20 Mar 2013 (57 Pages)
Includes 3 FREE Quarterly Updates.
BMI View: Plans to develop Iran's nuclear capacity are central to the country's power industry and its ability to meet its energy requirements. While the country continues to face huge international opposition, it has made plans for additional research reactors, even as its first reactor faces teething problems as operators attempted to connect it to the main grid in March 2013. Although sanctions pose problems for many developed nations wanting to invest in Iran, the country still stands to benefit from investment from its neighbours, such as India, and greater development of its renewables generation capacity .The country also stands to gain from the power and gas import requirements of India and Pakistan. Iran will continue to rely largely on conventional thermal sources for electricity generation, with many of the power projects that are currently under construction slated to increase the nation's natural gas generation capacity. The country is pursuing plans to increase its nuclear capacity, despite external political resistance and sanctions. Meanwhile, the country's growing generation capacity suggests that it may increase exports to energy-hungry neighbours Turkey and Pakistan.
Key trends and developments in the Iranian electricity market:
-While the country continues to face external opposition to its nuclear ambitions, it is determined to continue in its efforts to meet its long-term generation plans and rely on domestic expertise. In February 2013, the Atomic Energy Organisation of Iran (AEOI) designated 16 nuclear power sites (coastal areas of the Caspian Sea, Persian Gulf, Sea of Oman, Khuzestan and north-western parts of the country) and also announced the discovery of more uranium deposits. However, we believe that unless the country is able to reassure the international community, progress will remain slow.
-Head of the AEOI, Fereidoun Abbasi, claims that Iran's first nuclear power plant in Bushehr is still in the testing phase. According to Abbasi, the Russian contractor has transferred all the necessary equipment and is trying to prepare the reactor for connection to the national grid. Due to a lack of information, it is difficult to ascertain the likelihood of success. However, if it comes online, the plant will operate under the full supervision of the International Atomic Energy Agency.
-During the period 2013-2022, Iran's overall power generation is expected to increase by an annual average of 2.7%, to reach 287.2 terawatt hours (TWh). Driving this growth is the build-up of output from the country's first nuclear power facility, which was connected to the grid in 2012 and is scheduled to be operating on a commercial scale by March 2013. However, operation halts at the plant suggests that it may not be fully operational and represents downside risks to our 2013 forecasts. Growth from non-hydro renewables generation is expected accelerate and deliver an average annual supply growth of 2.5% over the 2013-2022 period.
-Iran's 2013 real GDP is forecasted by BMI to contract by 1.0%, following an estimated contraction of 3.2% in 2012. However, growth is forecasted to recover to an average of 3.5% between 2014 and 2022.The population is expected to rise from an estimated 75.6mn in 2012 to 82.0mn by 2022, while net power consumption looks set to see far greater gains, increasing from an estimated 183.1TWh to 245.5TWh over the period. Over 2013-2022, electricity demand is forecast at to grow at an average annual rate of 3.0%.
- Thanks partly to the projected rise in net generation, growth of which falls below underlying demand trend, Iran's power supply surplus is likely to increase slightly over the medium term, although the country is keen to develop its power export capability. A decline in the percentage of transmission and distribution (T&D) losses from an estimated 15.4% in 2012 to 14.1% by end-2022 will further support the widening of the surplus. The forecasted net export capability in 2022 is put at 1.1TWh.