat and power (CHP) and combined cooling, heating and power (CCHP) plants, we can increase energy efficiency up to 95 percent."

Milad Tower has been recently equipped with a CCHP system, he said, adding that by reducing the fuel consumption, the system has saved $1.5 million in a year.

  Not Attractive

Although by means of connecting to the national power grid, DG systems can sell their surplus electricity output to the government at a guaranteed rate, the secretary of renewable energies committee of the Electrical Industry Syndicate believes that guaranteed purchase rates for DG are not attractive for the private sector. Rahele Ghezel said these prices increase the repayment period for investors, thus discouraging the private sector from taking part in the implementation of such projects. Also, once the number of power plants with micro generation and DG systems increases, conflict will rise over how the government wants to supply gas needed by these power plants, she added.

  Gov't Debts to Investors

The money the ministry of energy owes contractors is the biggest concern of the private sector investors, according to Siros Reza Moghadam, former board member of the Electrical Industry Syndicate. The biggest risk threatening micro-generation power plants is the failure of the ministry to pay for the electricity produced by these power plants, he said, adding that construction of power plants requires adequate knowledge and skills and the task cannot be undertaken by the cooperatives.

Financialtribune.com