Energy

Why Are Solar Companies Doing Business With Iran?

REUTERS/Fahad Shadeed

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Andrew Follett Energy and Science Reporter

Solar companies are looking at Iran and seeing dollar signs, according to a report commissioned by Germany’s Foreign Office.

The lifting of economic sanctions against Iran has given German solar firms a “huge sales opportunity,” according to the 133-page report.

“The political will in Iran to realize success in this market is abundantly clear,” Joerg Mayer, the report’s author and head of a German solar industry group, told Bloomberg Wednesday. “What counts now for German firms is the speed and determination to build business relations” with Iran. Germany is Iran’s largest European trading partner.

Most solar panels currently in Iran were made in China, but the Islamic Republic wants to attract enough investments to finance its own solar industry. An Iranian official said in November that the country has already partnered with German investment firms to build a 1,250 megawatt solar plant.

Iran is desperate for investment in its energy industry. Due to sanctions and lack of cash, Iran hasn’t seriously invested in its oil or energy sector for years, but its energy consumption is estimated to be 80 percent above the Middle East’s average.

Simply keeping the lights on is estimated to require a minimum $150 billion of new investment — that number could be as high as $500 billion over the next five years, according to reports by Iran’s state-run news agency.

Iran is very interested in developing its solar industry, and wants green energy to make up 5 percent of its electrical generation capacity by 2020. The country is deeply dependent on cheap energy, and keeps energy prices artificially low through enormous subsidies. Iran spends between $40 to $100 billion annually on these subsidies, according to The Economist. That’s an enormous amount, as Iran’s entire gross domestic product (GDP) in 2014 was $406.3 billion.

The huge subsidies and low oil prices mean finding enough cash to invest in a developing solar industry without foreign support would be virtually impossible

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