This summer Iran’s electricity consumption reached the peak of its production capacity (just over 51 GW). Iran’s electricity sector will face a shortage in coming years as Iran’s electricity demand is expected to grow by 6% per year but growth in its generating capacity is only limited to a third of that amount. Iran currently is only producing 0.2% of its energy from renewable sources. The renewable energy sector comprises of mainly wind (53.88 MW), biomass (13.56 MW), solar (0.51 MW) and hydropower (0.44 MW).summer Iran’s electricity consumption reached the peak of its production capacity (just over 51 GW).

 

Iran’s electricity sector will face a shortage in coming years as Iran’s electricity demand is expected to grow by 6% per year but growth in its generating capacity is only limited to a third of that amount. Iran currently is only producing 0.2% of its energy from renewable sources. The renewable energy sector comprises of mainly wind (53.88 MW), biomass (13.56 MW), solar (0.51 MW) and hydropower (0.44 MW).

 

Iran’s geography and climate are highly suitable for the various forms of renewable energy technology. The southern provinces of Iran are an ideal location for solar projects as they are located on the world’s 'Sun Belt' enjoying high solar irradiation (direct nominal irradiation of up to 5.5 kWh/m² day) and an average of 300 sunny days per year. Further, the country also has the potential to produce 1.4 GW of wind power as it is located in a low pressure region surrounded by high pressures areas and is in the main air corridor of winds in summer and winter.

 

The Iranian government is pushing for a move away from the use of hydrocarbons as a source of electricity production. This will free up oil and gas for export and allow electricity to be produced more cost effectively. Iran’s policy makers have recognised the potential of the renewable energy sector and have taken steps to exploit it. The Iranian government in its 5th Development Plan (2010 to 2015) announced plans to install 5,000 MW of renewable energy by providing incentives, such as minimum tariff rates, to the private sector to invest in the sector. This target was too ambitious to achieve in a country where the renewable energy sector is in its infancy. International sanctions were also a contributing factor in Iran failing to meet this target.

 

The Iranian government has now set a new target in its 6th Development Plan (2016 to 2020), to be passed by parliament this year, which will see the instalment of renewable capacity of 5,000 MW within this period as well as plans for an additional 2,500 MW by 2030. The Iranian Power Generation, Transmission, Distribution and Management Company (the 'TAVANIR'), estimates that Iran’s renewable energy capacity will be able to provide 10% of the country’s energy requirement within 5 years.The lure of Iran’s renewable energy sector can be seen in the investments already made in this sector after sanctions were lifted. There are a number of solar and wind farm projects that have signed PPAs, including a 48 MW wind farm in southwest Iran, 1,250 MW of solar power plants to be constructed at various locations across Iran (including 500 MW near Tehran), a 1 GW solar park in the Khuzestan province to be built by a consortium of Iranian, Indian and South Korean companies and a 50 MW solar plant in Qeshm Island to be built by an Italian company. Furthermore, a Danish company has announced the construction of a wind turbines facility in Iran and a Spanish company has signed an 18 month contract to supply technical services to the Renewable Energy Organization of Iran (the 'SUNA'). The head of the Ministry of Energy (the 'MoE') has recently stated that Iran is planning to tender 1,000 MW of wind and as much as 3,000 MW of solar projects. This process will begin later this year and will take place over several stages.

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