Iran

Relatively high real generating costs, under-capacity in both generation and transmission in the North of the country, and increasing imports from neighbours imply - at least theoretically - a market for electricity imports from Georgia in the medium-to-long term, especially during the summer months. Recent statements by Iranian authorities indicate an interest in imports from Georgia (which is not contiguous with Iran) via planned upgrades to the Armenian grid. Given the nature of Iranian electricity trade with other countries, however, any trade with Georgia may have a strong political dimension, which could complicate deals for private foreign investors. The main hurdle for market-based imports, however, may be the current high subsidy for gas used in Iranian power generation, although this may not be so relevant during summer shortages. There are apparently no plans to end current gas and power subsidies, and it would be politically difficult to do so. However, an eventual end to such subsidies would probably lead to a significant fall in Iranian electricity demand.

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