Evaluating the Impact of Energy Pricing Dynamics on Iran’s Primary Industrial Sector

Document Type : Original Article

Authors

1 Department of Energy System Engineering, Faculty of Mechanical Engineering, K.N. Toosi University of Technology, Tehran, Iran

2 Renewable Energy Research Department, Niroo Research Institute (NRI), Tehran, Iran

3 Specialized Center for Innovation and Technology Development for Energy Consumption Management, NRI, Tehran, Iran

4 Iran’s Renewable Energy and Energy Efficiency Organization (SATBA), Tehran, Iran

Abstract

In Iran, the population benefits from governmental subsidies on energy, resulting in energy costs being lower than international standards for consumers. Nonetheless, this strategy leads to an increase in state expenditures and presents notable obstacles for economic and industrial progress. One feasible approach to diminish governmental expenses is the deregulation of energy prices within the industrial sphere. It should be emphasized that the liberalization of energy prices may have adverse impacts on the nation's economy, potentially escalating production expenses across various sectors. Hence, precise policy execution is of utmost importance. Within this analysis, we examine energy expenditures in pivotal industries such as steel, cement, refining, agriculture, automotive, machinery, and food production. We evaluate the proportion of energy costs in total revenue, overall expenditures, and fully burdened costs. Our results indicate that the petrochemical, cement, and refining sectors demonstrate the greatest susceptibility to energy expenses in the event of two scenarios of energy price hikes (50% and 100%). Conversely, the automotive and agricultural fields pose lower risks for modifications in pricing policies. Consequently, the deregulation of energy prices in these sectors could represent a feasible strategy, with minimal detrimental effects on the nation's economy. Remarkably, the outcomes of this investigation can function as a fundamental resource to support policymakers in this area.

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References

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Journal of sustainable Energy Systems
Volume 3, Issue 1
January 2024
Pages 73-88

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