Iran is endowed with the world’s fourth-largest proven crude oil reserves and the world’s second-largest natural gas reserves. The country has relied heavily on its rich fossil fuel resources to supply domestic energy consumption.
In 2013, Iran’s total primary energy consumption consisted of 60 per cent natural gas, 38 per cent petroleum and 1 per cent hydropower. The remaining share was provided by coal, nuclear and other renewable sources, each of which accounted for less than 1 per cent of the mix.
The Iranian government has signalled its intention to move towards a more balanced energy mix while improving energy efficiency. Recent reforms have curbed subsidies on domestic petroleum, natural gas and electricity with the intention to raise consumer prices. The goal is to limit domestic demand growth. Iran’s primary energy consumption has almost doubled since 2004, with growth concentrated in rapidly urbanising areas.
These reforms were initiated in 2010, and the second phase began in 2014. The recent lifting of international economic sanctions will likely boost production and exports of petroleum, which may have a moderating effect on any further energy price reforms.
The Iranian government also implemented the Renewable Energy Development Fund in 2013. This policy obliges the ministry of energy to include a duty of IRR 30/kWh on energy bills, which will be payable by all customers with the exception of rural householders. The fund will be maintained by Tavanir, the state-owned utility, and will contribute financing for the expansion and maintenance of rural electricity grids as well as the development of new renewable energy capacity in the country.
Most large-scale hydropower projects are managed by the Iran Water and Power Resources Development Company (IWPCO). There are also a number of well-known developers active in the country, such as Farab, a contractor, and Mahab Ghodss, an engineering consultancy.
Hydropower is the country’s largest renewable resource by generational capacity, and Iranian companies have considerable experience in hydropower development. They are also increasingly active on the international stage. For example, Iran has long-standing agreements in place with Tajikistan, and is supporting development of the Uma Oya multipurpose project (134 MW) in Sri Lanka.
There has also been steady progress on development within Iran. The 1,040 MW Siah Bishe pumped-storage plant, which commissioned its first 260 MW generating turbine in 2013, entered full commercial operation in September 2015 when the fourth and final pump-turbine was commissioned. This station generates electricity during periods of high energy demand and consumes 940 MW of electrical power for pumping operation during periods of low demand. It is intended to meet peak electricity demand in the capital city, Tehran, which is 125 km to the south.
The first of three 160 MW turbines at the 480 MW Seimare dam was also commissioned in 2013. Studies for the dam were carried out in the mid to late 1970s and construction began on the diversion works in 1997. In 2006, concrete placement began, and on 19 May 2011, the dam began to impound the river. Looking forward, two major projects are expected to be completed in 2016: Khersan 3 (400 MW) and Rudbar Lorestan (450 MW). The 1,500 MW Bakhtiari project is also currently under construction.
There are 14 large-scale projects totalling 5,831 MW seeking investments in the country, including the 1,000 MW Ilam pumped-storage plant, the 712 MW Karun 2, and the 584 MW Khersan 1. A further 28 potential large projects are being studied, totalling almost 13 GW in capacity.
There are also a number of small and medium-sized projects at various stages of development in the country. 14 small and medium-sized projects are ready for investment, representing a total of 430 MW in capacity.
This country profile is featured in the 2016 Hydropower Status Report. You can download the full report here.
This profile was last updated in May 2016.