Page 28 - bne IntelliNews Georgia country report November 2017

Opinion
November 11, 2017 www.intellinews.com I Page 28
ALACO DISPATCHES:
Fossil fuel giant Iran champions green energy
Yigal Chazan of Alaco
With its huge oil and gas reserves, Iran would seem an unlikely advocate of green energy. Yet
as the country looks to foreign investors to revive its economy, the government is keen to develop the nascent but rapidly expanding renewables sector, which has recently drawn major European investment.
In the last few months, Iran has launched,
and secured deals for, a series of substantial European-backed solar energy projects — the latest a $2.9bn agreement with Norway’s Saga Energy. It is the second-largest investment since the lifting of international sanctions, which followed the 2015 nuclear deal.
Though dwarfed by fossil fuel power generation, green energy is being prioritised by the country’s reformist President Hassan Rouhani. He is doing so in an effort to meet rising electricity demand, expand Iran’s share of regional power markets, export more oil and gas, and reduce air pollution.
The need to curb pollution, in particular, is argu- ably one of the most pressing objectives. It is an acute problem in Tehran and other Iranian cities, which are sometimes cloaked in thick blankets of smog in the winter. Last November the air quality in the capital was so bad that all its schools were shut for several days. In January the chairman of the Iranian parliament’s environment group, Mo- hammad Reza Tabesh, was quoted as saying that air pollution costs Iran about $20bn annually.
With around 300 sunny days a year, Iran has high potential for solar power generation.
Renewables are gaining traction in the Middle East with Iran possessing significant solar, wind and hydro energy potential. The country’s electricity generation capacity is currently 77,000 megawatts (MW) — green sources accounting for just 360 MW. Yet the sector has grown rapidly in recent years. From Rouhani’s election in mid-2013 to April this year, power production from renewables reportedly experienced a threefold increase, with the number of private companies generating green energy growing from three to 490.
Iran has introduced a number of measures to encourage foreign and local investors to develop non-fossil fuel electricity generation. These include the provision of attractive feed-in tariffs (financial incentives), rising by up to 30% when domestically-sourced components and equipment are used; 20-year power-purchase agreements; and five to 13 year tax holidays if plants are lo- cated in underdeveloped areas.
Although foreign direct investment has been
slow to flow into the country since the nuclear deal — primarily because of uncertainty over the agreement and remaining US sanctions — the solar energy sector has recently seen a surge in investor interest. It appears to have been driven by the falling costs of photovoltaic panels; sectoral potential — Iran has around 300 sunny days per year; and the government’s investment incentives. This year, a host of solar plant projects have been launched and secured.