MoU signed for 1 GW solar project in Iran

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Denikon, an Italian renewables developer, and Sinosteel Corporation, a Chinese state-owned enterprise focussed mainly on metallurgy and engineering, have signed a Memorandum of Understanding (MoU) to install between 500 and 1000 MW solar photovoltaic capacity in Iran.

The companies intend to develop a photovoltaic power plant in Yazd, located in central Iran. As the driest major city in the country and the hottest city north of the Persian Gulf coast, it is a popular location for solar projects. 

Earlier this year, Austrian developer mthpower announced that it plans to construct two solar plants with a combined capacity of 40 MW in Yazd, which will require an investment of EUR40 million (US$47.0 million). In October 2017, Pasargad Solar Projects began construction of a 100 MW photovoltaic complex in the area. It is expected to be completed by March 2019.

The MoU between Denikon and Sinosteel also covers the installation of 20,000 5 MW solar panels in residential areas across the city and the setting up of a solar panel factory. 

This follows a recent trend of agreements for large-scale solar projects including the development of the solar value chain. A MoU signed in April between Japanese conglomerate SoftBank and the Public Investment Fund of Saudi Arabia (PIF) covered the development of between 150 GW and 200 GW solar power generation capacity in Saudi Arabia by 2030, and support for the establishment of a solar manufacturing sector in the country, which would enable overseas exports of power and solar panels.

Last month, SoftBank agreed to set up an integrated solar photovoltaic manufacturing facility in India, where it is reportedly in talks to invest between US$60 and 100 billion in solar projects.

This indicates that governments of countries with less established renewable energy sectors are realising and seeking to capitalise on the potential value of localising renewable value chains. Private investment in singular projects, however big the generation capacity, represents the minimum, rather than optimum, of what governments can secure.

Iran’s government has set an objective to install 5,000 MW of new renewable energy capacity by 2020 and an additional 2,500 MW by 2030. The investment required to achieve these ambitious targets will be significantly reduced the installation of this capacity is completed in conjunction with the development of renewable manufacturing, engineering and equipment sectors.