Iranian energy investment could take a while, IFC says

The International Finance Corporation (IFC) has started discussions with companies interested in investing in Iran, but it could take between six and nine months to materialise.

“It’s definitely a country with a huge amount of potential and I think we’ll see a huge programme,” said Mouayed Makhlouf, the Mena director at IFC, adding that investment could come next year. “We need to make sure we’re investing with the right people.”

One area that will be a prime opportunity is the power sector.

Iran has a power generation capacity of 74 gigawatts, while electricity demand is growing at 6 per cent annually, according to Anup Barapatre, the energy and environment programme manager at Frost & Sullivan.

Frost & Sullivan said that the government was looking to increase its power generation capacity to 120GW over the next decade. To reach this target, the government is looking to acquire new investments spanning from technology, engineering and skills transfer that would total more than US$60 billion.

The IFC expects about 30 per cent of its funding in the Mena region to centre on alleviating climate change, which includes renewable energy investments and sustainable energy financing.

Most of the electricity generated in the country is through oil and gas, but renewable energy applications are beginning to raise their heads.

In December, the managing director of Iran Power Generation Transmission and Distribution Management Company, Arash Kordi, said that the country would add between 500 megawatts and 1,000MW annually of renewable energy power generation to the grid.

“I see [opportunities in] both wind and solar equally,” said David Corchia, the chairman of Eren Developpement, a renewable energy project developer based in Paris.

“They have a lot of wind in certain parts of the country and there is sun everywhere.”

Mr Corchia said that the firm was beginning discussions, but was uncertain how long it could take to get a project off the ground.

The Dubai-based solar and wind developer Alcazar Energy said that even though solar photovoltaic or wind projects may be cheaper than conventional power, it was still a significant amount of money for the company.

“Even at US$100 million to $200m, that’s still a big number for me, and before I can deploy a couple hundred million dollars anywhere, I need to have a full assessment on the bank­ability and local laws,” said David Calderon, the chief executive at Alcazar.

“This analysis, if everything is ready, takes at least six months.”

It is unclear how much regulatory framework Iran has in place to easily grab investor interest, such as a power purchasing agreement, but Eren is bullish on Iran’s ability to speed up the process.

“If they want to have 500MW to start with to see how things happen, it can be done within a year,” said Paris Mouratoglou, the president of Eren Developpement.

“You’re not reinventing the wheel.”

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