Quercus Invest In Iran’s Energy Sector
Marking one of the largest single investments in Iran’s energy sector by a UK firm since the lifting of international sanctions in 2016, Quercus – one of the world’s largest renewable energy investors specialising in utility-scale renewable energy projects – announces the launch of its 600 MW solar photovoltaic (PV) plant (“Iran project").
When complete the solar PV plant will be one of the largest in the world, revealing the huge scale of Quercus’ project, as well as the UK’s leading role in the development of renewable energy projects globally.
As the UK prepares to leave the European Union, this announcement is evidence of British business being ready to take advantage of opportunities in new markets, and represents a major milestone for UK-Iranian bilateral trade relations.
As part of the agreement signed by Quercus and Iran’s Ministry of Energy, the firm will be responsible for the construction, development and operation of the plant. The total construction period is expected to last three years with the development of one fully operational 100 MW standalone lot every six months.
Following significant interest from investors and building on Quercus’ existing experience - which has seen it build a 40-plant portfolio structuring comprising of more than €500 million of financing since being founded in 2010 - the Iran project represents the firm’s first investment outside of Europe. During this time, Quercus has built a respected reputation as a specialist renewable energy investor - with a particular focus on the UK and Italy - and has delivered a minimum 6% dividend distribution and 9-11% gross internal rate of return (IRR) on its investments. The firm has launched a number of funds, which focus on investing in and managing renewable assets in Europe, especially in the UK and Italy.
Quercus is advising on new funding structures and is launching a new, specialist team to help deliver the project on the ground, including a Head of Engineering, a Financial Controller, Project Co-ordinator, Planning Manager and Procurement staff based in Dubai and Tehran. It will be working with a number of project parties, including local engineering talent.
Iran represents an attractive opportunity for UK and international investors.Quercus has already secured significant commitments from private and institutional clients, who recognise the huge potential in the Middle East’s second largest economy and the region’s biggest renewable energy market. This has been helped by the Iranian government’s moves to bolster the market, including:
• A clear commitment by Iran to invest and develop its renewable energy capacity over the coming years Iran’s Sixth Development Plan aims to install 5 GW of new renewable energy capacity by 2020 (5% of total generation)
• Plans to reduce CO2 emissions by at least 260,000 tons p.a. to help combat the effects of climate change
• Offering a positive regulatory and legislative environment that supports renewables – the Ministry of Energy created SATBA to oversee and manage the renewables market, including a feed-in tariff that is increased by up to 30% if local equipment and components are used and tax holidays if the plant is located in underdeveloped areas
• Creating an attractive market for investment compared to prospects in mature markets – e.g. in cooperation with the Renewable Energy Organization of Iran (SUNA), the Government introduced guaranteed twenty-year power purchase contracts that offer developers an attractive fixed price for electricity produced from renewables
• In more practical terms, the country also enjoys 300 sunny days ensuring the perfect climate for producing solar energy
• In the Middle East (including Iran) in general, $12.2tn needs to be invested in renewables to meet demand and $1.5tn is to be invested into large scale PV, with wind and solar the most invested segments, highlighting the scope for investment
Commenting on the launch of the Iran project, Diego Biasi, CEO of Quercus, said: “Following significant interest from potential and existing investors, we are thrilled to be developing one of the world’s largest solar PV plants in Iran, presenting an unrivalled opportunity to tap into the huge potential in the country’s renewable energy market. As Iran opens for business, we are delighted to be taking a leading role in building the country’s renewable energy infrastructure at such an early stage of its development. Not only is this positive news for us, but also fantastic news for the UK, representing a major milestone for trade relations with Iran. Iran is seeing unprecedented levels of investments since the lifting of international sanctions, and we are proud to be leading the UK’s push into this market."
The Prime Minister’s Trade Envoy to Iran, Lord Lamont of Lerwick, said:
"We welcome initiatives that not only support sustainable energy solutions for the future but also underline the importance of developing improved trading relations between the UK and Iran." HE Hamid Baeidinejad, Iran’s Ambassador to the UK, said: “As one of the world’s largest solar PV plants, this project demonstrates Iran’s commitment to investing in and developing our renewable energy capacity. Solar is a dominant global energy source in near future. Iran, with its special geographic characteristics and position, will be a major hub of solar energy serving the region and beyond. This mega project is the foundation towards that goal."