Iran Takes Measured Power Steps to Attract Foreign Generating Investment

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Researched by Industrialinfo.com (Industrial Information Resources Incorporated; Houston, Texas). A 7% growth in Iranian electricity consumption and government guarantees to purchase power from private investors building power stations, plus government guaranteed profits on these investments makes the prospect for international companies investing in Iranian power projects financially bright, if politically problematical for some. The share of foreign investors in projects can be as high as 50% and foreign operators are able to engage in build operate and transfer (BOT) activities for the development of the Iranian power industry. The Central Bank of Iran has been obliged to convert a part of its income from power generation into hard currency, which can be taken out of the country. The national power generation and distribution company TAVANIR, has recently been promoting these benefits abroad to the power industry and investors.

Despite the cheap prices of fossil fuel in Iran, all power stations throughout the country are now consuming natural gas as their feedstock. According to TAVANIR construction of 22 new combined cycle steam power plants with a total capacity of 3,000 MW were slated in 2002. In the clean and renewable categories a solar power station is being built in the southern city of Yazd and wind energy electrical generating plant projects are being developed in northern and northeastern Iran. Plans are being implemented to set up a thermodynamic power station generating electricity from earth sources in the northwest of the country.

The real existing capacities of gas power stations operating within the nationwide power grid stand at 6,045 MW in summer and 5,196 in winter. Eleven of these plants were built before 1981 and seven others between 1981 and 1991.

The hydroelectric power station at Shahid Abbas-pour is 25 years old and at 1,000MW is still the most powerful in the country. Eight of the country's hydro plants were built before 1981 and 10 before 1991. In all 30 Iranian power stations have been operating for 26 years.

At the end of 2001 all the power stations linked in the national grid had a real capacity of 26,537 MW in summer and 25,159 in winter. The local industry experts believe that the power plants are in dire need of renovation and modernization. At present the share of installed capacities in steam, combined cycle, gas, hydroelectric, and diesel power are respectively: 52%, 25%, 14%, 7% and 2%.

Iran has achieved a 60% local content standard for equipment used in power stations with the Tuga factory set to manufacture ten 160 MW gas turbines and five 150 MW combined steam cycle steam turbines annually by 2005.

Planning, engineering, and construction are ongoing on a wide range of power plants with a major current push on some larger hydroelectric plants. The call is out to NGOs and foreign power industry leaders to assist in Iran's power drive through 2010 to 2020.

The energy ministry is concerned with the performance of some of the thermal power stations, but claims that overall performance hit 99% of targets in 2001 with consumption rated at 97.4 kWhrs. Power cuts in 2001 averaged 4.55 minutes per day per subscriber, which was longer than the actual 'outs' in 2000 and missed the target of 3.88 minutes. Room for improvement is admitted and measured presenting a progressive environment for new foreign developers and suppliers.