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Iran is seeking to fast-track solar energy projects in an effort to ease biting electricity shortages because of crumbling infrastructure and years of US sanctions.
Tehran is hoping that more solar capacity could ease an energy crisis that forced it to renew rolling blackouts this year, as it faced critical fuel shortages despite having the world’s third-largest oil reserves and second-largest natural gas reserves.
“Renewable energy development has evolved from a supportive policy to a strategic necessity,” Mohsen Tarztalab, the deputy energy minister, told a conference on solar energy in Tehran last week. “Expanding clean energy is central to achieving energy security and reducing Iran’s reliance on fossil fuels.”
Chronic under-investment and outdated infrastructure, exacerbated by years of US economic sanctions, have caused disruptions to electricity supply in summer and natural gas supply in winter. Iran has also suffered from
made worse by climate change.
The country, traditionally reliant on natural gas to produce 80 per cent of its electricity, is now seeking to diversify by deploying renewables. Still, experts are sceptical that Iran’s battered economy could meet its ambitious solar targets, with the country relying on imports and cut off from global financing.
In a post on X earlier this month, Nasrollah Pejmanfar, a lawmaker, blamed the “central bank’s slow and inadequate provision of foreign currency” for the delay in implementing solar projects.
Iran is targeting 12gW of capacity in renewable energy in three years’ time, according to the state renewable energy regulator. Capacity doubled to 2.5gW this year, the energy ministry says, making up 2.5 per cent of electricity generated — far behind Turkey’s 16.3 per cent share from solar and wind power in 2023.
President Masoud Pezeshkian has said his government is prepared to work with private companies to deal with rising demand.
“All contracts for the construction of solar plants can be implemented within one year,’’ he said in an online ceremony this month to inaugurate new solar capacity. ‘‘We need to ensure that no factory faces electricity shortages next summer”.
Electricity cuts have disrupted production, increased costs and caused billions of dollars in damage to industry.
Rolling blackouts were imposed again over the summer when the grid, according to official figures, faced a shortfall of 15gW during the consumption peak when more air conditioning is used. Blackouts have been imposed on and off in recent years but are not currently in place.
Iran’s sovereign wealth fund in July committed to investing $2.3bn to build 7gW of renewables in partnership with the private sector, which will provide 20 per cent of the required investment.
With roughly 300 sunny days a year, experts say Iran is well placed to harness solar energy. Several solar farms have come online across the country in recent weeks.
“I advocate for renewable energy but the country’s contracting capacity is limited, and so it is unlikely that those targets will be achieved by the deadline,” Moslem Mousavi, head of Iran Renewable Energy Association, said.
“Even with the addition of renewable power plants over the next three or four years, we will not be able to bridge the gap in supply unless we optimise consumption and improve energy efficiency.”
To lower pressure on the grid, households are also encouraged to install rooftop panels with incentives such as loans and an option to sell their “green” electricity.
Heavily subsidised energy prices in Iran have encouraged excessive consumption. Pezeshkian said on Monday that a 10 per cent cut in energy use would save 800,000 barrels of oil and gas daily.
The country chiefly relies on imports from China, the world’s leading producer of solar installations.
The instability that followed Israel’s 12-day June war against Iran, which the US briefly joined to bomb the country’s nuclear sites, as well as restoring UN sanctions last month, caused Iran’s national currency to nosedive. That has made imports even more expensive.
“Sanctions both affect financing and increase costs, and they also deprive us of foreign investment in this sector,” Mousavi said. Foreign corporations which left Iran after the US pulled out of the 2015 nuclear deal and then restored sanctions had previously pledged $4bn in renewable investment, he said.
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