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Shabnam Mirsaeedi, MPhil, MPA Berlin Centre for Caspian Region Studies Freie Universität Berlin [email protected] www.fu-berlin.de/bccare
The Diversification of Electricity Generation in a System Dominated by Fossil Fuels
- the Case of Iran-
17th REFORM Group Meeting
Salzburg, August 30th 2012
Developing a Strategy for the Diversification of Electricity Generation through Renewable Energies in a System Dominated by Existing Fossil Fuels
2
Introduction
Problem description
Research question
Methodology
The theoretical approach: history matters
A historical overview of Iran’s energy sector
A historical overview of Iran’s electricity sector
The 5-year development plans: 1990-2010
1990-1995
1995-2000
2000-2005
2005-2010
Gas has dominated the electricity sector in Iran since the 1990s, only hydropower represents renewable energy sources in electricity generation
3
Electricity generation in Iran, by fuel GWh
Source: IEA Statistics
Research question and hypotheses
4
Research question
How has the energy sector dynamic shaped the use of renewable energy in electricity generation in Iran between 1990 and 2010? – How have national decisions on both the domestic market and Iranian decisions
on an international level shaped the policy cycle in promoting renewable energies in electricity generation in the country?
– What policy interdependencies can be identified between the fossil fuel and renewable energy sources for the purpose of electricity generation in Iran?
– How can renewable energy sources be promoted in a fossil fuel dominated society?
Hypotheses
External policy pressures seeking an isolation of Iran by undermining its oil sector have significantly influenced a policy of self-sustainability that in turn has encouraged the expansion of the renewable energy sources in the country.
Geopolitical concerns and limits have pushed Iran to engage in a strategy of regional dominance and influence,
which includes its electricity export in neighboring countries In spite of the Iranian government elite’s long-term interest in renewable energy sources, political power and
short-term interests have been hesitant to renewable energies
The interplay of oil, gas and renewable energy sources in Iran’s policies on both the domestic and international level is an integral part of its foreign policy
1
2
3
4
5
1990 first program
1995 second program
2000 third program
2005 fourth program
2010 fifth program
A policy analysis of each five-year development program, incl. problem definition, agenda setting, policy formulation, decision-making, implementation and evaluation
A development of an advocacy coalition model over this time period
Methodological framework
A policy cycle analysis for each five-year program period will enable an analysis of the evolution of policies, actors and processes
Developing a Strategy for the Diversification of Electricity Generation through Renewable Energies in a System Dominated by Existing Fossil Fuels
6
Introduction
Problem description
Research question
Methodology
The theoretical approach: history matters
A historical overview of Iran’s energy sector
A historical overview of Iran’s electricity sector
The 5-year development plans: 1990-2010
1990-1995
1995-2000
2000-2005
2005-2010
7
Conceptual theoretical framework - components
Neo-classical realism
Handel internal vs external forces Path dependence The international system
The behavior of leaders can be shaped “internationally for domestic reasons or domestically for international purposes” and thus occurs at the intersection of these two spheres
when a state experiences an increase in relative material power, it eventually will lead to “a corresponding expansion in the ambition and scope of a country's foreign policy activity
Different states or even the same state at different times pursue particular strategies in the international arena that are shaped by both internal and external forces
“the scope and ambition of a country’s foreign policy is driven first and foremost by its place in the international system and specifically by its relative material power capabilities”
Consequences of an historic event or development that will affect potential outcomes of a sequences of events occurring after that event
One definition includes: why states at different times in history pursued the same or different strategy
leaves room for changes in political strategies – rather than being limited to one policy path
Source: Pierson (2000), Rose (1998), Lobell (2009)
Neo-classical realism has been chosen as a suitable theoretical perspective to capture both domestic and international influences on Iran’s energy policy
8
Historical evolution of the energy sector in Iran
First concession for natural resources including for coal, iron, copper an oil was given to Baron Julius de Reuter
The price was quite low and few years later Nasir-Din Shah sought to cancel the concession
The concession was replaced by a new concession giving Reuter the right to establish the Bank-e-Shahi
End of 19th century
The division of Iran into spheres of influence between Great Britain and Russia
60 year concession to William d‘Arcy and the creation of the Anglo-Persian Oil Company
Iran received only 16% of net profits
As the geopolitical importance of Iran grew, Britain started to be concerned with internal Iranian affairs
1900-1930s
Iran abrogated the oil concession and sought to negotiate a more beneficial new agreement (1933 agreement)
Limited to a smaller area, higher payments by Great Britain, no right for unilateral pipeline construction
Sought nationalization of the oil sector in 1951 and the Consortium Oil Agreement in 1954
1930s-1979
First efforts to decouple from oil revenues
Cancellation of the Consortium agreement and management of all oil activities by the National Iranian Oil Company
After the revolution
Historically, foreign exploitation and domestic dependence have shaped Iran’s energy policy – first changes have been observed in the mid-20th century
9
Overall research design
Research question
Oil Gas Renewable energies
Share of diesel is decreasing in electricity generation but still remains four times higher than that of wind energy
Cheapest energy source in the country Still an important export resource of
the country (compared to gas and renewable energies)
Strategic priority for domestic electricity generation and regional export
Small-scale approach, mostly in rural areas
Too expensive in comparison to other fossil fuels in electricity production
How has the energy sector dynamic shaped the use of renewable energy in electricity generation in Iran between 1990 and 2010?
Methodology: Policy Analysis
Theoretical perspective
Dynamics of three different energy sources
At the heart of the research design lies the analysis of the dynamics of fossil fuels and renewable energies in the electricity sector
10
Deputy of Legislation Support and
Parlament Affairs Tavanir Holding Company
Organizational chart of the
Ministry of Energy
(electricity affairs only)
Deputy of Energy and Electricity Iran Water Resource Management
Holding Company
Deputy of Water and Sewage Country Water and Sewage Company
Deputy of Research and Human
Resources
Power and Water University of
Technology
Deputy of Planning and Economic
Affairs Niroo Research Institute
Power & Water Industry Practical,
Application and Educational Institute
Power Research Institute
Organizational chart of the Minstry of Energy Structural changes
The Ministry of Energy (MoE) was established in 1974/75 to better coordinate energy activities (with the exception of oil and gas)
By June 2012, Iran had 400 power plants with a total installed electricity generation capacity of 61,000 MW (2010)
Until the mid-1990s, the electricity sector
in Iran was completely centralized and managed by the Ministry of Energy
In accordance with Amendment 12 of the
2002 Budget Act, the government seeks to increase private sector participation in currently centralized sectors, including the electricity sector
Source: Ministry of Energy and Tavanir Holding Company, Statistical report on 44 years of activities of Iran electric power industry (1967-2010), published in October 2011.
Centralized in essence, the electricity sector in Iran has undergone some important structural changes since the mid-1990s
The electricity sector
11
2007
196.078
93%
7%
2006
184.762
94%
6%
2005
170.631
96%
4%
2004
155.757
98%
2%
2003
142.889
98%
2%
2009
212.852
88%
12%
2002
131.447
98%
2%
2001
121.046
98%
2%
2000
112.803
98%
2%
1999
102.248
1998
93.406
1997
87.718
1996 2008 1995
76.134
1994
73.470
1993
67.929
1992
81.257
1991
56.742
1990
51.982
205.922
90%
10%
60.574
MOE non-MOE
Source: Ministry of Energy and Tavanir Holding Company, Statistical report on 44 years of Activities of Iran electric power industry (1967-2010), published in October 2011.
Start of privatization of some power
plants in the country
Net power generation in Iran (1990-2009) In GWh
Although privatization of power plants has been initiated, over 85% of net power generation is still controlled and managed by the Ministry of Energy
Almost 20 power plants have been
privatized
12
52% 52% 51% 51%43%
36%32%
54%
29%
1%
16%
2008
1%
16%
2005
39%
26%
18%
1%
16%
2004
41%
25%
19%
2001
40%
2%
7%
2000
52%
38%
2%
8%
1999
52%
38%
2%
8%
1998
38%
3%
8%
1997
50%
38%
3%
26%
24%
1%
17%
2007
34%
24%
24%
1%
17%
2006
27%
19%
5%
12%
1991
27%
6%
13%
1990
55%
27%
6%
13%
100%
2009
32%
22%
1%
14%
2003
42%
2%
13%
2002
47%
41%
2%
10% 9%
1996
36%
3%
9%
1995
53%
35%
3%
9%
1994
53%
34%
4%
10%
1993
33%
4%
11%
1992
53%
30%
Steam
Gas
Combined Cycle
Diesel
Hydro
Wind
Solar
Biogas
Source: Ministry of Energy and Tavanir Holding Company, Statistical report on 44 years of activities of Iran electric power industry (1967-2010), published in October 2011.
Nominal capacities of power plants of the Ministry of Energy in Iran, by source in percent, 1990-2009 In %
Steam and gas plants still remain the number resources for electricity generation in Iran – wind and solar have only contributed since 2005
Introduction of combined cycle
plants
13
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
6.000
5.000
4.000
3.000
2.000
1.000
0
Import
Export
2.068
6.152
1.684
3.875
1.842
2.520 2.541 2.775
2.084
2.759
2.074
2.761
500
2.500
1.500
6.500
4.500
3.500
5.500
Source: Energy Balance-Sheet Iran, 1990-2010
Electricity import vs. export in Iran, 1997-2009 In GWh
Since 2004, Iran has increasingly become a net electricity exporter with an exporting capacity of 4,084 GWh
Developing a Strategy for the Diversification of Electricity Generation through Renewable Energies in a System Dominated by Existing Fossil Fuels
14
Introduction
Problem description
Research question
Methodology
The theoretical approach: history matters
A historical overview of Iran’s energy sector
A historical overview of Iran’s electricity sector
The 5-year development plans: 1990-2010
1990-1995
1995-2000
2000-2005
2005-2010
15
1990-1995
Source: Nasri, G. (2001). Oil and the National Security of the Islamic Republic of Iran ( ). Tehran: .
Budgeted 147 billion USD for its program, of which 103 billion USD were supposed to be generated through oil exports, 17 billion through non-petroleum exports and about 27 billion USD from foreign investments
Iranian assumptions for this period
Executive Order 12957 and 12959 that sought to ban U.S. trade with and investments in Iran as a response to Iran’s nuclear program and support for terrorist organizations were passed
Iran and Libya Sanctions Act that targeted U.S. and non- U.S. companies that invested over 20 million USD in the petroleum sector in Iran was passed
International developments
The country, however, was limited in its policy due to the fact that it could not surpass the exploration of more than 3.7 million barrels per day with its existing technology. Any increase in exploration would require significant investments – money that was (arguably) at that point not available in Iran
Domestic consequences
Within the first 5-year development plan, oil revenues were still an essential part of the program – international developments changed this reality
16
1995-2000
Recognition of the weakeness of a rentier state
Consequences of the previous period
Environmental movements (Agenda 21)
Kyoto Protocol Consequences of the US
sanction were apparent
International developments
In 1995, the Iranian Renewable Energy Agency was established to explore first alternatives to fossil fuel resources in the country
By 1995, substantial new gas explorations in the country were deemed a priority
The development of the first twelve projects at the South Pars site (the second set of projects in 1998)
It was decided in 1997 to replace when possible oil consumption with natural gas and develop gas exports to countries such as Turkey, Pakistan and India.
Domestic policies
Source: Nasri, G. (2001). Oil and the National Security of the Islamic Republic of Iran ( ). Tehran: .
Association for Economic Research ' '. (2007). Overview of the energy sector in the MENA region and the economic security of the Islamic Republic of Iran. Tehran: Association for Economic Research .
Self-sustainability interests and international policy changes endorsing environmental policies shaped much of the second 5-year development plan
17
2000-2005
Seeking to increase electricity independence from imports and increasing electricity export capacity
Consequences of the previous period
Environmental movements (Agenda 21)
Negotiations leading to the International Renewable Energy Agency (IRENA)
Consequences of sanctions
International developments
further emphasized the role of gas and renewable energies in the energy sector, but also sought to diversify the non-petroleum sectors of the economy
Energy efficiency measures were instituted on a policy level
Iran prepared itself for the numerous international decisions within the environmental sector
Geothermal research projects commenced
Domestic policies
Source: Abdolvand, B., Jalilvand, D., & Eskafi, F. (2012). Iran versus USA: Geburtswehen einer neuen Weltordnung. Welttrends Papiere, 6-45; Nasri, G. (2001). Oil and the National Security of the Islamic Republic of Iran ( ). Tehran: .
Decrease of energy consumption, diversification of energy sources and environmental interests became a priority in the third 5-year plan
18
2005-2010
Seeking to increase electricity independence from imports and increasing electricity export capacity
Consequences of the previous period
International Renewable Energy Agency (IRENA) was created
Further international pressures on Iran
International developments
Targets were set for wind and solar energy
It was decided to privatize distribution activities within the electricity sector, including customer services, diagnosis operations, designing systems, development and establishment, operation, consumption management, supervision, logistic services and distribution engineering
Development of feed-in-tariffs for renewable energies
By 2010, fossil fuel energy only contributed to 20% of the national
Domestic policies
Source: Abdolvand, B., Jalilvand, D., & Eskafi, F. (2012). Iran versus USA: Geburtswehen einer neuen Weltordnung. Welttrends Papiere, 6-45; Tavanir Holding Companz< Nasri, G. (2001). Oil and the National Security of the Islamic Republic of Iran ( ). Tehran: .
Expansion of renewable energy sources, energy efficiency and price increases were at the heart of the fourth 5-year development plan
19
Concluding remarks
The future of renewable energies in Iran – possibility or dream?
It is naive to consider renewable energy developments in Iran, or in any fossil fuel rich country, without considering fossil fuel interests in the analysis
As long as the energy sector remains significant, it will remain a political and
economic issue that forms the backbone of some of its foreign policy interests Although renewable energies are not likely to gain a significant share in Iran’s
energy sector in the near future, nonetheless, they present a strategic area of development in the country
Renewable energies are not really an environmental priority but currently more a tool to underline self-sufficiency aspirations, regional power aspirations and management of international developments in relevant sectors
Thank you very much for your attention!
Shabnam Mirsaeedi, Mphil, MPA
Research Fellow
Berlin Centre for Caspian Region Studies (BC CARE)
Freie Universität Berlin
Ihnestr. 22
D-14195 Berlin
Office: +49 (0)30 838 553 81
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