BMI Industry View
BMI View: The signing of the Joint
Comprehensive Plan of Action between the Iranian government and the PG+1, comprised of the five permanent
members of the Security Council and Germany, an agreement aimed at bringing an end to sanctions on
Iran through agreement on the country's nuclear programme, has precipitated considerable activity among
foreign investors looking to take advantage of the country's considerable market for electricity,
both in terms of domestic supply and export.
Since the signing of the agreement, several companies, many of them European, and several government delegations have visited Iran, signing agreements with the government aimed at installing a number of new power plants in the country. In Q116, Iranian authorities announced potential co-operation over nuclear power plants with both Hungary and Japan.
However, BMI's forecasts for the
power sector remain quite cautious, for the time being. BMI predicts Iran's total power generation to be
258.11TWh in 2016, an increase of 1.55% on 2015's 254.17TWh.
Between 2017 and 2025, BMI forecasts this output to increase at a year-on-year (y-o-y) average rate of 2.27% to 319.79TWh by 2025.
According to BMI's research, Iran will have 80,864.37MW of installed capacity in 2016, representing a 0.57% increase on 2015's 80,409.30MW. During the period 2017 to 2025, this figure will increase at an average year on year rate of 2.0%, reaching 96,508MW by 2025.
A number of factors underscore the
cautious nature of our forecasts. In recent years, Iran's economy has not performed well. It underwent a 10%
contraction in real terms across the period 2012 to 2015. The government predicts a rapid rebound in
economic growth, at a rate of 8% y-o-y. However, we predict that the economy will grow at just over 4%
per year. The upside is limited by the poor outlook for oil and gas prices and limitations on the removal of
sanctions, with the US government maintaining 'primary' sanctions.
Indeed, while non-US firms and foreign subsidiaries of US firms will now be permitted to conduct business in Iran, US companies will not. Moreover, some European firms have decided to remain on the sidelines for now, since doing business with companies linked to Iran's Republican Guard will remain a punishable offence.
All these factors limit the prospects for growth in consumer and industrial power demand in Iran, while also limiting the resources - fiscal and professional - available for investment in the sector.
گزارش تحلیلی بیزینس مانیتور- صنعت انرژی در ایران- سه ماهه دوم 2016