The geographic and climatic conditions in Iran are very favorable for solar and other renewable energies. With a huge land area of 1,648,195 square kilometers, the Alborz Mountains in the north-west, the deserts in the East, the Caspian Sea in the North and the Persian Gulf in the South, it comprises a wide variety of natural environments. The country enjoys an outstanding DNI (direct normal irradiation) of up to 5.5 kWh/ m²/day and an average of 300 sunny days per year. In particular the central and southern regions of Iran have high solar irradiation, such as the provinces of Yazd, Fars and Kerman with a DNI of about 5.2 to 5.4 kWh/ m²/day.
The below solar irradiation map can indicate the potential of solar energy in Iran.
The main Iranian foreign investment law is the Foreign Investment Promotion and Protection Act (FIPPA). The FIPPA grants foreign investors the same rights, protections and facilities available to domestic investors. This includes permission for investment in all fields where private sector activity is allowed and permission to hold up to 100% of shares in Iranian legal entities. Renewable energy is one of key factors for attracting foreign investment in Iran. In next steps, the supplementary information is made available in next steps.
Guaranteed Renewable Electricity Purchase Tariffs
To materialize the article 44 of the constitutional law regarding enhancement of private sector participation in economic activities of the country and in order to preserve fossil energy resource, safeguarding the environment, diversification of energy resources and passive defense, renewable energy organization (SUNA) has adopted feed-in tariffs (FiTs) of renewable and clean electricity generated from non-governmental power plants as one of its top program. In accordance with the decree, the electricity generated by solar energy will be purchased as follow table
| Technology | capacity | FiTs (IRRs per Kwh) |
| Solar farm | Above 30 MW capacity | 3200 |
| With the capacity of 30 MW and less | 4000 | |
| With the capacity of 10 Mw and less | 4900 | |
| With a total capacity of 100 KW and less | 7000 | |
| With a total capacity of 20 KW and less | 8000 |
Procedure for investment in renewable energy sector in Iran
Non-governmental applicants who are intended to construct renewable energy power plants should consider some requirements as follows
Company Registration:
Foreign investors in clean and renewable energy generation are welcomed. They may apply for construction permit and including the PPA by either registering a company in Iranian joining the Iranian companies.
Choice of suitable location as site plan:
Companies should try to find location to be useful for their solar power plant. Required land for solar power plants is assumed to be Max. 2 Hectares.
Construction permit (license) Issuance:
Construction permit applicants should fill out online application form at SATBA website. They should fill worksheets A, B and letter of commitment. Also, they should prepare required documentations, such as articles of association, registration ad in official gazette and its latest amendments, capacity and coordinates of the candidate location site. All documents should be attached at SATBA website.
Furthermore, companies should pay 1,096,000 Rials for per MW as charges. Of course, solar power plant with capacity up to 1 MW doesn’t need to pay any charge.
*Construction permit is issued for a certain capacity in a specific location.
Obtaining required permits:
The companies should acquire the below permits from related authorities for solar power plant:
- Grid connection permits (TAVANIR, Regional electricity companies, and distribution companies)
- Environment permit (environmental organization)
- Land delivery permit (rent or purchase land from related organizations)
Exchanging contract:
After precise control of all the permits and documentations by SATBA, the companies should prepare the below documents for signing contract:
- Specification of Solar power plants (quantity, quality and power of equipment)
- Site plan
- Time schedule for construction of the project
- Amount of power generation of solar power plant during 20 years
Execution period:
The rate of this announcement are valid for PPAs which the power plants will be constructed and commercially operated within a maximum of 15 months for different types of solar plants since the signing date of the PPA.
Investment incentives for renewable energy
Power purchase agreements of power plant subject of this announcement are extended to 20 year period with the specified tariff.
The principle and benefits of investment will be guaranteed based on rules and regulations of foreign investment for promotion and protection act (FIPPA) by organization for investment, economic and technical assistance of Iran. Furthermore, information is available at www.investiniran.ir.
At the present, no legal deductions (Tax, & VAT, insurance) will be applicable to payments of invoices.
To compensate for devaluation of money, the tariffs will be annually adjusted during the contracts based on euro exchange rate fluctuations and internal inflation according to the article 3 of cabinet’s directive.
Tariffs can be increased up to a maximum 30% for power plants constructed, using local know-how, design and manufacturing, according to the instruction articles 6 of cabinet minister’s directive.
Domestic manufacturers
Due to development of energy in Iran, many factories are active in field of electrical equipment manufactures. Domestic manufacturers have become "distinguished brands" in the region in terms of quality and quantity of products. Close to 65 percent of Iran's electricity generating equipment are made by domestic manufacturers.
In recent times, six solar production lines have been established in Iran. They are increasing their production every day. Beside this, there are four inverter producers. All of them can compete with foreign models. (ST/HCN)
Further information is available at: https://www.satba.gov.ir/en/investmentpowerplants/instructions/guidelinseonsettingthebills-Guidelines-on-setting-the-bills
The author can be reached via: taherian.elec@gmail.com, +989125335200
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More useful information:
http://www.pveurope.eu/News/Markets-Money/Iranian-solar-market-speeding-up
http://www.pveurope.eu/News/Solar-Generator/Fronius-scores-with-its-service-in-Iran
http://www.pveurope.eu/News/Solar-Generator/Iran-goes-solar-new-PV-plant-in-Rafsanjan-inaugurated
https://www.pveurope.eu/financing/iranian-solar-boom-attractive-return-invest
