Renewable Purchase Obligation (RPO) Analysis (Iran)

The article showcases the RPO targets of Iranian government and also analyses the RPO regulation for captive users in Iran and worldwide.

On the implementation of the legal obligations of Ministry of Energy, the guaranteed electricity purchase tariff for types of renewable and clean energy are notified as follows:

Power Plant Type Guaranteed electricity purchase tariff (Iranian RIALS Per KWh) Approximate amount converted in EURO per KWh (open market rate as of 1 July 2016)
Biomass landfill 2700 0.068
Anaerobic digestion 3500 0.089
Incineration and waste gas storage 3700 0.094
Wind farm above 50 MW capacity* 3400 0.086
50 MW and less 4200 0.106
Solar farm above 30 MW capacity* 3200 0.081
30 MW and less 4000 0.101
10 MW and less 4900 0.124
Geothermal (including excavation and equipment) 4900 0.124
Waste Recycling in industrial processes 2900 0.074
Small hydropower

(10 MW and less)

Installation on the rivers and side facility of dams 2100 0.053
Installation on the pipelines 1500 0.038

*Quota capacity for the wind and solar farms are determined by the compliance of paragraph 8 of this directive.

Allocated to the consumers and limited to the connection capacity Guaranteed electricity purchase tariff (Iranian RIALS Per KWh) Approximate amount converted in EURO per KWh (open market rate as of 1 July 2016)
 Solar 100 KW and less 7000 0.177
20 KW and less 8000 0.203
Wind 1 MW and less 5700 0.144
  1. Power Purchase Agreements of power plants subject to this announcement are extended for a 20-year period with the specified tariffs, during years of contract, the tariffs will be adjusted in accordance with coefficient under article 3 of Economic Council Directive.

Note1: Tariffs mentioned for all power plants subject to this announcement except wind farms, will be multiplied by     0.7 after adjustment of article 3 of Economic Council Directive starting from the first day of the second 10 years till     the end of the contract.

Note 2: tariffs for the wind farms with the capacity factor of 40% and above in the first 10 years, will be multiplied by 0.4 after adjustment of article 3 of Economic Council Directive starting from the first day of the second 10 years till the end of the contract, power plants with capacity factor of 20% will be multiplied by 1 and for the range between 20% and 40% in a proper coefficient.

  1. For the power plants connected to the distribution grid, note 3 article 2 of Economic Council Directive, transmission services rate will be added to the base rate.
  2. 20-year power purchase agreement starts from the influence date of the contract and includes the progress period and construction of power plant. During the period of power purchase agreement, the investor is allowed to sell electricity across the country in form of a bilateral agreement, energy exchange market, or any other form approved by the Ministry of Energy. The export of electricity from renewable and clean power plants depends upon separate permits.
  3. Tariffs will be proportionately increased up to 30% in accordance with the instructions under article 6 of Economic Council Directive, for power plants constructed using local equipment, technologies know-how, design and manufacturing.
  4. The base tariff will be specified within the following conditions in case the applicant intends to conclude more than one renewable power plant construction contract.
  5. For the lands located in one location or lands located in two main locations, the base tariff of each power plant will be specified based on the total capacity of permits.
  6. The purchase rate of power plants owned by one applicant that are connected to one substation (or distribution) will be specified based on the total capacity of permits.
  7. Except for items 6 and 7, the purchase price of each power plant will be independent from other power plants and will be specified based on the capacity of that power plant. Nevertheless, each applicant is able to have the construction permit of two power plants at most. Granting permits for construction of other power plants requires the commercial operation of previous constructed power plants.

Note 1: If it is determined that any of clauses 6 and 7 has not been observed during the period of the contract, the power purchase agreement for the related power plant will be based on the revised lower rate and the seller is obliged to refund the surplus funds that have been received as purchased content according to the contract.

Note 2: The legal entities that have shareholders, individual shareholders and also the legal entities are known as an applicant.

Note 3: In the case that the notification of the new contracts will be undertaken after the commercial operation of the previous contract, even if the conditions subject of clauses 6 and 7 are included, the base rate of the electricity purchase in the new contract will be specified according to the capacity of the new power plant.

  1. The guaranteed power purchase agreement demand for the power plants which used the state grant funds for the construction of their power plants is forbidden. The investor should guarantee and commit that the state grants funds is not used for the installation of the power plant.
  2. The rates of this announcement is applied for the contracts which the power plant of the contract will be constructed and commercially operated maximum in 30 months for different types of biomass, geothermal and small hydro, maximum 24 months for different types of wind power plants and waste heat losses in industrial processes and maximum 15 months for different types of solar power plants since the notification of the contract. In the case of delay, the last base rate which is approved by the Ministry of Energy on the start date of commercial operation or the mentioned rate, whichever is lower will be applied for the remaining period of the contract.

Note 1: In the case of delay of maximum 9 months related to the times that mentioned in the commercial operation of the power plant, the Renewable organization of Iran (SUNA) is allowed to terminate the power purchase agreement of that power plant, annul their construction permit and also refund the state lands which are intended for the construction of the power plant through the competent authorities. In the event that the part of the power plant capacity is operated, the construction permit capacity and the contract proportionally will be reduced and the rest of the state lands will be refunded.

Note 2: The request for the new contract from the investors that their contracts is terminated by the Renewable organization of Iran (SUNA), will not be investigated until two years after the notification of termination.

  1. The Ministry of Energy will follow up the development of Renewable and clean power plants policy to the maximum 2000 MW per year by the private sector. The Renewable organization of Iran (SUNA) is required to make appropriate arrangements for the implementation of the mentioned policy.
  2. The Ministry of Energy will follow up the policy of gradual reduction for the rate of the guaranteed power purchase agreement of the clean and Renewable power plants due to the increase of the capacity of these power plants and also under the consideration of financial resources provision. The reduced rate will be applied only in new contracts.