Energy Framework

Electric Regulatory Framework: the Ministry of Energy (MoE) of Iran was established in 1975 to be in charge of managing and coordinating water and energy activities except oil and gas. Until the middle of 1990s, the electricity sector in Iran was completely centralized and managed by the Ministry of Energy. In accordance with privatization program, the government seeks to increase private sector participation in centralized sectors, including the electricity one. The Iran Power Generation and Transmission Company (TAVANIR) was established to organize the supervisory activity of the government in the fields of operation and development of the Electric Power Industry. It supervises the affiliated companies and employes facilities of the Electric Power Industry of the country. Currently, the company is responsible for the management of 16 Regional Electric Companies, 28 Generation Management Companies, 39 Distribution Companies, Iran Power Development Co. (IPDC), Renewable Energy Organization of Iran (SUNA), Iran Energy Efficiency Organization (SABA), Iran Power Plant Project Management (MAPNA) and Iran Power Plant Repairs Co.2

Governmental strategy for development of Renewable Energy (RE) and for environmental technologies: the geographic and climatic conditions in Iran are very favorable for renewable energy. The country enjoys an outstanding DNI (Direct Normal Insolation) of up to 5.5 kWh/sqm/day and an average of 300 sunny days per year. Important measures have been undertaken for the development of renewable energy in regard to deployment of sustainable development, in order to respond to the increasing energy demand. To increase incentives for investing in renewable energy, Iran amended its laws in 2015. Pursuant to the new laws, a new system of feed-in tariffs differentiating by type of technology has been implemented: the power purchase agreement is entered into with SUNA, a subdivision of the Ministry of Energy in Iran specifically established for renewable energy matters and responsible for planning, policy making and promotion of renewable energy. The country aims at diversifying energy sources and modernizing the existing machineries and systems. Authorities have devised a development plan for alternative energy sources, encouraging considerable investments in renewables sector, which should generate 5000MW per year by 2018. Government craves to achieve partnerships with foreign investors and to transfer technologies and know-how. Iranian Energy department has outlined a development plan for the national electrical system. At the same time, Iranian Govern has identified as strategic priorities the implementation of photovoltaic and wind power plants. Nowadays, Iran exports energy to Turkey, Armenia, Turkmenistan, Azerbaijan, Pakistan, Syria and Iraq.

Environmental sustainability: in the country there is water scarcity: the water supply network is poorly developed, while the demand for drinkable water is sharply rising due to the significant urbanization effect. Furthermore, agriculture demands and consumes a considerable quantity of water; nevertheless, water recycle process is inadequate and uncommon.

Renewable energy: natural gas and oil accounted for almost all (98%) of Iran's total primary energy consumption, with marginal contributions from hydropower, coal, nuclear, and non-hydro renewables3. Thus, Iran as a major oil producing country has increasingly paid attention to the non-fossil energy resources, in particular to renewable energy sources for its longer term energy plans. In this regard, 11 projects pertaining to solar energy are being utilized or carried out by Iran's Ministry of Energy. Furthermore, two geothermal projects are being constructed in Ardabil Province at present. The renewable energy share in electricity generation in the country is currently about 3% with a potential to increase to 38% by 20304. Iran's electricity consumption is expected to continue to grow. In order to achieve a sustainable economic growth and to become a manufacturing hub, Iran has to combine a right mix of energy sources. For this reason, the government has incentivized private sector to increase investments in renewables. Particularly, while Iran’s renewables industry is concentrated mainly on hydro plants, the government plans to bolster wind, preserving crude oil mainly for export.

 

2 Source: German Solar Association

3 Source: U.S. Energy Information Administration (EIA)

4 Source: International Energy Agency (IEA). World energy outlook. Paris: OECD/IEA; 2009 in Renewable and Sustainable Energy Reviews 65 (2016) 743–755

Solar energy

A country-wide assessment shows that on 80% of the land in Iran’s territory, the solar irradiation would be between 1640 to 1970 kWh/m2 per year. The total installed capacity of PV power plants was about 87 kWp; among them the 12 kWp off-grid in Yazd province. There are several installed PV systems as distributed source of electricity and most of them supply electricity to the streets and parks lighting. Others are applied for traffic lights, bus stations, telecommunication systems and distributed residential electricity supply to rural areas. According to the Energy Balance sheet of 2013, most of the PV power plants were installed by the Ministry of Energy for rural electrification. The private sector was not active in the renewable energy investment until the ratification of Article 133 (section B) of the 5th five-year development plan in 2011. After that, another payment mechanism which is named “Buy-Back contracts” was introduced in Article 19 of Budget Act 2013 to enhance the investment in renewable energies. (Source: German Solar Association)

Wind Energy

The government has set the ambitious goal to build an additional 4,500 megawatts of wind power capacity and 500 megawatts of solar energy capacity by 2018. Moreover, the wind energy potential is estimated to be 30000 MWh. Private sectors have signed contracts to build more than 500 MW of new wind energy developers. According to some analyses (Mostafa Rabie’s organization), Iran can supply over two-thirds of its energy through wind power.The country already counts several wind energy plants: Takestan (Qazvin Province), Khaf (Khorazan Province), Neishabor (Khorzan Province), Manjil (Gilan Province), Lotak (Sistan Blochestan Province), Sarein (Ardebil Province), Sahand (Azarbaijan Province), Mahshahr (Khozestan Province), Sofeh (Esfahan Province), Baba kohe (Fars Province).

Hydropower

Hydroelectricity is among the most inexpensive renewable energy resources: because of the relative simplicity and briskness of the hydro industry, it is a reliable backup to the national grid when consumption spikes. According to TAVANIR, power generation in most of the country’s nearly 50 hydroelectric plants has either stopped or sharply diminished. Hydropower normally makes up 14% of Iran’s overall electricity mix, but this share has declined to less than five percent.


Biogas

Two geothermal projects are being constructed in Ardabil Province at present. At the end of 2010, the Meshkinshahr geothermal power plant project revealed a progress rate equal to 50%. Private sectors have already signed contracts to build more than 600 MW of biomass systems. Shiraz Biogas Power Plant is the main Iranian biogas power plant. (Source: Renewable and Sustainable Energy Reviews 65:743-755. July 2016.