Electricity supply in Iran has been heavily dependent on fossil fuels. In light of the government’s emphasis on reducing the consumption of conventional energy sources, combined with the worldwide attention to environmental issues, it is necessary for Iran to revise its current energy mix policy in power sector and move towards a more diversified energy portfolio. This paper aims to contribute to energy management studies through developing a new framework for assessing the mix of energy sources for producing electricity in Iran from the perspective of sustainable development. Multiple qualitative and quantitative criteria with conflicting nature need to be taken into consideration for evaluating competing energy options for electricity production in Iran. In order to address this issue and also to consider the complex interdependence among criteria and alternatives, this paper adopts a fuzzy analytic network process (FANP) method. Seven criteria and nineteen subcriteria are defined and structured in the form of benefits, opportunities, costs and risks (BOCR) to evaluate the share of six energy resources. The results indicate that the best energy mix for the power sector in Iran is as follows: renewable energies (31.6%), natural gas (25%), coal (12.3%), fuel oil (12.6%), nuclear (8.7%) and gas oil (9.7%).

Introduction

During the last 60 years, the global population has grown by the factor of 2.5, whereas the global primary energy consumption has increased by a factor of 4.5 [9]. Also, the worldwide demand for energy is expected to increase even more over the next 30 years [23]. A short glance at the world’s energy architecture reveals that fossil fuels have remained as the dominant sources of electricity generation. The extensive consumption of fossil fuels has had negative global consequences such as climate change, depletion of fossil energy resources, and environmental pollution. In this sense, electricity sector has been the focal point in mitigating these issues mainly for two reasons [105]: first, electricity sector, especially in developing countries, is often highly carbon-intensive and is considered as a major source of greenhouse gas emissions. Therefore, moving towards generating electricity in lower carbon intensity units is a highly effective emission reduction strategy. Second, electricity sector is a relatively easy target for mitigating environmental effects because it is a large and concentrated sector. In order to achieve long-term sustainable development and energy security, it is imperative for all the countries to diversify their energy portfolio and seek for exploiting a combination of various energy sources for generating electricity [53]; [109]. In fact, each source of energy has its own advantages and disadvantages and, as expressed by Li [53, p. 2240], “the dominance of a single energy source and system, no matter how ‘‘perfect’’ it might be at a time, would be unsustainable in the long run.” In this context, due to the large population and rapid economic growth of developing countries, their patterns of energy production and consumption might considerably affect the overall global energy consumption and environmental concerns. As a rapidly-growing developing country, Iran’s energy demand is continuously increasing. The consumption of primary energy in Iran has grown by almost 50% since 2004 and it is expected that in the coming decades this figure would continue to grow at a rate of approximately 6% per year [22]. According to the latest Iran energy balance sheet in 2013, about 92% of electricity has been generated in fossil fuel based power plants [36]. It is estimated that by maintaining the current trend of electricity generation, the demand of power sector for fuel would be more than doubled over a 30 years period [7]. In order to address twine challenges of long-term energy security and environmental sustainability in the next decades, it is of crucial importance for Iran to revise its energy policy and ensure its energy security by reducing the dependence on fossil fuels. In this line, Iranian government is planning to gradually decarbonize the country’s electricity generation mix and shift to a more diverse portfolio of clean, reliable and renewable sources of energy [58].