The Pilot Fuel Enrichment Plant (PFEP) is a test, research, development and pilot enrichment facility located aboveground in the complex that houses the Fuel Enrichment Plant (FEP) at Natanz. The PFEP, which consists of a cascade hall that can accommodate six cascades (164 centrifuges each), began operations in 2003. [1] Iran uses the facility to test new centrifuge designs such as the IR-3 and IR-4 and, since February 2010, to further enrich low enriched uranium produced at the Fuel Enrichment Plant (FEP). Apart from two 164-machine IR-1 cascades, the facility currently also has 10-machine and  20-machine cascades of IR-1, IR-2m and IR-4 centrifuges. [2] In May 2012, the IAEA Director General reported that Iran had installed 129 IR-4 centrifuges in Cascade 4 and was intending to install IR-5, IR-6 and IR6s – new types of centrifuges – as single machines in Cascade 2 in the R&D area of the PFEP. [3]

In February 2010, Tehran announced that the PFEP would begin to enrich UF6 to up to 20% U-235, supposedly for the production of fuel for the Tehran Research Reactor. [4] Later that month, the IAEA confirmed Iran's ability to enrich up to 19.8%. [5] Observed by IAEA inspectors, Iran also moved 1,950kg of low enriched UF6 from the FEP to the PFEP. Since July 2010, Iran has been feeding UF6 into two interconnected 164-machine IR-1 cascades. As of May 2012, the PFEP had produced 110.1 kg of UF6 enriched up to 20% U-235. [6] Tehran's decision to enrich to up to 20% levels has intensified concerns about a potential nuclear breakout scenario, because "a stockpile of 20 percent enriched uranium would cut by more than half the time needed to enrich to levels above 90 percent--levels that are necessary for a bomb." [7]

Sources:
[1] International Atomic Energy Agency, "Implementation of the NPT Safeguards Agreement and relevant provisions of Security Council Resolutions 1737 (2006), 1747 (2007), 1803 (2008), and 1835 (2008) in the Islamic Republic of Iran," Report by the Director General, 31 May 2010, www.iaea.org.
[2] International Atomic Energy Agency, "Implementation of the NPT Safeguards Agreement and relevant provisions of Security Council Resolutions  in the Islamic Republic of Iran," Report by the Director General, 25 May 2012, www.iaea.org.
[3] International Atomic Energy Agency, "Implementation of the NPT Safeguards Agreement and relevant provisions of Security Council Resolutions in the Islamic Republic of Iran," Report by the Director General, 25 May 2012, www.iaea.org.
[4] Hossein Jaseb and Fredrik Dahl, "Pressure Grows for Iran Sanctions over Atomic Plans," Reuters, 8 February 2010.
[5] International Atomic Energy Agency, "Implementation of the NPT Safeguards Agreement and relevant provisions of Security Council Resolutions 1737 (2006), 1747 (2007), 1803 (2008), and 1835 (2008) in the Islamic Republic of Iran," Report by the Director General, 18 February 2010, www.iaea.org.
[6] International Atomic Energy Agency, "Implementation of the NPT Safeguards Agreement and relevant provisions of Security Council Resolutions in the Islamic Republic of Iran," Report by the Director General, 24 February 2011, www.iaea.org.
[7] David Albright, Paul Brannan, and Andrea Stricker, "Has Iran Initiated a Slow Motion Breakout to a Nuclear Weapon?" Institute for Science and International Security, 12 July 2010, www.isisnucleariran.org.