Iran's energy crisis halts electricity exports to Iraq

Shortly after Turkey began exporting electricity to Iraq this week, Iran ceased its deliveries to its neighbor due to an increasingly worsening domestic power deficit.

The National Iraqi News Agency cited an official source on July 23, reporting that the country’s Diyala province experienced a massive power outage due to the cessation of Iranian electricity deliveries from both transmission lines for unknown reasons. The report suggests that Iran has stopped supplying 250 megawatts (MW) of electricity, while the region requires 900 MW due to rising temperatures.

The two transmission lines from Iran to Diyala have a combined transmission capacity of 550 MW. However, until July 20, Iran had only been delivering 250 MW to Diyala due to an intensified domestic deficit.

According to Iran's Ministry of Energy statistics archive, the country’s net electricity exports have drastically decreased from 2012 to 2022, indicating a substantial reduction in the surplus of electricity available for export. The country imported about three terawatt-hours (TWh) of electricity from Turkmenistan and Azerbaijan while exporting 4 TWh in 2022, with the majority going to Iraq. This puts Iran’s net electricity export at 1 TWh, which is eight times less than the 2012 level.

Iran's Ministry of Energy halted public access to its statistics in June 2023. However, some Iranian officials have stated that the country’s electricity trade balance has been zero since last summer, meaning that the Islamic Republic has been exporting electricity equal to its imports. It now appears that Iran's summer electricity deficit has reached a point where it cannot sustain its exports at the same level as its imports.

Meanwhile, Turkey's Energy Minister announced on July 22 the commencement of exporting 300 MW of electricity to Iraq. Additionally, since March 2024, Baghdad has begun importing electricity from Jordan. The country is also negotiating deals with Saudi Arabia and Oman to import electricity, though these agreements have not yet been finalized.

In 2023, Turkey launched 2,800 MW of solar and wind power plants. According to the latest statistics from Turkey's Energy Market Regulatory Authority, it added 3,500 MW of new solar and wind farms, as well as 600 MW of hydroelectric capacity, to its power generation during January-May 2024.

Turkey's growth in renewable electricity generation capacity in the first four months of 2024 exceeds more than twice the total electricity generation growth of Iran from all types of power plants over the past year. The country plans to add 7,000 MW of renewables this year.

In contrast, the Iranian government targeted the launch of 2,850 MW of solar and wind power plants last year but only achieved 2% of this goal. Most of Iran's newly launched power plants last year were steam and gas types with efficiencies of only 29% to 33%. This year, Iran faces a summer electricity deficit of 14,000 to 18,000 MW, equivalent to 20% to 25% of the country's electricity demand.

Iraq’s power plants also heavily rely on Iranian gas imports. The Iranian state, however, faces a significant gas deficit in winters and halts gas deliveries to its western neighbor. As a result, Iraq loses 4,000 to 5,000 MW of its electricity generation capacity in winters due to these interruptions.

Though Iraq recently extended a gas import deal with Iran for the next five years, it has been striving to diversify its energy import sources, including importing gas from Turkmenistan through Iran.

Iraq has also set a goal to stop gas flaring by 2028 and achieve energy self-sufficiency by 2030. The country is working to reduce its heavy reliance on Iranian energy supplies, which are subject to sanctions that necessitate the US to issue waivers every four months.