Iran’s Renewable Energy and Energy Efficiency Organization (SATBA) has issued a request for proposals regarding development of 4 GW of solar capacity across the nation, the latest sign of renewable energy’s recovery in the country.
In January Iran announced that it intends to reach 10 GW of new utility-scale renewable energy capacity in the course of the next four years, up from around 1 GW of total national solar and wind capacity today. SATBA has stated that it has 90 GW of project proposals submitted by investors.
In February the managing director of the Yazd Regional Electricity Grid said 1.65 GW would be installed in the province over the next four years, compared to existing capacity of 81.5 MW. Yazd province has only 1/70th of Iran’s population, but its central position means it has both more economic activity than average, and has open desert to build in. And in March, the Energy Ministry announced a goal of 550,000 rooftop solar installations by 2025, up from 6,000 today, which were mostly thanks to government-backed 10-year loans.
President Trump’s 2018 reimposition of sanctions killed the Iranian renewable energy project pipeline, with some 5 GW of solar developments cancelled, including 600 MW from Quercus Investment Partners and 2 GW from Saga Energy – European developers were commonplace. Iran’s plan had been to develop 5 GW of solar by 2022, and instead only 90 MW of new solar was installed in 2019, followed by 50 MW in 2020. Progress on wind power proceeded at a similar pace.
The Biden Administration has discussed lifting sanctions on Iran, mostly conditionally, and it has already lifted some, including on officials from Iran’s oil industry and two related companies. But so far the US has not let Western investment back into the country en masse, while for its part Iran refuses to sign the Paris Agreement on climate change while it remains under sanctions, which Iran blames for stalling its renewable energy development.
It’s unclear at this stage where exactly the investment for 10 GW of renewables will come from, with SATBA stating that it comes from “local private investors.” Without Western finance, the obvious alternative is China, with its Belt and Road initiative. SATBA states that it is offering 20-year PPAs, with active participation on the energy market also an option – generators and consumers can sign contracts directly with each other. Or maybe Iran will really pay for $10 billion of renewable projects by itself, in the global context of high profits for fuel exports. By March 2021 some 230 MW of renewable projects were under construction in the country courtesy of 54 companies, with much larger investments beginning to be announced, such as the 631 MW announced that month across two solar projects in Fars Province. Those two projects were attributed to Meraat International Group, an Iranian oil company.
In December an Iranian company, Mana Energy Pak, brought a 150 MW cell factory online, the first cell facility in the Middle East outside of Turkey. The company already owned a 250 MW module factory, which it plans to extend to 1.5 GW next year, and its website mentions 1200 MW of wafer capacity to be brought online “by the end of 2021”. It’s tempting to think of Iran as in a rather sorry state after all the Western sanctions – like Syria, Venezuela, or Cuba – but the country has its own scientific and technical base with an HDI of 0.783 (Human Development Indicator), not far behind Turkey’s 0.820.
That domestic manufacturing capacity will be protected by customs duties on imported solar products, but the market will also be supported by Iran’s generous Net Metering and Feed-in Tariff payments, backed up by irradiation levels on par with Arizona and northern Mexico. As of 2017, Iran’s Ministry of Energy owed $6.8 billion to private electricity producers due to subsidies on the electricity consumption of the average citizen.
Oddly enough, Iran has some regulations in place regarding consumption of renewable energy by cryptocurrency miners, with SATBA’s head stating in January that the agency was considering building renewable power plants specifically for that industry.
Iran desperately needs to address the problems on its grid. In the summer of 2021 the country faced its worst ever spate of power cuts with 11 GW of unmet demand. President Rouhani complained at the time that $4.5 billion of energy projects were on hold due to US sanctions, temperatures of over 40 degrees Celsius begged for over 20 GW of air conditioner power use, and hydropower dams ran low on their reserves. A 2006 study found that Iran’s hydropower had a capacity factor of just 16%.
During last summer’s crisis the government paid $15 per MWh to anyone with a generator while providing the fuel for free. So we can expect the commercial and industrial rooftop segment to do well in this country, as enterprises seek to insulate themselves from the grid’s weakness.
If Iran can solve its own problems the country should have a future as a power exporter to the less organized neighboring states of Pakistan and Afghanistan, while importing power at times from Armenia, Turkmenistan and Azerbaijan – meanwhile Iraq is significantly dependent on Iranian gas and electricity.
Besides photovoltaics Iran has good wind potential, and it is now building its first utility-scale CSP plant – a 20 MW facility to be integrated with an existing combined-cycle plant in Yazd province. We predicted that the country would have a couple of hundred MW of solar thermal capacity by 2030 in our CSP report, and if anything this may prove to have been understated.