Solar Iran

Solar Iran capability

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Iran faces an increasing energy demand that cannot be met by conventional energy sources only. Renewable Energy is an economic option when compared with the generation costs of conventional energy. Furthermore, the country has great solar energy potential that can be used. Hence, the main objective of ENABLING PV is to contribute to the sustainable deployment of renewable energy in Iran.
The project is funded by the German Foreign Office and is led by the German Solar Association (BSW-Solar) in cooperation with the consulting firm eclareon, the Iran-Wind Group and Pflüger International. The study aims to establish a long-term cooperation with solar energy companies and industry associations in Iran.
Within the project the processes of investments and project development of PV power plants in Iran were analyzed. This includes the identification of the legal and administrative framework and the description of the two most viable business models for solar PV. For this ENABLING PV IRAN focused on the following activities:
• Description of the most viable business models for solar PV
• Identification of the legal and administrative framework for each identified business model and the barriers hindering its implementation
• Formulation of recommendations to remove these barriers
• Presentation and discussion of the project results with decision makers in order to give input to the optimization of the legal framework. This was done through a workshop in Teheran
• Dissemination of the project results with local and international investors
• Strengthening the cooperation and transfer of knowledge between relevant stakeholders in Iran and Germany
The study was developed through desk research and interviews with market experts, legislators and project developers using standardized interview guidelines. Plausibility assumptions and an analysis of barriers helped to formulate recommendations for policy makers and politicians. Sample calculations of typical projects including cash flow modelling and sensitivity analysis provided an outlook for profitability changes according to changes in system prices, energy yield or remuneration and thus a first guideline for investors. The preliminary results were presented at an event in Teheran on the 21. December 2015 and discussed relevant stakeholders in Iran.

Electricity Market Profile in Iran

Electricity Market

Before restructuring the electricity market of Iran in 2004, the government worked as a monopoly with sole responsibility of generation, transmission and distribution. Due to the high consumption growth of electricity and the necessity to enhance private investment, the The Electric Holding Company of Generation, Transmission & Distribution Company (TAVANIR) took some steps to a reforming mechanism of power market starting in 2001. The initial objectives were set to prosper competition in the market, increase the share of private investment in power plants and to improve the efficiency in electricity generation. One decade after implementing the competitive basis of electricity market, most of the market players are still governmental or semi-governmental. The current structure of the electricity market is organized as follows:
a. Electricity Generation
Electricity is provided by i) state owned power plants which are administered by TAVANIR and affiliated Regional Electric companies, ii) hydroelectric power plants under the control of the Deputy of Water and Sewage of Ministry of Energy (MoE), iii) private owned power plants, iv) large industries, and vi) the Atomic Energy Organization which manages the nuclear power plant in Iran. Privatization in generation started by contracting Energy Conversion Agreements (ECAs) and continued by developing some Build-Operate-Transfer (BOT) and Build Own Operate (BOO) projects with private investors. In 2013, TAVANIR tendered and sold some of its power plants and increased the share of private electricity generation to 41% of the total installed capacity17.
b. Transmission
In each Regional Electric company there is a department under the title of “Deputy of Power Transmission” or “Deputy for Operation” which is responsible for maintenance, operation and development of transmission lines and sub-stations. Because all 16 Regional Electric companies are owned and administered by TAVANIR, the transmission sector is still considered as a regulated monopoly.
c. Distribution
With reference to the legislation approved by the parliament in 2005 known as “Independency Act of distribution companies”, all transmission companies are responsible for the development, operation and maintenance of transmission facilities and must work as
17 . Research calculation based on the “Iran Energy Balance (2013)”
non-governmental entities. During the privatization, about 60% of these companies were transferred to a private holding company18 and the other remained in TAVANIR.
d. Market Management and Regulatory Framework
The Iran Grid Management Company (IGMC) was funded as a state-owned company to handle the power market and operate the electricity network in 2004. The main objectives and the scope of activities of IGMC are: conducting and monitoring the production and transmission of the national network, developing competitive electricity market in generation and distribution, as well as adopting policy-induced participation of private sector into the market19. The market regulation is administrated by the Electricity Market Regulatory Board, which is a group of experts assigned by the Minister of Energy to monitor market performance and to revise the market operation rules and procedures.

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