Opportunities to Construct Renewable Energy power plants In Iran
1) Targets and Policy
- Prospect of Development:
According to guidelines set by The Excellency Supreme Leader of Islamic Republic of Iran, which determines the policy and planning framework of entire executive authorities of the country, developing renewable energy resources and power plants is necessary.
- The development of 5000 MW installed capacity of renewable power plants, is set as a main goal in the next 5 years.
This goal will be achieved mainly by interaction of private sector through guaranteed electricity purchase.
2) Law and Regulation
According to Iran laws and Regulations, Ministry of Energy is Obliged to Purchase Electricity from Power plants established by private sector with specific tariffs:
- Article 62 , Part of The Government’s Financial Regulations Act, that was legislated in 1380(2001), has obliged the Ministry of Energy to purchase electricity produced from non-governmental renewable power plants.
- Article 61 , The Law of Modifying Consumption Patterns that is a permanent law and was legislated in 1390(2011) , also obliged MOE to purchase electricity through long term contracts with guaranteed tariff.
- Paragraph B of Article 133,The fifth 5-year plan of development of the country , legislated by the Parliament in 1389(2010) , & its executive instruction was approved by the Council of Ministers , allows Ministry of Energy to purchase RE electricity through long term contracts and with adjusted tariffs according to local inflation & fluctuation in currency rates.
- Financial Sources needed will come from 1) benefits of fossil fuel saving 2) environmental benefits and 3) energy conversion expenses.
3) Tariffs for Renewable power plants:
- Tariffs in past years
- In 1391(2012) : 1792 and 1863 Rls per kWh
- In 1392(2013) : 4371 and 4442 Rls (only for 5 years)
- In 1393(2014) : 4480 and 4628 Rls (only for 5 years)
The higher rates of each year was related to power plants connected to distribution grid, usually with capacity less than 7 MW.
These are the last tariffs for past years only to mention the tariff variation history. The new tariffs are higher (different prices due to different capacities but with fixed IRR) and are guaranteed for 20 years period with fixed price during the contract.
The new and updated tariffs you can find in here: Iran feed-in tariffs in renewables
- Current year tariffs in 1394(2015):
- In this year, for the first time, the purchase price of electricity from renewable energy power plants has been based on different rates for different types of renewable energy technologies. The size of the power plants is considered as another factor in defining price of electricity.
- The average rate on the basis of the formula in article 133 is calculated 4873 Rials per kWh and then by taking the equal rate of return on investment and the capacity of development of each type, different prices are determined.
- The announced rates will be valid for the first 10 years of guaranteed purchase contract, and in second 10-year, the rate will be decreased by 0.7 factor(expect for wind power plants).
- For wind power plants it will be multiplied by a factor between 0.4 and 1 according to production plant factor in the first 10 years .
- In all 20 years of contract period, the rate based on formula adjusted by the rate of inflation in country and exchange rate fluctuation.
III. Index Formula
4) Foreign Investment Promotion and Protection Act (FIPPA)
- The law protecting foreign investment in Iran is the Foreign Investment Promotion and Protection Act ratified in 2002 which is referred to as FIPPA.
- Thescope of applicability of the FIPPA extends to the territory of the Islamic Republic of Iran under which all foreign investors may invest in the Country and enjoy the privileges available there under, a FIPA allows investors to invest with greater confidence.
5) Potentials of Renewable Energy Sources
Map of wind energy potential in Iran (80m above the ground)
Wind energy potential is estimated to be 30000 MWh
Map of Solar radiation in Iran
Central and southern regions of Iran have high solar radiation
Map of geothermal energy potential in Iran
Map of urban waste energy in Iran
6)Steps of implementing projects
1) Registration and acquiring Final Establishment Approval from SUNA
2) Gathering Approvals or Permissions including:
- Grid Connection Permission from TAVANIR,
- Environmental Permission from the Conservation of Environment Organization of Iran,
- Land Use Permission from the governmental lands authorization,
| 3) Signing Power Purchase Agreement with SUNA
SUNA will monitor and generally supervise the activities,
Beginning of Operation of the Power Plant. SUNA will coordinate the grid connection tests & inspections via Grid Management Company of Iran
7) Some of Registered projects by Iranian Private Sectors
- Establishment of new power plants which use urban waste and in cooperation with municipalities
- Establishment of new solar power plants:
Hedayat Noor Yazd, Electronic sazane semnan, atie barge khorasan and
- Establishment of new wind power plants :
Mapna, Beheen ertebat mehr, Mahtab gostar, Tavan baad, Pooya garb, Atrin Iranian, Asia sazan modern tarh
- Establishment of wind turbine production line in Iran
- Establishment of small hydro power plants in Iran
- Establishment of geothermal power plant in Meshkin shahr – Northwest of Iran
- Article 62 , Part of The Government’s Financial Regulations Act, that was legislated in 1380(2001), has obliged the ministry of energy to buy the electricity produced from non governmental renewable power plants. in 20 hours a day (for peak & normal load of national grid) with tariff of 650 Rials per kWh and in other 4 hours (for low load of national grid ) wih the rate of 450 Rials per kWh.
- The tariff in this law increased to 1300 and 900 Rials per kWh by council of ministers affirmation. And escalation of price was allowed according to the formula that has been announced in the paragraph B of article 25 of fourth development plan to compensate internal inflation and exchange rate of foreign currency.