Power Grid

Iran is turning to renewable energy as a critical solution to meet its growing electricity demand, especially amid dwindling gas supplies and ongoing economic challenges such as U.S. sanctions. The country is facing an urgent energy crisis, and renewable sources have emerged as a viable path forward.

In this context, Mohsen Tarztaleb, Deputy Minister of Energy and head of the Renewable Energy and Energy Efficiency Organization, announced the launch of a major initiative to install 7,000 megawatts of renewable energy capacity. This effort reflects Iran’s strategy to accelerate clean energy development and reduce its dependence on fossil fuels.

The new program is a key part of Iran's broader goal to add 30,000 megawatts of renewable energy in the coming years, including 25,000 megawatts of solar and 5,000 megawatts of wind power. With the support of the Economic Council and investment from the National Development Fund, the pace of development is expected to increase significantly.

Investors will be able to finance and own these power plants, a move intended to attract more private sector participation. In parallel, energy efficiency projects are being advanced through market-based mechanisms to reduce energy waste and enhance sustainability.

The Iranian government has taken concrete steps to support these ambitions. In March, it authorized the import of necessary equipment for building renewable energy plants, reinforcing its commitment to diversifying the energy mix. These initiatives are crucial to offset a projected 30% electricity shortfall during the peak summer demand in 2025.

Currently, fossil fuels account for over 90% of Iran's electricity production, while solar and wind contribute less than 1%. Despite having an installed renewable capacity of 13 gigawatts—one of the highest in the Middle East—the country has yet to fully leverage this potential.

Iran’s reliance on thermal power plants remains high, with gas and steam plants dominating the grid. These facilities are inefficient, operating with outdated technologies and low combustion efficiency. In contrast, the planned transition to renewable energy aims to reduce annual fuel consumption by 11 billion cubic meters and save between $5 billion and $7 billion. While electricity production has grown significantly since 1979, outdated infrastructure and limited renewable adoption continue to hinder progress.

Iran’s shift to clean energy is not just environmentally necessary but also economically strategic in reducing reliance on volatile fossil fuel markets.