Iran is falling behind in power generation due to inadequate investment

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Iran added just 1.2 gigawatt (GW) to its power generation capacity in the past fiscal year despite a planned growth plan of 3.5 GW, the energy ministry reported. April 13.

This is the third year in a row that Iran has failed to meet its annual electricity growth plan, falling behind rapidly rising consumption due to extremely low prices. The government that controls the energy sector provides up to $60 billion a year in this indirect subsidy to individuals and businesses.

Last summer – during the peak demand season – Iran faced a huge electricity deficit and long-lasting blackouts across the country.

It needs at least 5-7% growth in electricity production per year to meet the increase in domestic demand.

The Energy Ministry report says Iran’s electricity exports fell by about 40% last year and its imports increased by 5%.

Lack of investment in power generation capacity expansion and natural gas production are the main reasons for the power shortage. Only the gas sector needs 40 billion dollars to increase production and meet demand.

The lion’s share of the decline in power generation came from hydropower plants, which saw a 36% decline in power generation in the past Iranian year due to severe droughts. Hydroelectric plants generated just 15 terawatt hours (TWh) of electricity in the last fiscal year, compared to 31 TWh in 2019.

Pollution in Tehran on November 30, 2021

On the other hand, the country nuclear power generation also declined, from over 7.5 TWh in 2017 to just 4.4 TWh last year, or around 1.4% of the country’s total electricity generation.

Iran has an average of 300 sunny days per year, but its renewable energy sector has not yet been developed. The production of wind and solar energy represents only 0.5% of the total energy produced at the national level.

Thermal power plants accounted for more than 90% of the country’s electricity production of 324 TWh last year, but given the huge gas deficit during the cold months, they had to burn billions of liters of fuel oil and of polluting diesel in the electricity sector.

This can be inferred from the fact that the country became a net importer of diesel this winter for the first time in over a decade. But the government managed to prevent widespread power cuts, unlike in the winter of 2020-2021 when major cities experienced severe power shortages, leading to protests.

Consumption of liquid fuels in the electricity sector caused severe air pollution in major cities, and that was all the more reason to start protests in January 2021.

The Iranian government did not publish the use of liquid fuels in power plants during the last year (21 March-2021-20 March 2022), but in 2020 it consumed 6 billion liters of fuel oil and 11 billion liters of diesel, 60% more than in 2018.

Power generation in Iran requires about 220 million cubic meters of gas per day, while in January 2022 deliveries dropped to 100 million cubic meters.

Iran’s gas production is gradually declining due to years of government failure to invest in gas fields and acquire Western technology.

Meanwhile, the burning of oil, a heavy and dirty fuel, leads to extremely harmful air pollution. The global air quality monitoring company IQAir put Tehran as the most polluted city in the world on April 8with a “very unhealthy” real-time average air quality index of 236.


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