The greening of Iran

News item:

At a gathering with delegates at the Iranian Embassy in Berlin, representatives of the Middle Eastern nation revealed bold ambitions to add 5 GW of wind and solar power by 2018 …. The bulk of the total 5 GW comprises wind power projects, but 500 MW has already been earmarked for solar PV, with some projects already permitted licenses to commence construction or enter into power purchase agreements (PPAs).

Wind turbine factory in Iran Photo credit

Wind turbine factory in Iran
Photo credit

On the face of it, a pretty routine announcement. Iran’s plans are not particularly ambitious by regional standards, and would meet less than a tenth of the expected increase in electricity demand over the period. Turkey is aiming at 40 GW of renewables (one-third of electricity supply) by 2023. Egypt’s target is 20% renewables by 2020. Saudi Arabia plans to have 24GW of solar by 2032.

These targets are not all equally credible. But since Iran announced actual projects and contracts, we can probably put its programme closer to Turkey than to Egypt for realism.

What makes this noteworthy is the politics. Two things here. First, Iran is creating a pretty generous solar residential feed-in tariff. Turkey has one, but Arab countries do not. This is consistent with the greater responsiveness of the former two to public opinion. The FIT is not likely to lead to a rooftop boom yet. As German experts pointed out to the Iranian Minister, five years of FIT, even at 15c$/kwh plus a 50% cash grant, is far too short when the heavily subsidised retail electricity rate is 2c$. Still, the Iranian government is prepared to empower middle-class solar householders.

More important is the interaction with Iran’s nuclear ambitions. Two years ago I suggested, only half tongue-in-cheek, a PR campaign to show Iran’s media quite how passé nuclear power really is in the world outside China. I’ve no reason to think any such effort took place, though I dare say Chinese and German diplomats have been smoothing the path for solar and wind salesmen in Teheran.

The Iranian government are quite capable of drawing their own conclusions about civilian nuclear power. They need 5GW of new capacity a year, or 5 reactors’ worth. Only China is managing that pace at the moment (World Nuclear Report 2013, Annex 7). It would clearly be technically impossible for Iran, even supposing they can fix all the huge diplomatic problems about fuel supply. Besides, starting a large civilian nuclear programme tomorrow would give results at the very best in 5 years with Chinese construction times, 10 years with everybody else’s. And it would all cost a gigantic fortune meanwhile. They have not necessarily given up completely on the nuclear pipe-dream, but a serious renewables programme is a down-payment on a different future.

Two years from now, the government and an increasing number of ordinary Iranians will see the wind turbines and solar farms, built to budget and delivering power as promised. My long-shot hope is looking a bit more realistic: that the Iranian people will realize that they don’t need civilian nuclear reactors; and since that’s how the covert military programme is being sold to them, they will cease to support that indirectly.

PS: The economics of the 15c$ solar FIT (Turkey’s is 13$c) are better than they look. The retail electricity rate is fantastically subsidised. It’s half the cost of generation, and presumably even that uses low domestic prices for oil and gas. A rational economic valuation would use the opportunity value of the oil and gas on the world market. That’s why Saudi Arabia is splurging on solar farms: to avoid burning up the valuable oil reserves to meet domestic electricity demand. Let’s say 5c$/kwh for generation, and another 5$c for distribution. On that basis, Iran is subsidising solar, but by 50% or so, not 750%.

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