Central Asia

Norway’s Saga Energy to invest USD 3 billion for building solar power plants in Iran

On October 17, 2017, the Norwegian company Saga Energy signed a USD 3 billion investment agreement with the Iranian company Amin Energy Developers, at the residence of Norway’s Ambassador in Iran. The agreement provides for the construction of solar power plants in Iran, with a total power generation capacity of up to 2 GW. The project will be implemented in the following five years, with funding from a consortium of public and private investors: banks, pension funds, and Norwegian state export guarantees. Currently, the deal is awaiting the finalisation of economic guarantees for the project from the Iranian government.

Saga Energy is a Norwegian company active in the energy sector, including oil and gas exploitation and production. It is a member of the Taiwan’s Delta Group, which is a power electronics firm that specializes in solar inverters. Amin Energy Developers is an Iranian state company, with activity in the area of power plant development, focused on renewable energy.

Previously, on September 20, 2017, the British investment fund Quercus announced that it has reached an agreement with the Iranian government on the construction of a solar power plant with a capacity of 600 MW in Iran. This project involves an investment of more than EUR 500 million, which will be implemented until 2020. At the same time, the Norwegian company Scatec Solar announced, in September 2017, during an interview with Reuters news agency, that it is currently in talks with Iranian authorities to build solar power plants in Iran, with an initial capacity of 120 MW, which can be further extended to 500 MW, within a USD 130 million project. In July 2017, works have already been finalised at Mokran solar power plant, with a generating capacity of 20 MW, developed by a joint venture between the German company Adore and the Swiss company Durion. According to the Iranian Deputy Minister of Economy, Mohammad Khazaei, European Union states invested a total of USD 3.6 billion in Iran’s energy sector since the sanctions imposed to Iran have been lifted in January 2016, after the Joint Comprehensive Plan of Action (JCPOA) was signed.

Iranian authorities intend to expand renewable energy generation, in an attempt to solve the acute pollution problem Iran is facing nowadays. In this respect, they have set a goal to build 5 GW of renewable energy by 2020. Currently, Iran has a total power capacity of 77 GW, out of which 360 MW is renewable energy. According to Reuters, total solar energy capacity currently reaches 53 MW in Iran.

On October 13, 2017, the President of the United States (US), Donald Trump, declared that he does not certify that the suspension of sanctions under the nuclear deal is appropriate and proportionate to the measures taken by Iran to terminate its nuclear program, yet without the US leaving this agreement. Trump asked the US Congress to modify the agreement so as to impose more severe conditions to Iran. The US Congress has 60 days to decide whether to re-impose the sanctions against Iran. International sanctions imposed to Iran were lifted starting January 2016, after the Joint Comprehensive Plan of Action (JCPOA) was signed, in 2015, by the five permanent members of the UN Security Council (US, Russia, China, Great Britain, France) along with Germany and the European Union. JCPOA provided for the partial removal of international sanctions against Iran, which, in turn, expressed its commitment to reduce its nuclear activity. In this context, the Iranian media outlet Press TV labelled the investment agreement signed on October 17, 2017 by Norway’s Saga Energy as “an act of defiance” against Donald Trump.