Now that Iran has reached a nuclear agreement with six world powers it is well positioned to become a global energy superpower that includes renewables. Iran’s geographical position means that the nation has enormous potential for the production of different kinds of renewable energies, including geothermal, solar and wind power. Prior to the signing of the deal Iran was already working to expand its renewable energy sector. For both economic and environmental reasons Iran has indicated that it intends to be a serious player in renewable energy going forward.
The historic deal was reached on Tuesday July 14th, sanctions will eventually be lifted and the country will be able to trade more freely with the rest of the world. Iranian Foreign Minister Mohammad Javad Zarif said, “now we are starting a new chapter of hope.” US Secretary of State John Kerry said, “this is the good deal that we have sought.” President Obama said, “This deal is not built on trust, it is built on verification.”
Violation of the deal would mean a return to the sanctions regime. Iran’s President Hassan Rouhani called the deal it a “win-win” result.
In return for significantly limiting Iran’s nuclear ability, the P5+1 group (which includes the five permanent members of the U.N. Security Council and Germany) have agreed to lift international oil and financial sanctions against the nation. Click here to see the text of the Iran nuclear deal.
Iran has the 4th largest conventional oil reserves and the 2nd largest gas reserves in the world, but production is far behind its potential. Wikipedia lists Iran as having the second largest oil reserves in the world in 2006 the country produced about five percent of total global crude oil production. This amounted to 4.2 million barrels per day (670,000 m3/d) of total liquids. Iran also has the world’s largest reserves of natural gas (17.9% of the world’s total) a large share of which are untapped. The oil embargo halved Iran’s oil export revenues within two years, from $118 billion to $56 billion.
Currently, the Iranian grid generates 70 GW of power, and domestic demand is growing at 5 GW per year (subsidized electricity rates are just US$0.02 cents per kW). Iran is a net exporter of electricity and exchanges electrical power with all its land neighbors. Iran is the 19th largest producer and 20th largest consumer of electricity in the world. The nation is still heavily reliant on traditional thermal energy sources of electricity, with a small fraction being produced by hydroelectric plants. Consumption is expected to rise at about 6 percent per year for the following decade. According to research by the Ministry of Energy indicated that between 15,000-20,000 megawatts of capacity should be added in Iran in the next 20 years. Iran also has work to do with regard to efficiency of tis grid. It is estimated that some 18.5 percent of electricity generated in Iran are wasted before it reaches consumers.
Iran plans to generate 23,000 MWh of electricity through nuclear technology by 2025 to meet its increasing demand for energy. The first of four 915 MW reactors of Bushehr Nuclear Power Plant, built with help from Russia, came online in August 2010. Iran’s indigenously designed Darkhovin Nuclear Power Plant is scheduled to come online in 2016.
Iran’s Renewable Energy Organization (SUNA) is a governmental institution that has addressed the environmental problems associated with fossil fuels and the need to increase the nation’s production of renewable energy. SUNA developes the application of energies resulting from renewable resources and is the responsible party as manager of Energy Deputy Directorate’s projects, for carrying out R&D activities. SUNA has a budget of around $60 million.
A 2013 overview of renewable energies in Iran by Mohsen Bahramia and Payam Abbaszadeha discusses 11 solar energy projects. This report indicates that he total photovoltaic power installed in 2004 was 14,020 MW. This rate reached 67 MW by the end of 2010. The report also references two geothermal projects and progress on fuel cell research. Biogas power plants have a total installed capacity of 1.665 MW. Signed private sector contracts are in place to build more than 600 MW of biomass systems. There is also 500 MW of new wind energy developments from the private sector. The report states that the wind potential in Iran is approximately 6500 MW, employing wind turbines of 60,000 MW nominal power.
In 2010, the Iranian government announced plans to build 2,000MW of renewable energy capacity between 2010-2015. As of 2010, Iran had 8,500MW of hydroelectric capacity, as of 2014 hydro accounts for 11 GW of Iran’s energy generation. Wind energy accounted for 130MW.
In 2012, Iran allocated $780 million from the National Development Fund for renewable energy projects. In May 2014, at the Iranian embassy in Berlin, Iran revealed its ambition to add 5 GW of wind and solar power by 2018.
The government has implemented a number of favorable policy initiatives to promote renewable energy infrastructure development including a feed-in-tariff (FiT). To help make renewable energy commercially viable the Ministry of Energy is required to buy privately produced renewable energy at world market prices. FiTs for renewable energy are around $0.15 per kWh. The government also provides 50 percent of the installation costs of residential solar power systems.
In 2014 Iran announced plans to create an energy saving company in conjunction with the Iranian subsidy reform plan. Also in 2014 Iran sought the help of Azerbaijan to implement wind and geothermal power projects. This includes a wind energy project at Manjeel, Iran.
In 2014 Iran has opened a solar park near the Tehran using Swedish panels and German inverters. Iran’s unique geographical position means 90 percent of the country has enough sun to generate solar power 300 days a year. Iran has 520 watts per hour per square meter of solar radiation every day. Other sources give an average of 2,200 kilowatt-hour solar radiation per square meter. Energy generated by solar power reached 53 MW in 2005 and 67 MW in 2011. The Iranian government intends to develop at least 500 MW of solar power capacity initially. Construction on 400 MW capacity has already been started while contracts for 900 MW projects have been signed. A couple of European companies currently supplying solar energy systems to Iran are Trunsun Solar and Sanavi.
Iran has the potential to generate 20 to 30 GW of wind energy. That is half of the total energy consumption needs of the country. As at 2012 Iran had 163 wind turbines with an installed capacity of 92470 kWh. Most of the proposed 5,000 MW renewable energy capacity will come from wind energy.
Iran has the potential to become the 9th largest geothermal energy producer.
At the May 2014 meeting at the Iranian embassy, Iran’s energy ministry clearly stated his intention to open a closer dialogue with Western investors in an effort to help meet the country’s ever-expanding thirst for electricity.
The Iranian energy minister indicated that environmental concerns and economic realities are pushing Iran to pursue a more decentralized and renewable energy future.
In 2014 Iran indicated that it wanted to enact a new law aimed at creating a more attractive environment for foreign investment. Now that sanctions may be lifted investors are expected to line-up to help the country move forward.
To help address concerns about the volatility of the country’s currency, Iranian policymakers are making it easier for foreign investors. They have introduced an index formula to correct for significant fluctuations and also give power providers the option to be compensated with oil instead of Rials.
Poised to lead
Iran will not only increase its renewable energy it may very well become a global leader. This is the view of Prof. Dr Friedbert Pflüger, the Director of the European Center for Energy and Resource Security (EUCERS) at King‘s College London and former German Deputy Minister of defense. As he explained in a November, 2014 article, an international agreement could put Iran on a path to becoming an energy superpower including renewable energy.
Exploiting Iran’s resource wealth has been hampered by sanctions. Once these sanctions are lifted and Iran emerges from its isolation, it may well spark an energy “ranaissance”. As stated by Pflüger, an end to sanctions, “may place Iran on a path to reaching its full potential as an energy superpower – both in the field of fossils and renewables.”
Driven by increasing interest in staving off climate change from a stronger civil society, environmental NGOs and many small firms, Iran may be ready to lead the energy efficiency and renewable revolution that is taking hold all around the world.
Early in 2015, a top Iranian energy official said the country will see its capacity of renewable energy doubled by the end of the current Iranian calendar year (March, 2015). Homayoun Haeri, who serves as the director of Iran’s Power Generation and Transmission Company (TAVANIR), said that the government plans to double the capacity of Iran’s wind and solar power generation across the country.
Iran is preparing for an increase in its renewable energy infrastructure. In February 2015 Iran organized the 7th International Energy Saving Exhibition, Renewable Energy and Energy Efficiency. They invited companies and successful organizations in the field of energy to exhibit their latest achievements in the related fields.
Iran is now on the cusp of being free to transform itself into a renewable energy superpower.. This will provide strong economic benefits while addressing global and local environmental concerns.
Predictably, Republicans have sided with Israel in condemning the deal. If the deal is not stymied by the US Congress, Iran can expect trade sanctions to be lifted in the coming months and this will invite a wide range of foreign investors which should include significant investments in renewable energy. Congress now has 60 days to review the deal before President Barack Obama can start removing congressional sanctions. The President has promised to veto any attempt to interfere with the deal. However, with enough legislators the Congress could override a presidential veto.
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