Iranian Electricity Market

Iran is the biggest exporter for electricity in the region and possesses a power plant capacity of 75 GW, which is mostly based on energy sourced from gas and oil. In the past eight years, the electricity generation has been increased by 28 % and to 281 billion kilowatt hours. A growth of 2 to 4 % is expected in the coming years and the overall power plant capacity shall be increased by 50 GW. The share of renewable energies lies less than 1 GW (no including large hydroelectric facilities) and is planned to increase to 5 GW by 2021. In the midterm, the installed performance of renewable energy in the electricity sector will be increased to 7.5 GW.

In the course of the liberalization of the electricity market, already in 2001, a governmentally guaranteed feed-in rate, called feed-in tariff was established for private power plant operators. Prior to 2014, standardized tariffs for all types of power plants were available. Renewable energies, which compete with power generation costs of conventional power plants, could not withstand with the competition at that time.

To ensure clean and reliable electricity generation, in July of 2015, a special feed-in tariff for renewable energies was introduced. The system of feed-in tariffs for renewable energies is strongly oriented towards the German renewable energies act (EEG) from 2000.

The feed-in tariff for electricity generation from renewable energies has been differentiated by technology and plant size since 2015. A distinctive feature is the adjustment of the feed-in tariff for inflation and the exchange rate. Due to the excellent geographical conditions for biomass, wind and solar plants, as well as the globally unrivaled economic conditions, Iran offers the largest potential for growth in the utilization of renewable energies.