The Economic and Environmental Position of Geothermal Technologies in Iran’s Power Supply Portfolio from Policy and Investment Perspectives

In this study, the idea of utilizing hydrothermal technologies in the power supply portfolio is explored considering the necessity of power security, environmental protection, supplying the ever-growing power demand, and the opportunity to export hydrocarbon resources. The main goal is to determine a minimum guaranteed purchase price from a policy perspective and a confidence interval for sensitive technical and economical parameters from an investment perspective, in a way that electricity generation from hydrothermal resources would be feasible. The research methodology is an innovative combination of Net Annual Worth (NAW), Internal Rate of Return (IRR), and Benefit-Cost Ratio (BCR) indexes with California Electricity Community (CEC) in aims to consider all macroeconomic, technical-economic, and emission parameters of power plants in engineering economics calculations. The research data was collected from the strategic plans of the energy ministry and the related case studies and the year 1398 was considered as the base year. The results of this study from a policy perspective based on the power supply development guideline of REN21 suggest that in the current situation, where subsidized fuels are provided for power plants and the cost of external effects is not considered when calculating the cost of electricity, the hydrothermal technologies in the sixth to twelfth position in the power supply portfolio. Nevertheless, in the developed context of the electricity supply industry, where the power plants are supplied fuels with export prices and the cost of external effects is considered in the calculation of the cost of electricity, the hydrothermal technologies gain the second to sixth position in the power supply portfolio, higher than conventional technologies, such as steam, gas, and combined cycle. Results from an investment perspective show that the minimum guaranteed purchase price should be 6,705 Rials per Kw/h in order for the investment in this field to be feasible for the private section. Hence, considering the current minimum guaranteed purchase price, electricity generation in this way is feasible, only if the design and construction of the main equipment, such as the hydrothermal turbine are done locally and independent on the currency rate fluctuations. JEL Classification: D40, G32, H43. Keywords: Geothermal technologies, Power supply portfolio, Feed-in tariff for geothermal power, Levelized cost of electricity