32 R. MILLS
emissions than either the current system or with the planned 10 GW of
nuclear power. 57
Renewable energy installation has accelerated recently. The Ministry of
Energy Renewable Energy and Energy Efficiency Organisation (SATBA)
has signed power purchase agreements (PPAs) for 1427 MW of wind,
2685 MW of solar, 31 MW of biomass and 15 MW of small hydropower.
Still, the average size of these projects (32 MW wind and 9 MW solar)
is very small compared to the plants of hundreds of megawatts up to 2
GW being constructed in neighbouring countries such as Pakistan, the
UAE, Oman and Saudi Arabia. Plans for larger plants, such as a 1 GW
solar PV plant near Saveh in the central Markazi province announced in
January 2019, and a July 2018 memorandum of understanding for a 0.5–
1 GW plant near Yazd with an Italian-Chinese joint venture, are backed
by foreign investors. 58 Progress must remain doubtful given the problems
posed by sanctions and financing. The feed-in tariffs offered by SATBA
apply only to wind, solar or small hydropower projects of up to 10 MW, 59
given limited financial resources. 25% of value-added tax on electricity bills
is allocated to SATBA, but this amounts to only $25 million annually. 60
In 2016, state-owned organizations were obliged to install solar panels to
cover at least 20% of their electricity needs, but again take-up has been
limited. 61
There are several reasons for slow progress in renewables. Despite
government efforts to promote renewables, the investment environment
in Iran for foreign investors remains bureaucratic, slow and opaque. The
increasingly tight international and US sanctions established under President Obama during 2010–2015, then the greatly intensified US sanctions
imposed by Donald Trump’s administration after its withdrawal from the
JCPOA in 2017, have deterred foreign investment and made access to
international equipment more difficult. International financial institutions
such as the European Bank for Reconstruction and Development and
the World Bank, which had been important in establishing renewables
frameworks in countries such as Morocco, Jordan and Egypt, were not
able to bring financing and expertise to Iran. This increased the financial
requirement and risk on investors.
There was considerable interest in the brief period the JCPOA was
fully operational, including from Danish, Norwegian, Swedish, French,
German, Austrian, Spanish, Italian, Greek, Turkish, Indian, South Korean
and Chinese companies, who completed solar plants totalling more than
100 MW. 62 But following 2017, most of this activity ceased; for instance,
emissions than either the current system or with the planned 10 GW of
nuclear power. 57
Renewable energy installation has accelerated recently. The Ministry of
Energy Renewable Energy and Energy Efficiency Organisation (SATBA)
has signed power purchase agreements (PPAs) for 1427 MW of wind,
2685 MW of solar, 31 MW of biomass and 15 MW of small hydropower.
Still, the average size of these projects (32 MW wind and 9 MW solar)
is very small compared to the plants of hundreds of megawatts up to 2
GW being constructed in neighbouring countries such as Pakistan, the
UAE, Oman and Saudi Arabia. Plans for larger plants, such as a 1 GW
solar PV plant near Saveh in the central Markazi province announced in
January 2019, and a July 2018 memorandum of understanding for a 0.5–
1 GW plant near Yazd with an Italian-Chinese joint venture, are backed
by foreign investors. 58 Progress must remain doubtful given the problems
posed by sanctions and financing. The feed-in tariffs offered by SATBA
apply only to wind, solar or small hydropower projects of up to 10 MW, 59
given limited financial resources. 25% of value-added tax on electricity bills
is allocated to SATBA, but this amounts to only $25 million annually. 60
In 2016, state-owned organizations were obliged to install solar panels to
cover at least 20% of their electricity needs, but again take-up has been
limited. 61
There are several reasons for slow progress in renewables. Despite
government efforts to promote renewables, the investment environment
in Iran for foreign investors remains bureaucratic, slow and opaque. The
increasingly tight international and US sanctions established under President Obama during 2010–2015, then the greatly intensified US sanctions
imposed by Donald Trump’s administration after its withdrawal from the
JCPOA in 2017, have deterred foreign investment and made access to
international equipment more difficult. International financial institutions
such as the European Bank for Reconstruction and Development and
the World Bank, which had been important in establishing renewables
frameworks in countries such as Morocco, Jordan and Egypt, were not
able to bring financing and expertise to Iran. This increased the financial
requirement and risk on investors.
There was considerable interest in the brief period the JCPOA was
fully operational, including from Danish, Norwegian, Swedish, French,
German, Austrian, Spanish, Italian, Greek, Turkish, Indian, South Korean
and Chinese companies, who completed solar plants totalling more than
100 MW. 62 But following 2017, most of this activity ceased; for instance,