Author: Jason Deign, Solarplaza
A group of low-profile Italian developers appear to have seized the initiative in signing solar deals across Iran’s newly opened energy market. Two Italian firms, Genesis and Denikon, are said to have signed a memorandum of understanding (MoU) for the development of a hundred 10 MW solar plants in Qazvin, Northern Iran, over the next decade.
The agreement was announced by Mohammad Ali Qasemi, deputy head of Qazvin’s Provincial Investment Headquarters for Services, with funding of USD$1.5 billion to come from unnamed foreign investors. Genesis is also said to be investing in waste-to-power infrastructure in Qazvin, northern Iran, while Denikon, led by Carmelito Denaro, the former boss of Italian solar panel manufacturer MX Group, is likely to handle project development.
Elsewhere, Carlo Maresca, of Pescara, Abruzzo, has also confirmed a MoU signing in Iran, for the construction of a 50 MW plant on the island of Qeshm. The Italian deals follow the lifting of sanctions against Iran and a trade visit by Italy’s Prime Minister, Matteo Renzi, to Tehran in April. Iran’s energy industry was one of the main agenda items in trade talks. Italy’s top utility, Enel, for example, emerged with a MoU signed by the National Iranian Gas Export Company for gas-related infrastructure.
And Saipem, an Italian oil contractor, inked a cooperation agreement with Razavi Oil & Gas Development Company to drill wells at the Toos Gas Field. “Business delegations from other European countries are expected in Tehran in coming weeks,” Reuters reported. “But Italy is well positioned to win contracts that could deliver a much needed export boost for its chronically sluggish economy, especially in the energy sector.”
Part of Italy’s allure for Iranian decision makers is that Italy has made an effort to maintain trade ties with Iran even as relations with other western powers have remained cold over the last decade. In the mid-2000s, for example, Italy was Iran’s top European Union trading partner, and the third-largest overall.
Iran recognised this special relationship by making Italy the first stop in a European visit by President Hassan Rouhani, following the lifting of sanctions in January. The Iranian opportunity comes as Italian solar firms focus on new markets to make up for lack of growth at home.
“I think Italian developers generally have been looking for new markets now Italy is over,” said Bloomberg New Energy Finance solar insight manager Jenny Chase. “Sanctions on Iran have recently been lifted, and Iranian politicians have made Italy their first point of contact in Europe, though not the only one.”
While Italy’s developers may have stolen an early lead on competitors in the Iranian solar market, a number of other countries are close behind. Germany, another major European trade partner for Iran, was said by Bloomberg to be financing a 1.25 GW solar plant and pursuing further opportunities in PV, lured by 20-year power-purchase agreements and a feed-in tariff of $0.33 per kWh. This is however slightly off from the latest updates in FIT tariffs released by SUNA (see table). The tariffs for wind and solar energy projects fall within 9 and 14 euro cents per kWh. This is excluding tariff optimization through the local content uplift (up to 30%) and smaller uplift for distribution network uplift and peak production uplifts.
Elsewhere, the Tasnim News Agency said: “China’s Shanxi International Energy Group has agreed to invest in a major project to construct photovoltaic power stations across Iran.”
Josefin Berg, senior analyst for solar demand at IHS Technology, said all developers would be wise to treat the Iranian market with caution. “It’s still complicated to do business in Iran,” she said. “To develop solar projects is going to take a while.”
This underlines the notion of an ongoing MOU fever spot on. Where MOU and awarded licenses indicate a growth in interest though not necessarily an increase of project reaching an operational stage or even entering construction phase soon. So there is more than meets the eye.