Can renewable energy solve Iran's power crisis?

Iran, a country with the world's second-largest proven natural gas reserves, is facing a growing energy crisis.

Despite its immense resources, the country is grappling with frequent power outages and a deepening energy deficit that threatens to destabilize its energy infrastructure and economy.

The situation has raised concerns about the management and efficiency of Iran's energy sector.

Iran's Minister of Energy, Abbas Aliabadi, recently highlighted the government's efforts to tackle the crisis with renewable energy.

"We anticipate that about 2,400 megawatts of Iran's 12,000-megawatt renewable energy program will be operational by next summer," Aliabadi said.

Aliabadi added that the government plans to generate 30,000 megawatts of renewable energy over the next four years.

Umid Shokri, a Washington-based energy analyst at Gulf State Analytics (GSA), emphasized the untapped potential of Iran's renewable energy resources.

"Iran has a very strong potential in solar and wind energy but has not yet managed to capitalize on it," Shokri told DW.

Iran's potential in solar power

After the 2015 landmark nuclear deal between Iran and major powers, US researchers suggested that, if Iran had invested in renewable energy, it could have met all of its electricity needs from solar power by 2030.

"Iran has 300 days of sunlight each year, but instead of focusing on this, it has invested in nuclear energy, which has caused it to fall behind," Shokri added.

Iran could look to the experiences of countries like the UAE and Saudi Arabia, which have made remarkable progress in renewable energy development, especially solar power.

Saudi Arabia, in line with its "Saudi Vision 2030" development drive, is working to reduce its dependence on fossil fuels and increase its renewable energy capacity to over 58 gigawatts by 2030.

The UAE has also been a leader in solar energy development. The Al Dhafra solar power project is set to become the world's largest single-site solar power plant. This project, powered by over 4 million solar panels, aims to reduce CO2 emissions by 2.4 million tons annually, equivalent to removing 470,000 cars from the road.

Can Iran afford renewables?

However, despite these promising plans, financing large-scale renewable energy projects remains a major challenge for Iran, with Iran's currency recently plummeting to new lows against the US dollar, and ongoing sanctions adding pressure.

To address this, the government has proposed several solutions to attract foreign investment.

Under a new initiative, the Central Bank of Iran will facilitate financing for renewable energy projects, focusing on priority projects that have been approved by the Economic Council.

Meanwhile, the National Development Fund of Iran will provide up to $5 billion in loans over the next four years to help fund these renewable initiatives.

On the other hand, given Iran's ongoing economic crisis and rising inflation, increasing energy costs with renewables could prove unaffordable for many Iranians.

Alireza Salavati, an economic analyst based in London, believes that renewable energy is too expensive for Iran.

"Considering the advancement of technology, it seems that renewable energy makes sense economically. However, in a country like Iran, where there are abundant energy resources, investing in renewables is expensive and not logical," he said.

Salavati argues that Iran should focus on rebuilding its oil and gas infrastructure rather than investing heavily in renewable energy, which would require significant upfront costs.

Edited by: Wesley Rahn