Iran Turns to Solar to Address Electricity Shortage
Andrew Topf

Iran isn’t the first nation that springs to mind when it comes to solar power.

The Middle Eastern country is one of the richest in energy resources, holding the second-largest natural gas reserves behind Russia, at 17 percent, and 9.4 percent of global oil reserves. It is a founding member of OPEC and the Gas Exporting Countries Forum (GECF).

But over the past few years, Iran has faced an energy imbalance in its gas and electricity sectors, necessitating gas imports from Turkmenistan and recently Russia, states Manara Magazine.

This has led to Iran announcing earlier this month an agreement with private investors to develop solar plants by this summer.

“Our priority is to entrust existing infrastructure to the private sector before the government intervenes,” said Mohsen Tarztalab, deputy energy minister and head of the Renewable Energy and Energy Efficiency Organization (SATBA), during the signing ceremony.

According to the head of Tehran Regional Electricity Company, a 3-megawatt solar power plant worth approximately 900 billion rials (USD$1.8 million) will be constructed in the Iranian capital.

Once operational it will be connected to the national power grid.

Farhad Shabihi also launched the construction of 120 megawatts of renewable power plants, each with a capacity of 3 megawatts or less, in Tehran Province.

There are several reasons why Iran needs solar power and to import natural gas to address its energy imbalance.

First is abnormally high energy consumption. Iran produces about 260 billion cubic meters of gas a year, with only 18 billion allocated for export and the remainder consumed internally. Iran’s annual natural gas demand has risen 7 percent a year over the past decade, with the residential sector and power plants driving most of the growth.

According to Manara, Iran is the world’s fourth-largest gas consumer behind the United States, Russia and China, and consumes 10 billion cubic meters more gas than over 30 European countries combined.

Besides being a glutton for natural gas, Iran also wastes a lot of it. According to the World Bank and the International Energy Agency, the country flares 18 billion cubic meters annually due to the lack of gas collection equipment at oil fields. An additional 7 billion cubic meters is leaked from the transmission and distribution network each year.

US-led sanctions have also played a role in preventing foreign investment, and in developing gas production capacity and power plants.

In December 2022, Manara reported that Iran’s then-oil minister, Javad Owji, warned that Iran would become a net energy importer if it failed to attract $240 billion in investment to its oil and gas sector.

The final factor contributing to Iran’s gas imbalance is its lack of energy diversity. Just over two-thirds (68 percent) of Iran’s energy consumption relies on gas, compared to 26 percent for Turkey and 31 percent for Canada. These two countries also generate a respective 35 times and 30 times more solar and wind energy than Iran, and nine times and 53 times more electricity from hydroelectric power.

Iran’s gas imbalance has resulted in gas shortages and power outages.

During winter the country experiences a daily shortfall of at least 260 million cubic meters of gas, straining the electricity supply. Iran’s power industry is warning of a 30 percent energy deficit by this summer. According to Manara, the widespread and recurring problem of power outages in summer is forcing many industrial facilities, including gas power plants, to switch to mazut, a heavy oil that is highly polluting. 

Iran International reported at year-end 2024 that 50 percent of Iran’s industrial parks ceased operations due to power outages. Aging infrastructure, international sanctions, and poor management have compounded the problem, leading to the shutdown of approximately 80 power plants, the publication stated, adding that in industrial regions, power cuts have resulted in damages amounting to hundreds of billions of rials.

Iran’s electricity shortage was estimated at 14,000 megawatts last summer. Heavy state subsidies have encouraged inefficient energy consumption, while geopolitical tensions and sanctions have hindered infrastructure investments, Iran International stated.

By Andrew Topf for Oilprice.com

 

 

With over two decades of journalistic experience working in newspapers, trade publications and as a mining reporter, Andrew Topf is a seasoned writer specializing in natural resource commodities. Andrew also has expertise in the oilfield services and heavy construction industries.

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