On average, the cost for hydropower operations and maintenance is only one-third the cost of a nuclear or a fossil fuel powered facility.

Hydro energy is electricity powered through water. It is created by harnessing water flowing down a river through spin turbines inside a generator. Large rivers with fast flowing water work the best.
Canada is the largest producer of hydropower in the world. The United States is second.
Hydropower is clean. It doesn't produce any greenhouse gases or other kinds of air pollution. It also doesn't generate any waste products that might need special handling or disposal. Because it is carbon-free energy, hydropower doesn't burn fossil fuels, which release the same amount of carbon dioxide as the annual exhaust of 62.2 million cars (half the cars on US roads.)
Hydropower doesn't pollute the air but large hydroelectric generating stations can damage the environment. The natural flow of water to the sea can sometimes be changed, which harms plant and animal communities along the way.
Like solar and wind energy, electricity from water is renewable. Water from rivers is a natural resource so it doesn't come with some of the problems other energy sources have, such as cost and insufficient amounts. Hydropower converts kinetic energy from falling water into electricity and never uses up more water than nature produces.
Hydropower doesn't cost a lot of money. On average, the cost for hydropower operations and maintenance is only one-third the cost of a nuclear or a fossil fuel powered facility. That's not including fuel costs. Lower costs mean more jobs and also a help to the economy.
Another good thing about hydropower is that it is flexible and reliable. Hydropower can be turned on almost immediately to meet the fast growing electricity demands.

Proven and exploitable gas reserves of Iran are estimated to be 35.4 and 24.5 trillion cubic meters, respectively.

Giant Share
In Iran, more than 98 percent of the nation’s primary energy is derived from oil and gas resources and only less than 2 percent from other forms of energy such as water and coal.
Despite rapid expansion of the gas sector especially in recent years, oil still plays a dominant role in the energy sector and the economy. Petroleum products constitute more than 55 percent of Iran's primary energy supply. The share of oil sector in GDP is about 20 percent and more than 80 percent of the country's foreign exchange earnings come from oil exports.
Proven and exploitable gas reserves are estimated to be 35.4 and 24.5 trillion cubic meters, respectively (about 222 and 154 billion barrels of oil equivalent). These reserves theoretically give Iran a lead-time of more than 400 years to exploit them at the existing production level.
Proven coal reserves are estimated to be approximately 13.1 million tons. Due to the absence of modern technology, only 10 percent of these resources can be exploited at costs way higher than the international norm. Coal has a meager share in Iran's energy supply mix and it is not regarded a viable option in the foreseeable future.
In the meantime, Iran’s hydro power potential is theoretically estimated to be approximately 42,000 MW(e).
The annual average daily solar radiation is 2,000 kw/h per m2. There are also good potentials for producing wind and geothermal energies in some parts of the country. However, again due to technological deficiencies to guarantee steady and reliable supply of energy and much higher unit cost of electricity generated by these resources, it is not expected such renewable forms of energy play a major role in Iran's electricity system in near future.
Rapid population increase has caused an upsurge in domestic energy consumption by more than 7 percent annually, while electricity production has risen 10 percent per year in the last two decades.
In other words, while the size of population has nearly doubled, the final energy consumption is quadrupled and electricity production has risen six-fold to meet the existing demand.

Diversification
Making use of water as a source of energy, otherwise called as hydropower energy, caught the attention of officials some years ago when the first plan was in force.
Ever since, the government has been concentrating on diversifying the nation’s energy supply.
Despite its heavy costs, the government says utilization of hydropower energy has been a top priority, making the country one of the world’s leading dam constructors.
In an interview with the weekly Barnameh affiliated to the Management and Planning Organization, Managing Director of Water and Energy Company Zahmatkesh discussed the latest developments in the sector, especially with regard to generation of hydropower:

What are the major activities undertaken by the company during the Third Five-Year Economic Development Plan (2000-2005)?
The highlights of our activities involve three major dam and power plant construction projects. Construction of Karkheh dam and power plant was the biggest of its kind after the revolution. The reserve capacity of the dam, built over the Karkheh River, stands at 7 billion cubic meters and its power plant has 400 mgw production capacities. It is able to supply water to over 300,000 hectares of nearby lands.
A tunnel built alongside the river has made it possible for supply of water to an area extending over 60,000 hectares.
Masjed-Soleiman project, which also includes a dam and hydropower plant, is expected to boost Iran’s power generation capacity.
Standing 177 meters high, it is the tallest mud-made dam in the county which has been operating for three years now.
The construction of the 1,000-mgw-capacity Masjed-Soleyman hydropower plant is complete and has so far produced more than 6.5 billion mgw/h energy, which if calculated on the international rate basis would be equivalent to more than $320 million.
Karoun-3 dam and power plant went into operation last year (March 2004-05) at a ceremony attended by President Khatami. The dam, overlooking a lake with a length of 60 km and reserve capacity of 1.6 billion cubic meters, has been refilled.
Where does Karoun-3 stand among dams nationwide?
Karoun-3 dam is the tallest in the country and is third after Karkheh and Dez regarding its refill capacity.
The power plant, adjoining the dam, has 2,000 mgw capacity and all eight units of it will go on stream by March 2006.
The company also undertook a number of small-scale projects that went into operation during the plan's period including the Kouhrang hydropower plant with production capacity of 35 mgw capable of producing up to 128 million kilo watt/h energy annually.
The then Ministry of Construction Jihad implemented a large number of Ômicro’ projects that included 5 micro power plants each able to provide energy to villages disconnected from the national power grid.
The third plan period were busy times for the energy sector as a large number of schemes expected to become operational during the fourth plan, got underway like the 1,000-mgw Siyah Bisheh, an inventory pumping project for striking more balance in the national power plant. We hope to finish the project by 2010.

How much does hydropower energy constitute in the overall national energy production? What will be the share of hydropower once the projects mentioned go into operation?
The installed hydropower energy capacity by the end of this year (March 2006) will exceed 5,000 mgw, as against the total 36,000 mgw, which is a good. We hope to increase the proportion to 20 percent by the end of the fourth plan.
The overall hydropower production capacity currently stands at almost 30,000 mgw, which the government hopes to materialize in the 20-term perspective. Once we achieve this target, construction of dams will come to a stop and there will only be renovation and maintenance.

Despite high domestic capabilities, the completion period of energy-related projects takes much longer than the international standard. Why?
Shortage of funds and delayed disbursements can be cited as main reasons.
One point I have to mention is that national projects are often if not always excluded from the 'delay dilemma' as most of them are completed on time.
Another point worth mentioning is that whether the contractor is Iranian or not has nothing to do with the completion period. Masjed Soleyman project, implemented by a foreign contractor, was completed almost with the same amount of delay as Karkheh undertaken by a domestic contractor. Completion delays are not a big deal in my opinion because in most cases the time deviation is maximum 20 percent.

What factors, other than budget shortage, are involved in delays?
The overall national conditions as well as laws and regulations are also prime factors. There have been times when crucial projects have come to a standstill or completed with long delay due to unfavorable political conditions and/or obstructing laws.
For example, In Iran, contrary to the situation in most countries, there is no mechanism for opening credits, therefore dissuading the contractor from expediting the project on the possibility of running short of money. Projects could also suffer setbacks due to rigid customs and laws. Geological features of the site are also an important factor. In most cases, geological studies are conducted concurrent with implementation of the project. This is an inexpert approach because the entire project could be halted due to a specific geological and/or environmental defect, imposing heavy financial damages.

Why are geological studies not completed before the projects take off?
The reason is that in the case of most projects, geological studies had taken place before the war with Iraq started. After the end of the conflict, the government was eager to implement the projects without more delay, leaving no time for geological and certain feasibility studies to take place prior to the start of the schemes. The completion period for dam construction projects, undertaken by this company, is maximum 6-7 years. The global standard is maximum 5 years.

Given the law on maximum utilization of domestic capabilities and potentials for implementation of national projects, what is presently the share of domestic companies in this respect?
In all cases, feasibility studies are handled by Iranian consultant agencies in cooperation with their foreign counterparts. This practically gives domestic firms more than 50 percent of the work. Sometimes the entire project work is taken care of by domestic firms. Today few can deny that hydropower schemes can be implemented without foreign assistance. Karoun-3 project was undertaken by a major Iranian contractor. The Karkheh project was also implemented by five Iranian contractors led by Sepasad Company. Iranian companies have a huge stock in most such projects and their contribution is increasing rapidly.
The share of foreign firms in hydropower schemes stands at a meager 7.5 percent as against more than 90 percent of the share of their Iranian counterparts.
As much as 70 percent of equipment and machinery is obtained domestically.

Which parts are still imported?
For example, certain raw materials for manufacturing generators or those domestic brands which do not meet international standards are imported.

The financial allocations of such highly costly projects must be a difficult task for the cash-strapped government. Does the company have alternative resources?
Only 40 percent of project costs are met through state resources. We are critical of the low pricing of the final product (electricity) and believe that rational pricing can help a great deal in reducing our reliance on state funds and meeting our expenses by selling electricity.
The government and the company in particular, are eventually allowing for a bigger role of the private sector in power-related schemes. Talks are in the final stages with a number of private firms for signing BOT agreements. The construction of the 28-mgw Dez dam and power plant is one of the projects we are considering to hand over to the private sector. The sector’s main approach at the present is giving small and medium-scale schemes to the private sector.
We are also considering meeting a portion of our expenses through foreign resources and are currently involved in talks with the Germans as fund supplier for one major project.