With a population of over 80 million people, Iran is also home to the world’s fourth-largest oil reserves and the second-largest natural gas reserves. Yet despite its rich bounty of hydrocarbon resources, the country has decided to pursue projects that depend on renewable energy sources.
For many years, despite the country’s wealth of hydrocarbon resources, Iran has faced serious challenges in capitalizing on them due to low efficiency, poor policies, and barriers to foreign investment. However, in recent years, a growing population coupled with increased consumption of energy overshadowed concerns about efficiency and adverse effects to the environment, according to a report released in 2016.
And with electrical demand expected to increase at about 6.0 percent a year, Iran’s electricity sector will begin facing shortages. To this end, with a favorable topography and climate suited to a number of alternative energy technologies, The Iranian government is pushing to move away from the use of hydrocarbons as a source of electricity production, freeing up more oil and gas for export.
Policies on the increased use of renewables
Based on current information, Iran’s existing power generation capacity stands at 74,000 MW, of which almost 200MW is produced using renewable energy sources, either wind, solar or geothermal.
Currently, there are projects to produce 600 MW of electricity using wind, and/or biomass, as well as the construction of a 50-MW geothermal power plant in the northwest of the country. But these projects are just the beginning of Iran’s commitment to the Paris Climate Pact.
As one of the 200 countries that affirmed the agreement, Rik Teeuwen, the project manager of Solarplaza’s Renewable Energy Trade Mission Iran, told Al-Monitor, “If you can get wind energy and solar energy cheaper than old ways of generating, you save money and you can sell the fuels you don’t need to other countries at a premium.”
Renewables as part of Iran’s sixth Five-year Development plan
Speaking at a ceremony marking the launch of three 7-MW solar power plants in Hamedan on Sunday, Chitchian said, “Iran intends to launch a large-scale project to construct renewable energy power plants over the sixth Five-Year Development Plan to generate five thousand megawatts of energy in the country.” Chitchian added that besides the power plants inaugurated in Hamedan, construction of three more 7-MW power plants is under way.
The announcement of the $3.0 billion in foreign investments in Iran’s renewable energy sector was helped immensely by the Iranian government, which facilitated investment rules and offered incentives that encouraged local and foreign investors to look more favorably on the renewables sector.
And since the nuclear deal was drawn up and some sanctions dropped, foreign investors from a number of countries, including Germany, Italy, and Denmark, as well as companies from Norway, China, and South Korea have either reached agreements or have shown interest in working with Iran to meet its renewable energy goals.
