Iran direly needs investments in power sector

Iran suffered severely from the lack of investments and foreign technology during the sanctions era, which pushed the country’s net electricity export from above eight billion kilowatt hours (kWh) in 2013 to around zero in the first half of current Iranian fiscal year (started on March 21).
During the sanctions era, the efficiency of Iran’s power plants remained unchanged at 37 percent in average, while the power lost during transmission and distribution process remained high at 14 percent.
As for power output, Iran experienced less than 1 percent growth last fiscal year (ended on March 21) due to low investments in the past years. Iran was planning to increase the output by 5 percent.
The combined-cycle power plants still share 25 percent of Iran’s total power generation, despite a plan to increase this figure by converting old gas thermal power plants into combined-cycle ones.
Meanwhile, Iran and Turkey have a $4.2-billion memorandum of understanding (MOU) to construct power plants. Iran is also in negotiations with European companies, such as Siemens, for import of turbines in first stage, and then establishing a joint venture to produce turbines.
Iran needs $15 billion in the next five years to construct new power plants with 26,000 MW capacity and $5 billion to boost transmission and distribution systems.
Iran also needs more investments to increase power plants’ efficiency and decrease power lost in grid.
Currently, the country’s power plants have 75,000 MW generation capacity and they produce 282 billion kWh of electricity.
Iran direly needs to lure foreign investment, because the country has no choice but to boost the power generation capacity. Iran’s electricity export plunged during last two years due to rapidly increasing domestic demand.
Meanwhile, the removal of sanctions will pave a way for resuming industrial activities. This sector shared 31.5 percent of total power consumption last fiscal year, 2.3 percent less than in the previous year.
Iran’s power network should be developed, enhanced and upgraded as well.
Iran needs at least 5 percent power output growth per year.
Iran also exported above 11 billion kWh and imported three billion kWh of electricity in 2013.
During last two years, the figure drastically declined. In first quarter of current fiscal year (March-June), Iran exported only 1.341 billion kWh of electricity and imported 1.321 billion kWh.
Iran says it needs $50 billion in total in power sector in next seven years, including $12 billion investment in the renewables.

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