Iran’s Renewable Energy Growth Continues To Be Hindered By US Sanctions, Says Report


The Iranian power market has been severely impacted by the series of sanctions that have been imposed by the US, which has made it difficult for Iran’s finance and banking sectors to make payments or secure debt and equity finance for projects as it has become virtually impossible, found GlobalData.


The leading data and analytics company’s latest report, ‘Iran Power Market Size, Trends, Regulations, Competitive Landscape and Forecast, 2022-2035’, reveals that the government has several support systems to promote the growth of renewable energy.


Despite the sanctions, in January 2022 the Iranian Energy Ministry announced plans to add 10 GW of renewable capacity (including conventional hydropower) by the end of 2026 to achieve the long-term target of a renewable cumulative capacity of 30 GW. The Renewable Energy and Energy Efficiency Organization (SATBA) signed a Memorandum of Understanding (MOU) with private investors to execute the plan and has indicated that it would allocate around IRR30 trillion ($71.4 million) towards the first set of projects in the upcoming budget. SATBA has revealed that applications have been received for over 80 GW of renewable power projects.

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Attaurrahman Ojindaram Saibasan, Power Analyst at GlobalData, comments, “The government also allows custom duty exceptions for equipment used in the construction of renewable power plants. As well as this, there is an electricity duty placed on electricity bills which is used for the development of renewable power plants. However, this has not been enough to secure the potential development of renewables in the country. The key challenge is the lack of foreign investments in the renewable sector due to the sanctions imposed on Iran.”

There have been positive developments in the renewables sector following the commission of the country’s first solar cell factory in early 2022. The initial capacity of the plant is 150 MW and is situated closely to Khomeini.

Saibasan adds, “There are plans to increase the factory’s PV module capacity to 1.5 GW by the end of 2023. However, to be able to fully accelerate renewable power development, Iran needs to execute the nuclear deal which will lift sanctions on the country and bring in more private investments.

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“The removal of the sanctions will provide the boost the Iranian renewable sector requires. As per the current trend, only a quarter of the targeted capacity additions will be achieved by 2026. Foreign investments in the renewable sector and a knowledge transfer of the latest additions in renewable technology will enable stakeholders to exploit the untapped potential of the Iranian renewable market.”

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