Iran has increased the generation capacity of its small-scale power plants by 262 megawatts (MW) over the past year, reaching a total capacity of 1,692 MW despite recent damage sustained by the electricity infrastructure during a recent conflict. This reflects a significant achievement relative to the targets set under the country’s Seventh National Development Plan.

Abolfazl Asadi, Deputy for Planning and Economic Affairs at TAVANIR Company—which oversees power generation, transmission, and distribution—reported on Sunday that the development of small-scale thermal power plants surpassed planned expansion goals. While the initial target for this sector was 1,635 MW for the current year, the actual capacity rose to 1,692 MW, exceeding expectations through the efforts of regional electricity companies and distribution networks nationwide.

Asadi highlighted several advantages of expanding small-scale power plants, including the engagement of private sector investors, faster and more cost-effective project implementation, and enhancements in reducing network losses and strengthening the industry’s resilience. He noted that increased private investment was supported through measures taken in the past two years, enabling investors to actively foster growth in electricity generation.

According to Asadi, the Seventh Development Plan frames a dual approach to addressing Iran’s electricity supply imbalance: simultaneously increasing generation capacity and managing demand. The plan prioritizes the development of large thermal plants, small-scale plants, and renewable energy sources such as solar and wind, with concrete capacity targets set for each segment. Demand-side management efforts, aimed at optimizing electricity consumption, also form a key pillar of this strategy.

To attract further investment, TAVANIR has introduced three dedicated trading platforms: the Green Board, focused on renewable energy projects; the Free Exchange Board, catering to investors in small and large thermal power plants; and the Savings Board, designed for those investing in energy consumption optimization initiatives. These platforms facilitate transparent transactions and provide opportunities for participation across different sectors of the electricity industry.

Asadi explained that the Green Board allows renewable energy producers to sell electricity year-round without fuel constraints, while the Free Exchange Board supports thermal power projects including combined cycle and steam plants. The Savings Board, in particular, has seen rapid growth, with contracts increasing from two to 55 over the past 18 months, covering projects like motor replacements in water coolers to enhance energy efficiency.

Addressing concerns from private sector investors regarding electricity pricing and payment delays, Asadi emphasized TAVANIR’s push to expand electricity trading through an Energy Exchange Board. This market enables direct, transparent transactions between suppliers and buyers, predominantly industries that purchase electricity mostly on a cash basis. The share of electricity traded on this exchange has steadily risen during the past two years, with the Seventh Development Plan aiming for 60 percent of transactions to be conducted via this platform. The Ministry of Energy intends to gradually withdraw from direct electricity transactions to facilitate fairer pricing and payment processes through this market-based mechanism.

Concerning recent damages to the electricity sector caused by the recent conflict, Asadi stated that approximately 130 MW of nominal power generation capacity was impaired, including units exceeding 100 MW each. Efforts to rebuild these facilities are ongoing, but simultaneous use of existing capacities at gas stations and small-scale plants has helped offset the shortfall. Despite the damage, the government managed to bring more than 200 MW of new capacity online.

Asadi acknowledged cooperation from several ministries, including the Ministry of Petroleum in fuel supply and the Ministry of Industry, Mine and Trade in foreign currency allocation, as well as collaboration from private investors. This collective effort has been instrumental in achieving the electricity sector targets outlined in the current development plan.