Master Plan”. In general, the plan highlights Iraq’s plans for the development and further expansion of its electricity sector. The master plan also includes improvement strategies for power plants, as well as T&D systems.
In 2016 the Ministry of Electricity announced the PV Solar Plan 2017-2020. According to the PV solar Plan 2017-2020, Iraq has a target of installing 2240 MW solar PV energy by 2020. This indicates the country’s political commitment toward the deployment of RE. Details on the capacity of the projects in each governorate and the annual target are provided by the Table below In 2010, the Ministry of Electricity developed a long-term plan for the electricity sector called “Iraq Electricity
Table 1: Projected Solar PV Capacities In Iraq (Ministry Of Electricity, 2017)
Legal Framework
Investment Law: Some provisions of the Investment Law No. (13), 2006, referred to encouraging investments in RE projects in Iraq. They contain incentives such as; land lease that allows the investor to pay only 2% of the estimated annual lease return, and tax exemptions that extend for the first 10 years of the project’s lifetime. In addition, the law introduces incentives such as duty exemption for imported equipment related to RE projects. Electricity Law
The new Electricity Law was issued in 2017. It encourages the deployment and investment in RE in Iraq.
In 2017, Iraq cabinet directed the public buildings to coordinate with the Ministry of Industry, and Alzaoraa General Company to install solar PV systems to cover all or at least a reasonable portion of their electricity demand (General secretariat for the Council of Ministers, 2017).
Land Lease: Articles 8 and 9 of Regulation No. 7 of 2010 explain the leasing process. According to this regulation, the land is provided to the investor for a nominal rent equal to 2% of the estimated annual lease return. This is subject to the geographical location, where the project is to be constructed as prices vary from one location to another. Energy transfer costs and security costs tend to be less in remote areas or areas that are near power transmission lines
The Free Zones Law No. 3 of 1998 established the General Commission for Free Zones under the MoF.59, three free zones areas are defined (1) Nineveh, (2) Khor Al-Zubair/ Basrah and (3) Al-Qa’im/Anbar. Under the free zones law all the capital invested, the generated income, the interest, and all the imported and exported goods are exempted from taxes and fees through the whole lifetime of the project, including the construction and startup phase. The foreign wages are also exempted from taxes and allowed to be transferred outside the country while Iraqi workers having 50% from their wages to be exempted from income taxes.
Incentives
Iraq not only provides an ideal geographical location for investment in solar energy but has also provided various incentives to encourage private investment in its RE sector.
The National Investment Law No. 13 of 2006 created the National Investment Commission (NIC) and Provincial Investment Commissions (PICs), in order to attract private investments including the power sector.
Companies investing in RE equipment have been exempted from both operational and income taxes. For RE projects, the land is leased at a rate of 2% of the estimated annual lease return.
Iraq also initiated a bidding process for private investors interested in investing in solar or wind projects and allowed also direct proposals, if they comply with bid terms and conditions.
Despite these considerable efforts and the national commitment to diversify energy resources, Iraq is still in the process of further reforms of its energy subsidy structure, as it is one of the lowest electricity prices in the world.
The country also needs to restructure its regulatory and institutional framework to further develop the national energy market, promote RE investment and decrease risks to attract further investors.
Access To Land
According to the Ministry of Electricity (MoE) in Iraq, 18 sites have been allocated to build solar PV projects. In general, the lands dedicated to solar plants are rented at 2% of their estimated annual rent. The cost of rent varies according to the location of the lands. It is typical to plan future solar plants near substation transformers or transmission lines in order to lower the cost of interconnection and to reduce security issues.
“The above are extracts from RCREEE report to UNDP on RE Context in Iraq. Please refer to RCREEE as the reference”