2013-03-29 04:47:40 - Recently published research from Business Monitor International, "Iran Power Report Q1 2013", is now available at Fast Market Research
BMI View: Plans to develop Iran's nuclear capacity are central to the country's power industry and its ability to meet its energy requirements. While the country continues to face huge international opposition, it has made plans for additional research reactors, even though its first reactor is only due to be commercially operational by March 2013. Despite sanctions posing problems for many developed nations to invest here, Iran still stands to benefit from investment from its neighbours, such as India, and greater development of its renewables generation capacity .The country also stands to gain from the power and gas import requirements of India and Pakistan.
Iran is expected to continue to rely largely on conventional thermal sources for electricity generation, with many
of the power projects that are currently under construction slated to increase the nation's natural gas generation capacity. While Iran plans to increase its nuclear capacity, external political resistance makes the realisation of this future rather uncertain and will likely slow the process further.
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Fears of that nuclear power will be used for purposes other than power generation continue to plague other nations, and sanctions are likely to remain for the foreseeable future.
Key trends and developments in the Iranian electricity market:
* Majid Salehi, the Managing Director of Iran Power Development Company, has revealed that around 23 new power plants will begin production by the end of the government's tenure in the next Iranian year, starting March 2013. Investment of approximately IRR50trn will be required for the projects, which will be developed as part of the energy ministry's Mehr Mandegar programme. The 648-megawatt (MW) Kermanshah Power Plant will be the first to start production, while the gas-fired units of the Zanjan, Semnan and Shahround power plants should become operational in the coming months. The ministry has granted permits for the private sector construction of renewable energy power plants, with a combined production capacity of 12 gigawatts (GW), according to Iran Renewable Energy Organisation's Managing Director, Yousef Armodeli.
* In late May 2012, Iran's government terminated a contract that was awarded to China for the construction of the Bakhtiari hydropower plant in the south-west of the country, according to Energy Minister Majid Namjou. China's proposed US$2bn financial package for the 1,500MW plant was rejected by the Iranian Central Bank, with the project now being awarded to the Iranian Revolutionary Guard Corps' engineering arm, Khatam al-Anbiya. The cancellation of the contract could have an adverse impact on the economic relationship between China and Iran.
* During the period 2013-2021, Iran's overall power generation is expected to increase by an annual average of 2.58%, to 275.5 terawatt hours (TWh). Driving this growth is the build-up of output from the country's first nuclear power facility, which was connected to the grid in 2012 and is scheduled to be operating on a commercial scale by March 2013. Growth from non-hydro renewables generation is expected accelerate and deliver an average annual supply growth of 6.98% over the period.
* Iran's 2013 real GDP is forecasted by BMI to contract by 0.8%, following a contraction of an estimated 3.1% in 2012. However, growth is forecasted to recover to an average of 3.2% between 2014 and 2021.The population is expected to rise from an estimated 75.6mn in 2012 to 81.5mn by 2021, while net power consumption looks set to see far greater gains, increasing from an estimated 176.6TWh to 225.9TWh over the period. Over 2013-2021, electricity demand is forecast at to grow at an average annual rate of 2.78%.
* Thanks partly to the projected rise in net generation, growth of which falls somewhat short of the underlying demand trend, Iran's power supply surplus is likely to stagnate over the medium term, although the country is keen to develop its power export capability. A decline in the percentage of transmission and distribution (T&D) losses from an estimated 17.3% in 2012 to 16.3% by end-2021 will help balance the market. The forecasted net export capability in 2021 is put at 4.8TWh.
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