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Impacts of reforming energy subsidies on small scale generator business in Iran

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  • Shahverdi, M.
  • Moghaddas-Tafreshi, S.M.
  • Mazzola, Michael S.
  • Kaviani, A.K.

Abstract

Iran had been dedicating a substantial amount of its budget, known as subsidy, to keep the price of natural gas and electricity for customers considerably lower than real cost until 2011. Legislatures passed a law reforming energy subsidy in 2011, but this process is to take five years. Iran ceased to fully-subsidize from 2011, and gradually continues this process through 2015 when no subsidy will be paid. After 2015, the energy price will reach its prime cost. In addition, Tavanir organization, official organization of electrical energy management, published the “contract of guaranteed purchase price of energy for small scale generator”. Based on the contract, the Ministry of Energy guaranties that electricity generated by a small scale generator is purchased at a price higher than market purchase price (http://www.tavanir.org.ir: letter no. 52504/350, October 22, 2008). These two issues, reforming subsidies and incentives for small scale generators' owners, would affect distributed generation areas in terms of operation and investment. This research studies effects of reforming energy subsidy on optimum daily operation of a Fuel Cell Power Plant (FCPP), as an example; however, the results are not only helpful for FCPP but also extendable to some extent to other small scale distributed generators.

Suggested Citation

  • Shahverdi, M. & Moghaddas-Tafreshi, S.M. & Mazzola, Michael S. & Kaviani, A.K., 2014. "Impacts of reforming energy subsidies on small scale generator business in Iran," Renewable Energy, Elsevier, vol. 71(C), pages 679-689.
    • Handle: RePEc:eee:renene:v:71:y:2014:i:c:p:679-689
    DOI: 10.1016/j.renene.2014.06.036
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    References listed on IDEAS

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    2. Chang, Kai & Long, Yu & Yang, Jiahui & Zhang, Huijia & Xue, Chenqi & Liu, Jianing, 2022. "Effects of subsidy and tax rebate policies on green firm research and development efficiency in China," Energy, Elsevier, vol. 258(C).
    3. Huan Du & Jian Hu & Huaxuan Wu & Tieshan Li & Lingjuan Chen, 2023. "Analysis of the Threshold Effect of Renewable Energy Industry Subsidies Based on the Perspective of Industry Life Cycle," Sustainability, MDPI, vol. 15(21), pages 1-19, October.
    4. Saeed Solaymani, 2021. "Energy subsidy reform evaluation research – reviews in Iran," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 11(3), pages 520-538, June.
    5. Zhang, Huiming & Zheng, Yu & Ozturk, U. Aytun & Li, Shanjun, 2016. "The impact of subsidies on overcapacity: A comparison of wind and solar energy companies in China," Energy, Elsevier, vol. 94(C), pages 821-827.
    6. Lin, Boqiang & He, Jiaxin, 2017. "Is biomass power a good choice for governments in China?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 1218-1230.

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