34 R. MILLS
difference with the typical GCC projects. Acquisition of land is also a
slow and expensive process, although this is meant to be provided by the
government. 69
There have been turf wars between the Ministry of Energy, responsible for electricity, and the Ministry of Environment. The Ministry of
Energy has less institutional power than the Ministry of Oil and the
National Iranian Oil Company (NIOC), who have historically produced
most of export earnings. Other organizations have also been active in
renewables and receiving part of the allocated budget, including the
Renewable Energy Initiative Council (REIC) under the Research Institute of Petroleum Industry, part of NIOC; the Iranian Fuel Conservation
Company; the Iranian Research Organization for Science and Technology; and the Ministry of Industry and Mines. This dispersal of
responsibility and budget is also likely to have retarded progress. 70
Despite several rounds of subsidy reform, electricity prices remain very
low in international terms because of inflation and currency depreciation. In 2019, power cost a reported 2 USc/kWh to generate (with
gas priced at about $1/MMBtu, a low figure by international standards)
but was sold at 0.7 c/kWh. 71 This makes private installation of solar
power unattractive. Mohammad Ali Pouramiri, a board member of the
Iran Renewable Energy Association, said that subsidies had to be lifted to
make renewables attractive. 72 However, given the difficulties in exporting
oil and gas, social unrest at rising prices and the attempt to export products such as petrochemicals instead, there are countervailing pressures to
retain subsidies.
Chinese firms could take a larger role in the market, given that they
could be paid in yuan, they have the expertise and remain relatively willing
to take on sanctions risk. As noted, Chinese firms have been developing
projects in Qom, as well as the central city of Yazd. But Iran has recently
been disappointed with the lack of support provided from China to help
it withstand the intensified American sanctions.
These obstacles could, of course, be partly overcome with different
government policies, at least to encourage domestic investors. But with
a smaller size, lower rents and less domestic manufacturing capacity
than for hydropower and the oil and gas sector, renewables have not
so far attracted so much political attention from influential business
groups, including those linked to the IRGC. There are some exceptions. For instance, in 2017, a Greek engineering firm, Metka, and its
Iranian partner, Ghadir Electricity, completed a 10 MW solar plant near
difference with the typical GCC projects. Acquisition of land is also a
slow and expensive process, although this is meant to be provided by the
government. 69
There have been turf wars between the Ministry of Energy, responsible for electricity, and the Ministry of Environment. The Ministry of
Energy has less institutional power than the Ministry of Oil and the
National Iranian Oil Company (NIOC), who have historically produced
most of export earnings. Other organizations have also been active in
renewables and receiving part of the allocated budget, including the
Renewable Energy Initiative Council (REIC) under the Research Institute of Petroleum Industry, part of NIOC; the Iranian Fuel Conservation
Company; the Iranian Research Organization for Science and Technology; and the Ministry of Industry and Mines. This dispersal of
responsibility and budget is also likely to have retarded progress. 70
Despite several rounds of subsidy reform, electricity prices remain very
low in international terms because of inflation and currency depreciation. In 2019, power cost a reported 2 USc/kWh to generate (with
gas priced at about $1/MMBtu, a low figure by international standards)
but was sold at 0.7 c/kWh. 71 This makes private installation of solar
power unattractive. Mohammad Ali Pouramiri, a board member of the
Iran Renewable Energy Association, said that subsidies had to be lifted to
make renewables attractive. 72 However, given the difficulties in exporting
oil and gas, social unrest at rising prices and the attempt to export products such as petrochemicals instead, there are countervailing pressures to
retain subsidies.
Chinese firms could take a larger role in the market, given that they
could be paid in yuan, they have the expertise and remain relatively willing
to take on sanctions risk. As noted, Chinese firms have been developing
projects in Qom, as well as the central city of Yazd. But Iran has recently
been disappointed with the lack of support provided from China to help
it withstand the intensified American sanctions.
These obstacles could, of course, be partly overcome with different
government policies, at least to encourage domestic investors. But with
a smaller size, lower rents and less domestic manufacturing capacity
than for hydropower and the oil and gas sector, renewables have not
so far attracted so much political attention from influential business
groups, including those linked to the IRGC. There are some exceptions. For instance, in 2017, a Greek engineering firm, Metka, and its
Iranian partner, Ghadir Electricity, completed a 10 MW solar plant near