Bilateral renewable energy trade between Turkey and Iran is welcome to benefit both and other countries in the region, according to Iranian deputy energy minister.

Husheng Felahetiyan, deputy energy minister of the Islamic Republic of Iran, told Anadolu Agency Monday in an exclusive interview that after sanctions were lifted against Iran, the country has drawn a lot of interest throughout the world.

He explained that Iran is actively involved in supporting an emerging renewables market in which he encourages Turkey’s participation.

The country offers opportunities to invest $250 billion in 12 different sectors, including energy. Additionally, Iran plans to have more than 800 power plant projects in the next 20 years to increase the country’s current installed power capacity from 75,000 megawatts to 100,000 megawatts.

The country is heavily reliant, by around 85 percent, on fossil fuels, particularly natural gas and oil, according to the International Energy Agency data. However, Tehran wants to develop its renewable energy potential in addition to its hydrocarbon resources.

Iran has around 100,000 megawatts of renewable energy potential from solar, wind and biomass.

“There are many reasons for accepting and inviting Turkish clean energy investors to Iran in realizing common activities,” Felahetiyan said, and added that both share close cultural, religious and historic ties which he cited as an advantage to in fostering better understanding,

“We are interested very much in developing cooperation with Turkey in many fields,” he underlined.

While a decade of financial and economic isolation has taken its toll on the country’s banking system, foreign banks are not rushing into the Iranian market. One of the difficulties for foreign investors is that they are not eager to take risks in the country.

Felahetiyan said that after the sanctions were lifted on the country, it has taken serious steps to attract foreign investors.

After the deal, Iran is expected to remove some of the obstacles on the country’s banking systems, insurance, shipping sector, and restrictions on oil exports.

International transaction links between banks are due to be restored to ease money transfer to and from Iran.

“The sanctions removed in June 2015 announced by United National Development Program (UNDP) in January has ensured that Iran so far has regulated its sectors to prepare a safe ground for foreign investors,” he explained.

He said that Turkish investors have shown interest in Iran’s energy sector ranging from small to large in renewables for production and in setting up new plants in the country.

Improvements to Iran’s financial sector

Felahetiyan said that in the post sanctions era, Iran has better banking relations with foreign banks.

“We know their concerns and we are working on it. For example with Turkey, we have very good relations with Turkish Halkbank which has expressed willingness to collaborate with Iranian parties,” he explained.

Payment guarantee is on table

He said the country is ready to give payment guarantees to Turkish companies who participate in Iran’s energy sector.

According to Renewable Energy Organization in Iran (SUNA), Iran envisages constructing wind farms and photovoltaic plants with a capacity of at least 5 gigawatts by 2018.

Iran recently amended its laws and prolonged the guaranteed term for power purchase agreements from five years to 20 years. Moreover, feed-in tariffs have been increased, e.g. photovoltaic plants with a capacity of more than 10 MW are eligible for a feed-in tariff of IRR 5,600.00 (about $0.15 — open market rate) per kilowatt hour.

In addition, an adjustment mechanism has been put in place to reflect inflation and currency exchange rate changes in favor of investors.

“If a Turkish company comes to Iran and selects an Iranian company to work with in the energy sector with any percentage share, and work here, there would be and seems to be no obstacle if they give the necessary volumes, then we are ready to give the payment guarantee,” he explained.

He assured that with a guaranteed feed in tariff for electricity, and an assured investment duration, investor risk will be reduced.

Iran reached a comprehensive nuclear deal with the world’s P5+1 powers; U.K., China, France, Russia, the U.S. and Germany in Vienna on July 14, 2015.

Source: Anadolu