Iran struggling to tackle energy crisis despite vast oil reserves

ISTANBUL

Iran is grappling with an energy crisis amid the cold winter weather, with many factories and government offices in some cities closed or operating with reduced hours while schools are switching to distance learning.

The oil-rich country is suffering from an energy crisis due to sanctions, which have led to a lack of sufficient investments in its energy infrastructure. Power outages in industrial and residential areas and shortages of energy supply, especially in the winter, have caused economic and social issues.

Electricity and natural gas outages have become commonplace in Iran due to rising energy demand coupled with inadequate infrastructure.

Iranian President Masoud Pezeshkian recently appealed to the public to turn their thermostats down by 2C (3.6F).

Energy Minister Abbas Aliabadi called on the public to reduce fuel consumption to provide more fuel to power plants to minimize problems with energy supply.

All levels of education were suspended in December in several Iranian provinces.

Iranian Vice President for Executive Affairs Mohammad Jaafar Ghaempanah said on Dec. 17 that factories and workshops in some industrial zones had halted operations due to the lack of natural gas, noting that despite the country’s demand of 945 million cubic meters, only 840 million cubic meters had been produced.

Most of Iran’s electricity needs are met by thermal power plants using natural gas, resulting in a deficit of around 15,000 megawatts during peak demand, according to Tejaratnews.

Around 94% of Iran’s electricity is produced from fossil fuels. As for clean energy, while the world's share of wind and solar energy is around 13% of the total electricity generated globally, Iran’s share is at 0.6%.

A significant reliance on natural gas, lack of technological advancements and outdated infrastructure negatively impact renewable energy development efforts, leading to energy losses and causing significant damage to the national economy.

Iran’s energy inefficiency leads to higher costs and renders its electricity grid unreliable. Estimates suggest that power outages in the country could cost the economy $5 billion to $8 billion annually.

Iran aims to increase its renewable energy capacity to approximately 30 gigawatts by 2030, aiming to significantly expand its use of clean energy sources like solar and wind power, but financial difficulties and economic sanctions are affecting the inflow of foreign investments and the development of advanced technologies.

Russia boasts the largest proven natural gas reserves in the world at around 47 trillion cubic meters, while Iran has the second largest reserves at around 34 trillion cubic meters, according to the US Energy Information Administration.