2 THE POLITICS OF LOW-CARBON ENERGY IN IRAN AND IRAQ
41
the MOE in the KRI). This creates the concern for investors that they
will experience delays and difficulty in receiving payment, particularly in
the absence of a sovereign guarantee. Officials at the MOE, meanwhile,
were concerned that awarding projects at prices significantly above those
achieved in neighbouring countries would attract political scrutiny and
allegations of corruption.
The government of Adel Abdel Mehdi, with the highly-regarded Luay
Al Khatteeb as electricity minister, came into power in October 2018, and
intended to add 1.5–2 GW of renewables during its 3–4 year term. 110
A Renewable Energy Law was drafted, and institutions and individuals
have been given the right to generate renewable power for their own
use, to ‘wheel’ it through the state grid to their other facilities, or to sell
to MOE under a PPA. Low-interest loans are offered for rooftop solar
installations. 111
In May 2019, the MOE abandoned the feed-in tariff for projects
above 10 MW, and instead launched a competitive tender for 755 MW
of solar PV across several sites, and pre-qualified 45 bidders, 112 with
interested companies including Total, Siemens and Acwa Power, a private
Saudi developer with a strong regional track record and significant state
backing. In November 2019, a Ministry adviser revealed plans for another
750 MW, 113 or 1000 MW to be launched in the first quarter of 2020. The
longer-term intention was for renewables to account for 20% of generation (probably meaning capacity) by 2030. In late 2019, Acwa Power
and Amea Power, a private UAE developer, were reportedly encouraged
by their home governments to look at investments in Iraq as part of
supporting the government and offsetting Iranian influence. Acwa Power
proposed two 1 GW solar projects; one would be based in Saudi Arabia
and export to Iraq at a tariff of 1.65 c/kWh; the other would be in
Iraq with a tariff of 6.5 c/kWh. 114 This illustrates the difference in business risk between the two countries, given that the solar resource is very
similar.
However, Iraq has experienced major turmoil since, with widespread
anti-corruption protests starting in October 2019, the resignation of
Abdel Mehdi’s government and the lengthy process of selecting a new
prime minister, involving the replacement of Al Khatteeb who had been
in office for barely a year, then the arrival of the coronavirus pandemic
and the crash in oil prices of March 2020. In this environment, the solar
projects have not advanced.
41
the MOE in the KRI). This creates the concern for investors that they
will experience delays and difficulty in receiving payment, particularly in
the absence of a sovereign guarantee. Officials at the MOE, meanwhile,
were concerned that awarding projects at prices significantly above those
achieved in neighbouring countries would attract political scrutiny and
allegations of corruption.
The government of Adel Abdel Mehdi, with the highly-regarded Luay
Al Khatteeb as electricity minister, came into power in October 2018, and
intended to add 1.5–2 GW of renewables during its 3–4 year term. 110
A Renewable Energy Law was drafted, and institutions and individuals
have been given the right to generate renewable power for their own
use, to ‘wheel’ it through the state grid to their other facilities, or to sell
to MOE under a PPA. Low-interest loans are offered for rooftop solar
installations. 111
In May 2019, the MOE abandoned the feed-in tariff for projects
above 10 MW, and instead launched a competitive tender for 755 MW
of solar PV across several sites, and pre-qualified 45 bidders, 112 with
interested companies including Total, Siemens and Acwa Power, a private
Saudi developer with a strong regional track record and significant state
backing. In November 2019, a Ministry adviser revealed plans for another
750 MW, 113 or 1000 MW to be launched in the first quarter of 2020. The
longer-term intention was for renewables to account for 20% of generation (probably meaning capacity) by 2030. In late 2019, Acwa Power
and Amea Power, a private UAE developer, were reportedly encouraged
by their home governments to look at investments in Iraq as part of
supporting the government and offsetting Iranian influence. Acwa Power
proposed two 1 GW solar projects; one would be based in Saudi Arabia
and export to Iraq at a tariff of 1.65 c/kWh; the other would be in
Iraq with a tariff of 6.5 c/kWh. 114 This illustrates the difference in business risk between the two countries, given that the solar resource is very
similar.
However, Iraq has experienced major turmoil since, with widespread
anti-corruption protests starting in October 2019, the resignation of
Abdel Mehdi’s government and the lengthy process of selecting a new
prime minister, involving the replacement of Al Khatteeb who had been
in office for barely a year, then the arrival of the coronavirus pandemic
and the crash in oil prices of March 2020. In this environment, the solar
projects have not advanced.