Solar-Based Green Energy Solutions
Solar-Based Green Energy Solutions
Business Model Description
Design, supply and install solar-based green energy solutions such as off-grid, hybrid, and grid-connected PV installations, including both ground-mounted and roof-mounted modalities, green retrofitting, solar carports, solar air conditioners, solar fridges, and solar power ventilations as an Independent Power Producer (IPP) in remote areas of Iraq, as well as in the Kurdistan Region of Iraq for the use of key infrastructure, including desalination plants, firms in the agro value chain, small businesses, and households.
Expected Impact
Foster self-sustaining and energy-efficient solar technologies in Iraq, relieving the energy supply-demand gap and improving the conditions for economic growth and decent work opportunities.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
Disclaimer
UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.
The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.
Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.
Country & Regions
- Iraq: Countrywide
- Iraq: Northwestern Iraq and Anbar
- Iraq: Kurdistan Region of Iraq
Sector Classification
Renewable Resources and Alternative Energy
Development need
4.5 GW of generating capacity were impaired due to the war and about twenty percent of the transmission infrastructure became inoperable. As the peak energy demand surged by 80% in 2017, Iraq experienced a large power shortage. Power outages and scheduled brownouts are not infrequent and contribute to civil unrest, particularly during the peak demand for air-conditioning (1).
Policy priority
The Iraqi government prioritises solar generation projects in line with the SDG 7. The Electricity Law No. 53 of 2017 states its objective of supporting and encouraging the adoption of renewable energy, its activities and nationalisation. The share of renewable energy in the total national mix is targeted at 10% by 2030 (2, 3).
Gender inequalities and marginalization issues
The access to formal electricity services is restrained to marginalized groups of women. Women in general appear to be uninformed regarding the delivery of energy services, their rights and obligations as users, and options for bill settlement. Power outages negatively affect female attendance of educational institutions and significantly hinder the conduct of women-led small business (4).
Investment opportunities introduction
Iraq’s abundant solar radiance potential, Euphrates and Tigris rivers’ significant contribution to hydropower generation, and the country’s wind zones with wind speed of 5.0 m/s, capacitate major wind, solar, and hydropower projects along expanding transmission, upgrading cooling, insulation, and deploying smart meters for households and businesses (5, 6).
Key bottlenecks introduction
Lack of robust sectoral regulation, unattractive investment conditions with no official tax incentives, and lack of financial mechanisms obstruct the development of renewable energy sector. Additionally, residential subsidies on tariffs discourage the adoption of energy-efficient practices or the utilization of alternative energy sources (1, 7).
Alternative Energy
Development need
Low efficiency infrastructure, high levels of aggregated technical and commercial losses (> 50%), and frequent outages result in heavy reliance on diesel-powered neighbourhood generators, which generate expensive electricity, contribute to noise and air pollution. With overreliance on oil and gas power generation, alternative energy sources can accelerate the decarbonization (1).
Policy priority
The Iraqi government aims to produce 14TWh by 2035 using hydropower. Kurdistan Regional Government plans to increase hydropower-generated electricity. In 2019, the central government in cooperation with international organizations formulated a solar policy aimed at deploying several thousand megawatts of utility scale solar plants and residential PVs by 2028 (3, 8).
Gender inequalities and marginalization issues
Oil exploration and construction of hydropower dams contribute to the forced displacement of population and aggravate the pre-existing poverty. Nearly 50% of Iraq's population are young and are particularly vulnerable to energy crisis. Oil-related industries tend to be more male dominating, prohibiting women's participation in the private sector (9, 10, 11, 12).
Investment opportunities introduction
In 2022, the Ministry of Electricity of Iraq signed an agreement worth EUR 65 million for the revitalization of hydropower plant Haditha. Additionally, solar plants in ACWA-Najaf solar farm were announced in Najaf with 1GW of expected capacity. It is estimated that the serviceable size of the solar market in Iraq could reach USD 20 billion (13, 14, 15).
Key bottlenecks introduction
Solar PV is expected to become cost-competitive with gas generation, even if gas is priced at USD 2 per million British thermal units (MBtu), by the year 2030. Climate change poses a challenge for hydropower generation, potentially causing a 5-10 percent reduction in power output from Iraq's third-largest dam by the year 2050 (1, 7).
Solar Technology and Project Developers
Pipeline Opportunity
Solar-Based Green Energy Solutions
Design, supply and install solar-based green energy solutions such as off-grid, hybrid, and grid-connected PV installations, including both ground-mounted and roof-mounted modalities, green retrofitting, solar carports, solar air conditioners, solar fridges, and solar power ventilations as an Independent Power Producer (IPP) in remote areas of Iraq, as well as in the Kurdistan Region of Iraq for the use of key infrastructure, including desalination plants, firms in the agro value chain, small businesses, and households.
Business Case
Market Size and Environment
5 GW of green energy capacity replacing diesel generators
During the peak summer months, small oil-based generators are used to supplement grid's power supply and mitigate some of the most severe shortages. In 2018, the total capacity of these small generators reached 5 GW (1).
The Iraqi companies offering small-scale green tech solutions could aim at getting 5% of the market share from on-grid mitigation investments in the country, based on Nationally Determined Contributions (NDC) targets (40).
In 2018, Iraq's total energy consumption reached 22,552 ktoe, of which renewable energies held only 0.3% (approximately, 67.6 ktoe) (20).
Indicative Return
10% - 15%
An academic study conducted for installation of a 10 MW PV plant in three locations in Northern Iraq showed an average pre-tax IRR of around 13%, and after-tax IRR of about 11% for fixed axis photovoltaic plants (20).
Investment Timeframe
Medium Term (5–10 years)
A green tech solutions company in Iraq has reached break even point with funding from grants and equity investments, after five years (40).
A 5-kWp hybrid-connected rooftop solar system at Diyala, Iraq that showed a 5 year payback period given the tariff set at 0.2 USD/kWh (21).
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Capital - Requires Subsidy
Impact Case
Sustainable Development Need
Due to inefficient infrastructure and aggregated technical and commercial losses of over 50 percent, Iraq suffers from frequent blackouts (1). As the population is estimated to double in 30 years and reach about 80 million, more people will be deprived of electricity, if status quo persists (23).
Disrupted electricity supply significantly affects the quality of air-conditioning in Iraqi buildings, which have poor ventilation during summer seasons (6).
The volume of rivers flowing in Iraq decreased by 37.5%, from nearly 80 billion cubic meters p.a. in the 1970s to less than 50 cubic meters in 2021 (26). Limited water supply aggravated by unstable energy flow poses a great risk for water desalination plants that resolve water scarcity.
Gender & Marginalisation
Power unreliability and unavailability negatively impacts youth's, particularly women’s, social and economic life, disrupting their access to formal education, which they are often deprived of anyway, and prohibiting income generation for women-led businesses (11, 4).
Expected Development Outcome
Green tech solutions provide Iraqi population with self-sufficient energy-saving technologies to address inadequate ventilation of the buildings and compensate for the technical losses.
Green tech solutions benefit the Iraqi population by providing solar-based air conditioning, an independent and stable source of cooling in the hot periods of the year.
Green tech solutions address the demand for desalination facilities and energy-intensive water supply and purification systems in Iraq by providing an independent and reliable source of energy (6).
Gender & Marginalisation
Green tech solutions provide off-grid solar power for educational facilities and women-led businesses, contributing to improving income generation and employment.
Primary SDGs addressed
7.1.1 Proportion of population with access to electricity
7.2.1 Renewable energy share in the total final energy consumption
In 2020, 100% of Iraqi population had access to electricity (36).
In 2019, renewable energy amounted to only 0.4% in the total energy consumption mix (35).
N/A
In 2021, the Ministry of Oil announced the country's ambition to raise its clean energy to 33% of the power capacity mix by 2030 (25).
11.6.2 Annual mean levels of fine particulate matter (e.g. PM2.5 and PM10) in cities (population weighted)
61.9 in 2019 (36).
N/A
12.a.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)
According to IRENA, Iraq's per capita renewable capacity declined to 36.6 watts/per person in 2021 (37).
The Ministry of Oil announced the country’s plans to reach 10 GW of solar power capacity by 2030 (38).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Public sector
Outcome Risks
If the country has limited capacity to effectively manage decommissioned solar panels, there is a risk of soil contamination and illegal disposal of the hazardous waste.
The manufacturing of solar technologies outside the domestic borders could pose a risk of heightened reliance on imported goods.
Impact Risks
If solar panels are improperly installed, the continuous disruption of power supply may persist, consequently diminishing the impact of the business model.
High upfront cost and limited access to debt finance can impede access to services to low-income consumers.
Impact Classification
What
Green tech solutions improve buildings ventilation, support water desalination plants, and relieve the national grid overload, resulting in increased welfare and economic activity.
Risk
Improper installation of solar power stations and high upfront costs can affect the delivered impact of the business model.
Contribution
Green tech solutions improve ventilation of the buildings, which otherwise rapidly heat up in summer as a result of unstable energy supply.
Impact Thesis
Foster self-sustaining and energy-efficient solar technologies in Iraq, relieving the energy supply-demand gap and improving the conditions for economic growth and decent work opportunities.
Enabling Environment
Policy Environment
Vision 2030: is a comprehensive sustainable, and green development roadmap and a long-term social and economic recovery plan. Establishes a goal of reducing environment pollution and greenhouse emissions through increasing the reliance on renewable and clean energy sources among other things (31).
Integrated National Energy Strategy, 2012: as a part of a medium-term strategy, sets out to develop on-grid solar and wind capacity, aiming to design a detailed solar atlas to identify areas with high potential, and improve regulatory framework to encourage investments in the sector (32).
National Development Plan, 2018-2022: sets an objective of improving the environmental impact of electricity activity by reducing CO2 emissions through opening investment opportunities in solar energy (33).
Financial Environment
Financial incentives: In 2022, the Central Bank of Iraq (CBI) introduced the 1 trillion Iraqi Dinar initiative (about USD 750 million) which aims at promoting solar energy projects by offering concessional loans (35).
Fiscal incentives: The Investment Law No. 13 of 2006 presupposes certain tax exemptions and benefits for investing to contribute to the development of Iraq and diversification of its economy. The period of the tax exemption covers 10 years (34).
Other incentives: Although there is no Renewable Energy Law in the country, Government of Iraq (GoI) have been exploring the development of a legal framework for renewable energy, for which the United Nations Development Programme (UNDP) has been providing technical support (41).
Regulatory Environment
The Electricity Law No. 53, 2017: states its objective of "supporting and encouraging the adoption of renewable energy, its activities and nationalization" (6).
Law on Protection and Improvement of the Environment, 2009: focuses on monitoring pollution from all activities, preserving natural resources, biodiversity as well as natural and cultural heritage, in line with sustainable development (6, 29).
Foreign Direct Investment Law 13, 2006 (amended in 2010 and 2015): encourages investments and facilitates the adoption of the necessary technologies to support Iraq's development. Under the legislation, a foreign investor or developer have the right to invest in Iraq without restrictions (6, 30).
Marketplace Participants
Private Sector
Euphrates Ventures, KAPITA, 51 Labs, KESK, Bereket Al-Noor, Mosul Solar, QHC Solar, TotalEnergies, ACWA Power, Strategy&, Masdar, PowerChina, Orascom, Al-Bilal, Scatec ASA, Tanweer Energy Solutions, Iraq Tech Ventures, Iraq Venture Partners (IVP), Yellow Door Energy.
Government
Central Bank of Iraq, Ministry of Environment, Ministry of Oil, Ministry of Electricity, Ministry of Construction, Housing and Municipalities, Iraqi Prime Minister’s Office Advisory Commission (PMAC), Ministry of Finance, Ministry of Planning, National Investment Commission.
Multilaterals
United Nations Development Programme (UNDP), World Bank, the International Energy Agency (IEA), the International Renewable Energy Agency (IRENA), the Regional Centre for Renewable Energy and Energy Efficiency (RCREEE), Japan International Cooperation Agency (JICA), Korea International Cooperation Agency (KOICA).
Non-Profit
Non-Profit: The Station, Friedrich-Ebert-Stiftung (FES), Welt Hunger Hilfe, Al-Bayan Center for Planning and Studies, Iraq Energy Institute.
Public-Private Partnership
Development & Production Contract and 1GW solar project between the Government of Iraq (GoI) and TotalEnergies. The Federal Budget 2023-2025 stipulates the "Principles of Cooperation on Energy in Iraq/Phase II" with Siemens and General Electric (42, 43).
Target Locations
Iraq: Countrywide
Iraq: Northwestern Iraq and Anbar
Iraq: Kurdistan Region of Iraq
References
- (1) International Energy Agency (IEA). 2019. Iraq’s Energy Sector: A Roadmap to a Brighter Future. https://iea.blob.core.windows.net/assets/fb1f67b9-3515-4b5a-bb40-06ca0b83ef70/Iraq_Energy_Outlook.pdf
- (2) REN21. 2019. Renewables 2019 global status report. REN21 Secretariat. https://www.ren21.net/gsr-2019
- (3) Friedrich-Ebert-Stiftung (FES). 2020. Iraq Solar Energy: From Dawn to Dusk. https://library.fes.de/pdf-files/bueros/amman/16324-20200722.pdf
- (4) International Bank for Reconstruction and Development. 2019. Iraq Electricity Services Reconstruction and Enhancement Project. https://documents1.worldbank.org/curated/en/504001557108087756/pdf/Iraq-Electricity-Services-Reconstruction-and-Enhancement-Project.pdf
- (5) Kazem, H. A., & Chaichan, M. T. 2012. Status and future prospects of renewable energy in Iraq. https://doi.org/10.1016/j.rser.2012.03.058
- (6) Friedrich-Ebert-Stiftung (FES). 2021. Sustainable Transformation of Iraq's Energy System. Development of a Phase Model. https://epub.wupperinst.org/frontdoor/deliver/index/docId/7891/file/7891_Iraq.pdf
- (7) UNDP. 2022. Mainstreaming Anthropocene Considerations. The Case of Iraq. https://www.undp.org/sites/g/files/zskgke326/files/2022-11/Anthropocene_Iraq-%20Final%20Report%20signed.pdf
- (8) International Energy Agency. 2012. Iraq Energy Outlook. World Energy Outlook Special Report. https://iea.blob.core.windows.net/assets/defc91da-512b-41ca-b4c1-fde8f8aba682/WEO_2012_Iraq_Energy_OutlookFINAL.pdf
- (9) Terminski B. 2011. Oil-Induced Displacement and Resettlement: Social Problem and Human Rights Issue. http://ssrn.com/abstract=2029770
- (10) UN. 2004. Social Impacts and Social Risks in Hydropower Programs: Preemptive Planning and Counter-risk Measure. https://www.un.org/esa/sustdev/sdissues/energy/op/hydro_cernea_social%20impacts_backgroundpaper.pdf
- (11) World Bank Group. 2017. Iraq Systematic Country Diagnostic. https://documents1.worldbank.org/curated/en/542811487277729890/pdf/IRAQ-SCD-FINAL-cleared-02132017.pdf
- (12) World Bank Group. 2020. Women's Economic Participation in Iraq, Jordan and Lebanon. https://documents1.worldbank.org/curated/en/933641600751429640/pdf/Middle-East-and-North-Africa-Women-s-Economic-Participation-in-Iraq-Jordan-and-Lebanon.pdf
- (13) Koncar. 2022. Koncar Wins a EUR 65 Million Agreement for the Revitalization of HPP Haditha in Iraq. https://www.koncar.hr/en/koncar-wins-a-eur-65-million-agreement-for-the-revitalization-of-hpp-haditha-in-iraq/
- (14) Arab News. 2023. ACWA Power to develop 1,000 MW solar plant in Iraq. https://www.arabnews.com/node/2288221/business-economy
- (15) Global Communities. 2022. How Financial Innovation is Fostering Renewable Energy in Iraq. https://stories.globalcommunities.org/crisis-to-resilience/technology-innovation/how-financial-innovation-is-fostering-renewable-energy-in-iraq/
- (16) TotalEnergies. 2022. At a Glance 2022. https://totalenergies.com/sites/g/files/nytnzq121/files/documents/2022-05/TE_essentiel_2022_EN.pdf
- (17) KESK. 2023. [Our products and services]. https://www.keskco.com/portal/services
- (18) IEA. 2020. Data and statistics. https://www.iea.org/countries
- (19) QHC Solar. 2023. [Home page]. http://solar.com.iq/en/
- (20) Bamisile O. et al. 2018. Techno-Economic and Performance Comparison of PV Installation in Different Location in Northern Iraq. https://www.researchgate.net/publication/325088741_TECHNO-ECONOMIC_AND_PERFORMANCE_COMPARISON_OF_PV_INSTALLATION_IN_DIFFERENT_LOCATION_IN_NOTHERN_IRAQ
- (21) Falih H. et al. 2022. Techno-economic assessment of a hybrid connected PV solar system. https://link.springer.com/article/10.1007/s44189-022-00003-7
- (22) World Bank Group. 2023. A Tale of Two Transitions: Iraq’s Energy Sector and Macroeconomic Stability in a Climate-Constrained World. https://openknowledge.worldbank.org/server/api/core/bitstreams/9dbdcaab-e834-4324-b3bb-27e4cb3128c9/content
- (23) Al-Bayan Center for Planning and Studies. 2022. Population Inflation and Demographic Shifts in Iraq: A Challenge to Human Security and An Entry Point for Political and Societal Destabilization. https://www.bayancenter.org/en/2022/06/3372/#:~:text=The%20population%20growth%20in%20Iraq,million%20by%20the%20year%202050.
- (24) UNDP. 2014. Catalysing the Use of Solar Photovoltaic Energy. Iraq. https://info.undp.org/docs/pdc/Documents/IRQ/PIMS%205137%20-%20ProDoc%20-%20Iraq%20-%20Catalysing%20the%20use%20of%20solar%20energy%20-%20Final%202%20-%20submitted.pdf
- (25) Enerdata. 2021. Iraq Energy Information. https://www.enerdata.net/estore/energy-market/iraq/
- (26) International Federation of Red Cross And Red Crescent Societies (IFRC). 2023. Iraq: Droughts - DREF Operation no. MDRIQ013 - Final Report. https://reliefweb.int/report/iraq/iraq-droughts-dref-operation-no-mdriq013-final-report
- (27) World Resources Institute. 2018. In Iraqi Kurdistan, Solar Offers Hope to the Powerless. https://www.wri.org/insights/iraqi-kurdistan-solar-offers-hope-powerless
- (28) World Economic Forum. 2018. This woman is rebuilding war-torn Iraq greener and stronger. https://www.weforum.org/agenda/2018/01/rebuilding-wartorn-iraq-greener-basima-abdulrahman
- (29) IEA. 2020. Law on Protection and Improvement of the Environment (Law No. 27 of 2009). https://www.iea.org/policies/12001-law-on-protection-and-improvement-of-the-environment-law-no-27-of-2009
- (30) FAO. 2022. Investment Law No.13 of 2006 as amended with Law No.2 of 2010 and Law No.50 of 2015.. https://www.fao.org/faolex/results/details/en/c/LEX-FAOC201855/#:~:text=This%20Law%20consisting%20of%2037,invest%20in%20Iraq%20by%20providing
- (31) Ministry of Planning of Republic of Iraq. 2019. "The Future We Want". Iraq Vision for Sustainable Development. https://andp.unescwa.org/sites/default/files/2021-05/The%20future%20we%20want-Iraq%20vision%20for%20Sustainable%20Development%202030.pdf
- (32) Iraq Prime Minister Advisory Commission. 2012. Integrated National Energy Strategy (INES). https://documents1.worldbank.org/curated/en/406941467995791680/pdf/105893-WP-PUBLIC-INES-Summary-Final-Report-VF.pdf
- (33) Ministry of Planning of the Republic fo Iraq. 2018. National Development Plan 2018-2022. https://andp.unescwa.org/index.php/plans/1139#:~:text=The%20National%20Development%20Plan%202018,ecological%2C%20psychological%20and%20spiritual%20levels.
- (34) Deloitte. 2021. Doing business guide. Understanding Iraq's tax position. https://www2.deloitte.com/content/dam/Deloitte/xe/Documents/tax/me_doing-business-guide-iraq-2021.pdf
- (35) Solarquarter. 2023. Central Bank Of Iraq Launches Renewable Energy Financing Initiative. https://solarquarter.com/2023/05/17/central-bank-of-iraq-launches-renewable-energy-financing-initiative/
- (36) SDG Index. 2023. Iraq. https://dashboards.sdgindex.org/static/profiles/pdfs/SDR-2023-iraq.pdf
- (37) IRENA. 2023. Energy Profile. https://www.irena.org/-/media/Files/IRENA/Agency/Statistics/Statistical_Profiles/Middle%20East/Iraq_Middle%20East_RE_SP.pdf
- (38) Bloomberg. 2021. Iraq Plans to Build 10 Gigawatts of Solar Projects Over 10 Years. https://www.bloomberg.com/news/articles/2021-02-21/iraq-plans-to-build-10-gigawatts-of-solar-projects-over-10-years?leadSource=uverify%20wall
- (39) Tanweer. Energy Solutions. 2022. Design, Build, and Operate 49.5KWp on-grid in Al-Burhan Group. https://tanweer.energy/index.php/projects-post/al-burhan-pv-49-5kwp/
- (40) UNDP SDG Financing in Iraq project team consultations with Iraqi firms and other private sector stakeholders in September 2023.
- (41) UNDP Iraq. 2023. Catalysing the use of solar photovoltaic energy. https://www.undp.org/iraq/projects/catalysing-use-solar-photovoltaic-energy
- (42) TotalEnergies. 2023. Iraq: Agreement between Iraq and TotalEnergies. https://totalenergies.com/system/files/documents/2023-04/ENG_Agreement_between_Iraq_and_TotalEnergies.pdf
- (43) Republic of Iraq, Ministry of Justice. 2023. Federal Budget 2023-2025 (Arabic original). https://iq.parliament.iq/blog/2023/06/26/%D9%82%D8%A7%D9%86%D9%88%D9%86-%D8%A7%D9%84%D9%85%D9%88%D8%A7%D8%B2%D9%86%D8%A9-%D8%A7%D9%84%D8%B9%D8%A7%D9%85%D8%A9-%D8%A7%D9%84%D8%A7%D8%AA%D8%AD%D8%A7%D8%AF%D9%8A%D8%A9-%D9%84%D8%AC%D9%85%D9%87/