Overview of Renewable Energy in Iran

Iran is an exciting new market for renewable energy, with a high demand for electricity and numerous incentives from the government to encourage a switch from hydrocarbons to renewable energy.

Iran’s policy makers have recognized the potential of the renewable energy sector and have taken steps to exploit it. Through the new terms of the Power Purchase Agreement and tariff rates, Iran hopes for an increase in foreign investment in this sector.

Iran’s energy production market is dominated by fossil fuels that satisfy 91.8% percent of Iran’s total energy demand. Nuclear electricity provides 2.3% of energy, while Hydropower stands for 5.7% of total power generation and 0.2% comes from other renewable sources, mainly wind (53.88MW), biomass (13.56MW) and solar (0.51MW).

The Iranian Power Generation, Transmission, Distribution and Management Company estimates that Iran’s renewable energy capacity will be able to provide 10% of the country’s energy requirement within 5 years.

Iran is an ideal location for solar projects as it is located on the world’s “Sun Belt” enjoying high solar irradiation and an average of 300 sunny days per year. The country also has the potential to produce 1.4GW of wind power as it is located in a low pressure region surrounded by high pressures areas.

Iran’s 6th Development Plan (2016 to 2020) states installation of 5GW of renewable energy within this period as well as plans for an additional 2,5GWW by 2030.

Iranian government reduced bureaucracy in its energy sector, streamlined its licensing process, and presented competitive incentives to R.E. infrastructure developers and equipment suppliers. For instance, the Renewable Energy Organization of Iran modeled its new feed-in tariff policy on the German equivalent, guaranteed government purchases of power for 20 years, and introduced a 15 percent tax reduction for companies that use domestic components.

The tariff rates offered by the government will soon reduce to be competitive with the rates offered elsewhere in the region. Developers entering the market today may take some risk but they will reap greater rewards for the next 20 years because of higher tariff rates offered now.

The attractiveness of Iran’s renewable energy potential has not gone unnoticed. Brittany’s Quercus recently announced an investment of 500€ million to build a 600MW solar power plant in Iran. Other investments include a 48MW wind farm, a 50MW solar plant to be built by an Italian company and two PV-Solar plants of 7MW to be built by German companies. Furthermore, a Danish company announced the construction of a wind turbines facility in Iran and a Spanish company has signed an 18 month contract to supply technical services to the Renewable Energy Organization of Iran.

The head of the Ministry of Energy has recently stated that Iran is planning to tender 1GW of wind and as much as 3GW of solar projects. This process will begin later this year and will take place over several stages.

This article was first published at Reflets Magazine N.98 from ESSEC Business School. http://www.alumni.essec.edu/fr/magazine-fr/

Iran Business Culture

Given that Iran is minority in 3 important factors of ethnic, religion, and the governing system, the county’s socio-cultural environment is not very similar to any other country. That explains why most of the people who visited Iran for business or leisure are surprised and usually express their experience with the statements like “It was far from what we expected”. But what do you need to know to build a successful business relationship with Iranians?

The Governing System

Regardless of the Persian Gulf monarchies, Iran’s governing system is to a good extend democratic. The country’s last monarchy was ended in 1979 by a revolution that ended up to an Islamic Republic by a simple referendum “Islamic Republic: Yes or No”. Islamic Republic is a mixture of elected and non-elected bodies with sometimes tension in between.

There is a Supreme Leader at the top of non-elected bodies, and a president who is elected in national votes. The Supreme Leader serves the country until he gets ill or passes away. The proceeding then would be appointed by a group of around 90 senior Iranian political and clerical, called the Assembly of Experts. The members of Assembly of Experts are elected in a national vote every 8 years and this is how the un-elected bodies get legitimated in the Islamic Republic of Iran.

Ethnical and Religious Diversity

Iran is a large country (equivalent surface area of Germany, France and the UK together) with the population of over 80 million. Different ethnics with diverse cultural norms are calling Iran their “home land”, among them are Persians (61%), Azerbaijanis (16%), Kurds (10%). It is important to know that Iran is not an Arab country, though 2% of the population is of Arab ethnicity.

languages of iran

98% of Iran’s population is Muslim and 90% Muslim-Shia, which is a minority in the Islamic world. Iran is the only Muslim country with strong majority of Shia. Iran has the largest Jewish population of any Muslim country with around 10,800 Jews living in Iran.

Calendar

Saturday is the first working day of the week in Iran. Thursdays and Fridays are weekend days.  It is common to work on Thursdays as well, especially in the private sector. In many organizations Thursday is a half working day.

Iran has a solar calendar which is different from European Calendar. It is now the year 1396 in Iran. The Iranian New Year is always at the beginning of spring, the 21st of March. The European calendar is understood and can be followed.

During the fasting month, Ramadan, eating and drinking in the public places are not recommended. Most of the restaurants are closed until the sun-set. Hotel’s restaurants are open for the tourists. Even if your Iranian host organization offers you lunch, they won’t join you for the meal.

Business Dress Code

Dress code is usually business casual for men, but it can vary based on the corporate culture. Wearing a tie is not popular among Iranians even in very formal business occasions. But wearing tie is not perceived negatively.

Dress Code

Due to the Iranian law, every woman entering the country should follow the local Islamic dress code. In Iran this means wearing long (above knees) jackets or mantels which also covers the arms. A headscarf should cover the hairs, not necessarily completely, but to a good extend. Wearing skirts is neither popular nor formal in Iran, while jeans are the most popular and Slacks the most formal for women.

Irna

Business Meetings

Delay

Up to 10-15 minutes of delay is acceptable and even common in the Iranian business culture. Furthermore, spontaneous changes in the schedule are not seldom.

Greetings

Iranians usually shake hands in business environments and first encounters only between the same sexes. Between different sexes, nodding once with a smile is a perfect greeting instead.

Business Card

Business cards are usually exchanged in the beginning of meetings. You can expect a person to have up to 4 business cards. In many corporations, employees prefer to use their personal Gmail or Yahoo account for work. This is acceptable in Iran.

Warm-up time

Iranians don’t usually jump into the business talk in the meetings. You should consider between 5-15 minutes for small talk, and ice-melting phase. This small talk is usually about weather, traffic and politics. Iranians are very proud of their ancient time. If you want to make a strong positive influence on your business partner, simply express your recognition of the Iranian ancient history and culture during the warm-up talk.

Negotiation

Iranians are tough negotiators. Even though showing flexibility has positive effect on your Iranian clients, but you should stick to your “red lines”; and should not give up on them in the negotiations.

Negotiations

Communication

Not everybody speaks good English in Iran, but it is not difficult to find English speakers in the Iranian organizations, especially among the younger generation. Other languages are not popular except for Turkish, which is well understood by the Azari people in Qazvin, Zanjan, Tabriz, and Azarbaijan province.

Iranians, like many other Asian countries, are not very direct in communication. Sometimes it is not easy to understand their “Yes” or “No”, because strong and bold disagreement can be perceived impolite. To overcome this challenge, rephrase your understanding of agreement during your conclusion talk, to make sure that you and your Iranian partner have the same understanding.

Religious Background

You won’t have any disadvantage in business relationships with Iranians due to your religion or belief. Normally you would not be asked at all about your religion in Iran.

Gifts

Sometimes Iranian companies offer personal gifts to their business partners, especially around the Iranian New Year. Basically the companies don’t expect any favor in return, and the gift is only a sign of good will to the company partners. It is also very nice if you bring a small souvenir from your country to your Iranian Partner, even though it is not necessary. Don’t forget to keep alcoholic drinks out of your gift list. Bringing alcohol to Iran is illegal.

 

INOTEX 2016: a unique hands-on opportunity

The 5th International Innovation and Technology Exhibition (INOTEX 2016) will be held on 22-25 May 2016 in Tehran, at a time when many western companies are carefully  eyeing the potentials of the Iran market.

Last year during June 9-12, 47 foreign and 72 domestic knowledge-based and hi-tech companies attended INOTEX 2015. After the historic agreement between Iran and the West in 14 July 2015, Iran has opened up as one of the largest emerging markets to foreign investment and trade. There is huge potential across a range of sectors.  Ministers of many European countries have visited Tehran during previous months in hope of reviving economic ties with Iran after the economic sanctions relief.

INOTEX 2016, as the leading international exhibition in Iran, seems to be a perfect technology transfer platform for international companies to demonstrate their products and services to a large group of potential partners in Iran. On this basis, the exhibition is sure to attract a significant number of international participants next year.

To find out more about INOTEX 2016, please check here:

www.iranaconsulting.co/inotex