Meet Iran’s $60bn Renewable Energy Rush
(FinancialPress)—It’s been less than two years since Iran was welcomed back into the international oil market, and already the Middle Eastern state is making a push towards a renewable energy revolution.
Despite only currently representing 360 MW of the country’s 77,000 MW of power capacity, Iranian Deputy Energy Minister Houshang Fallahatian believes that his country can add 1,000 MW of new renewable power capacity every year over the next five years, and that revenues from such renewable sources should reach US$60 billion if he’s correct.
Iran, most notably associated with fossil-fuel power, has the right mix of factors to make the leap into a more renewable driven power grid.
For a country that has over 300 sunny days per year, delivering an average of 2,800 hours of sunshine, the move towards renewables has been a slow crawl until recently.
According to Falahatian, renewable energy (including hydropower) accounts for only approximately 6% of the overall electricity produced. On the other side of the equation, upwards of 90% of the fuel used for power generation is currently coming from natural gas.
Most of Iran’s electricity is generated from thermal power plants, which are in turn powered by fossil fuels.
Iran is currently one of the most energy-intensive countries in the world. Inefficiencies in energy use, coupled with consumer subsidies has driven Iran’s per-capita energy consumption to levels 10x that of those seen in the European Union.
Something had to give.
“We have planned to allocate part of the country’s electricity basket to renewables and as a result, we have decided to bring 1000 MW of renewable energy to the national grid each year in the next five years if possible and raise the country’s renewable power capacity to 5,000 MW,” said Falahatian to Iranian media this week.
The statement follows the sentiments of state-owned Renewable Energy and Energy Efficiency Organization (Satba) and its head Mohammad Sadeqzadeh, predicting renewables could account for 25% of Iran’s power generation by 2022.
“Five domestic investors are operating/developing photovoltaic panel manufacturing units in five cities. Upon the launch of the country’s biggest solar panel manufacturer in Shiraz, domestic companies will have the capacity to produce solar panels with a total capacity of 210 MW annually,” said Sadeqzadeh on Sunday.
Sadeqzade also noted that increasing production capacity of solar panels to 450 MW per year could create 150,000-250,000 jobs.
“In a positive scenario, up to 250,000 people can be employed in Iran’s fledgling renewable industry.”
By expanding Iran’s renewable power generation capacity by 5,000 MW annually, or 20,000 MW in four years, the country hopes to lure additional foreign and domestic investment into the space, which could mean investment opportunities in both wind and solar.
Wind power is still in its infancy in Iran, with only 141 MW of installed power coming from the spinning turbines. There are currently only 15 wind farms in Iran, while there is still an estimated 100,000 MW of potential capacity for wind power alone in the country.
By reducing the need for fossil fuels domestically, the strategy for Iran’s planners is for more of its hydrocarbons to be freed up for international export.
Energy producers from Germany, Italy, India, South Korea, Japan, Spain, China, and Switzerland are said to have already visited Iran as of late to assess the possibilities for investment.
Since sanctions related to Iran’s pursuit of nuclear power were lifted in early 2016, the country has opened up its economic portals to international investors.
According to former energy minister Hamid Chitchian, there have been a total of $3.6 billion worth of investment proposals to develop renewable projects in Iran submitted.
One potential suitor has already come forward. Norway’s Scatec Solar has been reported to be in talks to generate 120 MW of Iranian solar power, which could rise to 500 MW. According to Scatec’s CEO Raymond Carlsen, the project would cost $120 million per 100 MW installed.
But the largest solar project to-date comes from an Italian bid to create 1,000 MW of solar capacity in Qazvin, for a price tag of $1.5 billion, which includes an array of 100 photovoltaic power stations over 10 years, each with a capacity of 10 MW.
State officials claim that an additional 4,000 MW of renewable capacity is expected to come from wind power, and to be built by 2020.