Iran needs to change its approach in power plant construction to overcome the fuel supply crisis and disruptions in the electricity network. The fuel crisis in winter and network problems in summer indicate that the current issue in the country is not only related to production shortages but also the inefficiency of the network structure is one of the main factors. If policymakers are looking to escape this vicious cycle, they should not revert to old and tested solutions once conditions stabilize.
Need for Transformation in Power Plant Structure
Iran, during the reconstruction phase and after the crisis, needs to shift from "massive and centralized development" to "three-dimensional and resilient architecture." This model is based on three pillars: improving efficiency by converting existing gas power plants to combined cycle, decentralized development of renewables, and transferring loads to self-sufficient industrial power plants. Currently, about 15,000 megawatts of gas power plants with an average efficiency of 32 percent are active in the network, indicating a waste of one-third of the input fuel before it is converted to electricity.
Converting gas units to combined cycle can create about 7,500 megawatts of new capacity without consuming a single cubic meter of new gas. This change will raise overall efficiency to the range of 45 to 51 percent and save 12 billion cubic meters of natural gas annually. Statistics show that 63 percent of the total capacity of private sector power plants consists of high-quality combined cycle units, while this share in state-owned plants is only 5.5 percent. This significant difference indicates that reforming economic signals can direct the private sector towards high-efficiency technologies.
Development of Solar and Self-Sufficient Power Plants
The second pillar of this new architecture is the development of distributed solar power plants. The country's cooling load in summer reaches over 35,000 megawatts, coinciding with peak sunlight hours. Although the actual capacity factor of photovoltaic plants in Iran is recorded between 20 to 27 percent, their reliable capacity during peak summer load reaches 30 to 70 percent of their nominal capacity. These types of renewables are considered suitable options for increasing the resilience of the network due to their rapid deployment and lack of need for gas pipelines.
Additionally, large and energy-intensive industries are required, under Article 4 of the Law on Removing Barriers to Electricity Industry Development, to build at least 9,000 megawatts of high-efficiency thermal power plants and 1,000 megawatts of renewable power plants. The development of self-sufficient power plants at consumption sites, especially by utilizing combined heat and power (CHP) systems, reduces the load on the national grid and minimizes the risk of industrial production stoppages.
Ultimately, for a smart reconstruction of the electricity industry, policymakers must prioritize four operational directions: 1. Implementing Article 12 of the Law on Removing Production Barriers, 2. Developing a direct trading platform in the energy exchange, 3. Localizing renewable equipment, and 4. Developing energy storage systems. Thus, Iran's energy security in the coming years will be assessed by the flexibility of the network and diversification of the fuel mix.
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