Electric Power Industry in Iran

Posted on Posted in Business Guidelines

The electric power industry was brought to Iran for the first time during the reign of Mozaffareddin Shah Qajar in 1284 by Mohammad Hossein Amin Zarb through the purchase of a power plant from Russia. This industry has experienced numerous changes throughout the years and this article tries to examine briefly the current conditions of the power industry in Iran.

Current capacity for electricity consumption in Iran in 2014 has been equal to 219 billion kilowatts-hour, with the percentage of consumption in every sector depicted in table below;

Sector 2014

2013

Domestic

31.7 32.2
Public

8.8 8.9

Agriculture

16.3 16.1

Industrial

34.8 34.1

Other Uses

6.6 6.8

Light at Passage ways 1.9 1.9

Export of electricity in 2014 has been equal to 9.660 million kilowatt-hours and its import has exceeded 3,772 million kilowatts-hour, which demonstrates that other countries in the region have a higher need for electrical power than Iran. Since the export of electricity is much cheaper than the export of gas and the cost of its required infrastructure are much lower, and also considering the diminished price of gas, Iran aims at putting the export of such clean energy source at the top of its agenda and make it the substitute for the export of gas.

By establishing Mapna Company, Iran has enabled itself to make use of domestic human resources as well as the import of technology from foreign companies and to achieve 90 percent self sufficiency in generating electricity. On the other hand, regarding the lifting of sanctions against Iran, Mapna Company has resumed its collaborations with companies such as Siemens, which is promising for further progress in this area.

Considering the price of electricity, the Government is trying to offer the electric power in Energy Exchange Market and create proper infrastructure for a more balanced price for this source of energy. Currently, around 17 percent of total value of transactions in the exchange market for energy has been dedicated to electricity transactions, a number which will definitely be subject to growth in the near future. At present, the electricity tariff for every kilowatt-hour is equal to 600 IRR, while the final cost for producing this energy equals 1000 IRR, thus showing an imminent rise in its price in the near future.

It is worth mentioning that regarding the significant share that gas and diesel power plants have in generating electricity as well as the low efficiency of these plants, government is opting to make use of clean energy sources to generate electricity including solar, nuclear and incineration sources.

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