Utility-Scale Solar Farms

Utility-Scale Solar Farms

Photo by UNDP Iraq

Utility-Scale Solar Farms

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
12 to 21 GW of potential solar PV capacity by 2030
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7) Responsible Consumption and Production (SDG 12) Climate Action (SDG 13)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Decent Work and Economic Growth (SDG 8) Industry, Innovation and Infrastructure (SDG 9) Sustainable Cities and Communities (SDG 11)

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.

Read More

Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Iraq: Countrywide
  • Iraq: Southern Iraq and Mesopotamian Marshes
  • Iraq: Northwestern Iraq and Anbar
  • Iraq: Kurdistan Region of Iraq
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

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).

Sub Sector

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).

Industry

Solar Technology and Project Developers

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Utility-Scale Solar Farms

Business Model

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

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

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

IRR
Describes an expected annual rate of growth of the IOA investment.

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

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

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

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - CapEx Intensive

According to the World Bank Group, green transition scenario in Iraq requires 28 percent of total CAPEX by 2025. In other words, USD 17.8 billion, equivalent to a yearly average of 2.3 percent of GDP, will be needed to transition to clean energy (23).

Market - Highly Regulated

In the renewable energy sector, Iraq lacks robust and comprehensive legal framework and regulations that would incentivize private investments in the sector (6).

Capital - Requires Subsidy

The electricity sector is highly subsidized, which discourages any investment into efficient energy solutions or alternative energy. Hence, in order to promote green transition, rebalancing the subsidies from oil industry to renewable energy is required (3).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

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

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.1 Proportion of population with access to electricity

7.2.1 Renewable energy share in the total final energy consumption

Current Value

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).

Target Value

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).

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

12.a.1 Installed renewable energy-generating capacity in developing countries (in watts per capita)

Current Value

According to IRENA, Iraq's per capita renewable capacity declined to 36.6 watts/per person in 2021 (36).

Target Value

The Ministry of Oil announced the country’s plans to reach 10 GW of solar power capacity by 2030 (37).

Climate Action (SDG 13)
13 - Climate Action

13.2.2 Total greenhouse gas emissions per year

Current Value

261.79 MtCO2e in 2020 (39).

Target Value

Iraq's Nationally Determined Contributions (NDC) target is 15% reduction, both conditional and unconditional, of greenhouse gas (GHG) emissions (38).

Secondary SDGs addressed

Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities

Directly impacted stakeholders

People

People and businesses benefit from stable access to electricity and reduced blackout and brownout incidences, as wells as improved air quality, which is polluted by the extensive use of diesel neighbourhood generators.

Gender inequality and/or marginalization

Women and youth, internally displaced persons (IDPs) benefit from stable, cheap and clean energy.

Planet

Nature and animals benefit from the improved air quality, reduced noise pollution, and intact fossil fuels deposits.

Corporates

Companies engaged in the provision of green energy solutions will benefit from the improved demand, hence increased revenue. The investments could facilitate methane abatement in oil and gas sector.

Public sector

The Ministry of Electricity and Ministry of Environment benefit from supported grid system, consistent energy supply and reduced need for electricity tariff subsidies.

Indirectly impacted stakeholders

People

Workers from the energy industry benefit from the expanded employment opportunities.

Gender inequality and/or marginalization

Women and youth benefit from improved access to educational and employment opportunities as a result of consistent energy supply.

Planet

As a result of a greater share of renewable energy in the energy mix, water resources are less contaminated by the by-products of the oil industry.

Corporates

Oil companies that operate in the field will benefit from expanding their operations in the renewable energy sector, increased revenue and technological advancement.

Public sector

Reduced dependence on imported fuels and narrowing down the electricity-supply demand gap contribute to public budget and social cohesion. Cost of doing nothing in energy transition could translate into stalled economic growth, disrupting Iraq’s fiscal balance.

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

C—Contribute to Solutions

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

Explore policy, regulatory and financial factors relevant for the investment opportunity.

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

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

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

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
semi-urban

Iraq: Countrywide

More than 80% of land area in Iraq have a solar energy capacity potential, measured in terms of annual generation per unit of installed PV, between 1.6 - 1.8 MWh/kWp (36).
semi-urban

Iraq: Southern Iraq and Mesopotamian Marshes

Around 15,000 sq km of southern and western regions of Iraq, receive sufficient direct solar radiation between 2,800 to 3,000 hours per year (3). The recent fire at the Al-Bkir substation in Basra resulted in the separation of transmission lines linking the southern and central regions (27).
semi-urban

Iraq: Northwestern Iraq and Anbar

Around 15,000 sq km of southern and western regions of Iraq, receive sufficient direct solar radiation between 2,800 to 3,000 hours per year (3). Iraqi households suffer six hours of power outages on average, with some areas, especially in the West, facing longer outages (23).
semi-urban

Iraq: Kurdistan Region of Iraq

Growing by 10% annually, peak electricity demand in KRI exceeds supply by 700MW. With the aim of narrowing down the gap by tapping into 1900 kWh/m2 annual solar radiation, regional government approved 4 solar PV projects as of 2022 (40).

References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.