Utility-Scale Solar Farms
Business Model Description
Design, supply, install and operate a utility-scale solar power farm through tailor-made Public-Public-Private contracts or Private Partnership (PPP) modalities, such as Build-Operate-Transfer (BOT) or a Build-Own-Operate (BOO) model alongside obtaining Power Purchase Agreement (PPA). The project may be financed on a “back-to-back” basis where a PPA with a creditworthy off-taker such as national utility company can cover the key risks of the project.
Expected Impact
Provide steady, cheap, and clean energy to the population, boosting economic activity and improving employment opportunities, particularly for youth, women and IDPs.
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: Southern Iraq and Mesopotamian Marshes
- 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 prioritizes 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 nationalization. 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 businesses (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
Utility-Scale Solar Farms
Design, supply, install and operate a utility-scale solar power farm through tailor-made Public-Public-Private contracts or Private Partnership (PPP) modalities, such as Build-Operate-Transfer (BOT) or a Build-Own-Operate (BOO) model alongside obtaining Power Purchase Agreement (PPA). The project may be financed on a “back-to-back” basis where a PPA with a creditworthy off-taker such as national utility company can cover the key risks of the project.
Business Case
Market Size and Environment
12 to 21 GW of potential solar PV capacity by 2030
In Iraq, 21 GW solar PV capacity could be deployed by 2030 to close the acute electricity supply-demand gap of 12 GW, one-third of Iraq's electricity demand was unmet in 2021 (1, 38).
Iraq's revised Nationally Determined Contributions (NDC) from 2021, sets the climate change mitigation target of installing 12 GW renewable energy generation capacity by 2030 through private sector investments (38).
In 2018, Iraq's total energy consumption reached 22,552 ktoe, of which renewable energies held only 0.3% (approximately, 67.6 ktoe) (19).
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 (21).
Investment Timeframe
Medium Term (5–10 years)
Given the high MWh costs of neighbourhood generators that are highly used in Iraq, to overcome issues of energy supply, 5-year capital recovery pricing for Solar PV utility investments is commercially viable (1).
Simple payback period of the fixed axis photovoltaic plant system might take 7.1 to 7.2 years for a 10 MW PV plant in the north of Iraq (21).
Ticket Size
> USD 10 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 (24).
Iraq’s oil production is relatively emission-intensive, releasing extra methane to the atmosphere while wasting power that could fuel energy generation. Iraq has a limited refining sector, which increases the import dependence, raises the prices and aggravates to the security of energy supply (1).
Neighbourhood generators are used across the country to compensate for frequent outages and provide 20% of the demand. Diesel-powered generators contribute to poor air quality, create noise pollution, and are an expensive alternative to conventional grid power supply (USD 600-1200 per MWh) (1, 3).
Gender & Marginalisation
Power unreliability and unavailability negatively impacts 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 (4).
Oil industry in Iraq tends to be less labour-intensive and more male-oriented, creating less demand for employment of women in the private sector (12).
Youth accounts for nearly 50% of Iraqi population, making the citizens especially vulnerable to power cuts. Hence, youth may experience limited access to formal education, increased unemployment, which stands at around 40%, and impoverishment (1, 11).
Expected Development Outcome
Utility-scale solar power farm provides additional power supply to the grid system to accommodate for the increased demand, and brings environmental gains without increasing the cost of electricity.
Installing utility-scale solar power farm leads to a reduction in burning of oil and gas, supplying the country with clean energy without the need for imported capacities or new refineries.
Utility scale solar power farm helps individual households reduce their own dependence on expensive and polluting neighbourhood generators (3).
Gender & Marginalisation
Utility scale solar power farm provides youth and women with new employment opportunities in the private sector.
Utility scale solar power farm contributes to improvement of female entrepreneurship and, hence, income generation by providing consistent and secure power supply.
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 (35).
In 2019, renewable energy amounted to only 0.4% in the total energy consumption mix (34).
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 (26).
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 (36).
The Ministry of Oil announced the country’s plans to reach 10 GW of solar power capacity by 2030 (37).
13.2.2 Total greenhouse gas emissions per year
261.79 MtCO2e in 2020 (39).
Iraq's Nationally Determined Contributions (NDC) target is 15% reduction, both conditional and unconditional, of greenhouse gas (GHG) emissions (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
Corporates
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
Utility-scale solar power farms provide affordable, reliable, and sustainable power supply, relieving the national grid overload, creating job opportunities, and boosting the economic activity.
Who
General population, social groups affected most by the power outages, such as women, youth and displaced population, benefit from the uninterrupted, clean, and affordable power supply.
Risk
Improper installation of solar power stations and high upfront costs can affect the delivered impact of the business model.
Contribution
Utility-scale solar power farms replace neighbourhood generators, which are otherwise widely used and are an expensive and polluting alternative.
How Much
Utility scale solar power farms contribute to the solar PV accounting for 42% of the total renewable energy mix by 2025 and generating up to 70,000 jobs by 2030 (6, 25).
Impact Thesis
Provide steady, cheap, and clean energy to the population, boosting economic activity and improving employment opportunities, particularly for youth, women and IDPs.
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 (30).
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 (31).
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 (32).
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 (34).
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 (33).
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, 28).
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, 29).
Marketplace Participants
Private Sector
TotalEnergies, ACWA Power, Strategy&, Masdar, PowerChina, Scatec ASA, Baker Hughes, Gaffney, Cline & Associates, Orascom, Al-Bilal, Tanweer Energy Solutions, Euphrates Venturs, KESK, Mosul Solar, QHC Solar.
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
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: Southern Iraq and Mesopotamian Marshes
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 (IEA). 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) 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/
- (19) IEA. 2020. Data and statistics. https://www.iea.org/countries
- (20) QHC Solar. 2023. [Home page]. http://solar.com.iq/en/
- (21) 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
- (22) 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
- (23) 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
- (24) 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.
- (25) 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
- (26) Enerdata. 2021. Iraq Energy Information. https://www.enerdata.net/estore/energy-market/iraq/
- (27) The Associated Press (AP). 2023. Power station fire, explosions cut off power in much of Iraq in scorching summer heat, officials say. https://apnews.com/article/iraq-power-fire-basra-electricity-8878767567d66ecf6b5f1266dd300fb4
- (28) 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
- (29) 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
- (30) 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
- (31) 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
- (32) 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.
- (33) 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
- (34) 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/
- (35) SDG Index. 2023. Iraq. https://dashboards.sdgindex.org/static/profiles/pdfs/SDR-2023-iraq.pdf
- (36) IRENA. 2023. Energy Profile. https://www.irena.org/-/media/Files/IRENA/Agency/Statistics/Statistical_Profiles/Middle%20East/Iraq_Middle%20East_RE_SP.pdf
- (37) 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
- (38) World Bank. 2022. Iraq: Country Climate and Development Report. https://www.worldbank.org/en/country/iraq/publication/iraq-country-climate-and-development-report
- (39) Climate Watch Data. 2023. Historical GHG Emissions. https://www.climatewatchdata.org/ghg-emissions?end_year=2020®ions=IRQ&start_year=1990
- (40) KRG Board of Investment. 2023. Invest in Kurdistan: Overview of Priority Sectors. https://online.fliphtml5.com/wbsvb/aoef/#p=1
- (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/