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Wednesday 15 February 2017
Iran’s well-advanced plans to install 5GW of renewable energy by 2020 financed by multi-billion dollar international investments are in doubt, as US President Donald Trump steps up pressure on Tehran with warnings of fresh sanctions.
Several international renewables companies with ambitions in Iran told Recharge privately that the global political situation threatens to undermine progress in what until recently looked set to be one of the world’s next big clean-energy growth markets.
For the wind and solar sectors the stakes are high, with many leading manufacturers and developers already actively seeking to help fulfil Iran’s huge potential.
Following the lifting of the crippling nuclear sanctions imposed on Iran that were imposed in 2006, the country now has access to billions of dollars of frozen assets in foreign banks.
Iran had planned to launch a 1GW wind tender by the end of 2016, followed by a further 800MW tender for solar and waste-to-energy projects early this year, but the timetable for the auctions is now shrouded in uncertainty.
The country is looking to attract $10bn of direct private investment by 2018 and $60bn by 2025, and Iran’s energy minister Hamid Chitchian is publicly still talking up the nation’s ambitions. He was quoted by local media within the last few weeks saying: “Iran intends to launch a large-scale project to construct renewable energy power plants over the sixth Five-Year Development Plan to generate 5GW of energy in the country,” without being specific on timings.
Major wind OEMs Siemens, Vestas and GE are all known to have visited Iran. Global Wind Energy Council (GWEC) chief Steve Sawyer told Recharge late last year that the country was high on its list of potentially promising new markets, citing its good resources and a desire to diversify its energy supplies.
However, the arrival of Trump in the White House has sent fresh jitters through the boardrooms of global renewables players, many of which also have strong US businesses and consequent worries about any future blacklisting.
The country’s renewables programme now looks in danger of getting caught in the crossfire of the deteriorating geopolitical situation.
Tensions flared last week after Iran confirmed it had conducted a missile test and Trump’s former national security adviser Michael Flynn – who has since resigned over his contacts with Russia – warned that Iran had been put “on notice” without spelling out what action the US would next take. Iran retorted that it will not halt its missile programme.
Trump has strongly criticised the deal reached by former US President Barack Obama and other major powers with Iran in 2015, which saw most of the sanctions imposed on Iran lifted last year in return for curbs on its nuclear programme.
At the Iranian end, President Hassen Rouhani, a moderate who came to power promising to reduce tensions with the West, faces a growing electoral threat from the country’s hardliners, who have always opposed the agreement as a concession to pressure from Washington.
The global renewables sector can only hope that a clear path to development in Iran emerges sooner rather than later, given the huge potential of the country.
Renewables output currently stands at less than 0.2% of the total power generated in Iran. But the Iranian government led by Rouhani plans to dramatically up that amount and has reduced fossil fuel subsidies in recent years.
Wind power has become a major priority for Iran as it increases its renewables base. Figures from the Renewable Energy Organisation of Iran (Suna) show there are already 15 wind farms operational in Iran accounting for 141MW of installed wind power. However, Suna estimates the vast country has room for 100GW of potential wind capacity.
In November 2015, Iran pledged a 4% cut in greenhouse gas emissions by 2030, a figure it says could increase to 12% if it can secure $33bn in international support. The government says reaching its target of 5GW of renewables by 2020 will be a vital step in helping to reduce emissions as part of meeting its United Nations climate change target.