Iran Energy Situation

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Iran

Capital:

Tehran

Region:

Middle East & North Africa

Coordinates:

32.0000° N, 53.0000° E

Total Area (km²): It includes a country's total area, including areas under inland bodies of water and some coastal waterways.

1,745,150

Population: It is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin.

89,172,767 (2023)

Rural Population (% of total population): It refers to people living in rural areas as defined by national statistical offices. It is calculated as the difference between total population and urban population.

23 (2023)

GDP (current US$): It is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.

401,504,514,719 (2023)

GDP Per Capita (current US$): It is gross domestic product divided by midyear population

4,502.55 (2023)

Access to Electricity (% of population): It is the percentage of population with access to electricity.

100.00 (2022)

Energy Imports Net (% of energy use): It is estimated as energy use less production, both measured in oil equivalents. A negative value indicates that the country is a net exporter. Energy use refers to use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport.

-33.40 (2014)

Fossil Fuel Energy Consumption (% of total): It comprises coal, oil, petroleum, and natural gas products.

99.02 (2014)

Source: World Bank

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Introduction

The Islamic Republic of Iran with an area of 1,648,195 square km is located in the Middle East and shares borders with Pakistan, Afghanistan, Turkmenistan, Azerbaijan, Nagorno-Karabakh (de facto independent state), Armenia, Turkey and Iraq. There are various climate zones ranging from subtropical in the South to temperate in the North, with a desert zone in the middle.

Energy Situation

Energy Data

Primary Energy Supply

Iran is a resource rich country. According to the US Energy Information Administration (EIA), holds the world's fourth-largest proved crude oil reserves and the world's second-largest natural gas reserves. Primary production in 2012 was 302,897 ktoe. This presents a decrease about 15% compared to 2011, as international sanction have affected the energy sector.

Consumption

Final energy consumption in Iran in 2012 added up to 162,620 ktoe. The share of the individual sectors is shown in table 1. In the past decade, the primary energy consumption has grown by more than 50%.  Besides the strong economic development and the improved standard of living, the demographic growth and the urbanization have had a huge impact the increasing energy demand.  

Table 1: Final energy consumption by sector in Iran in 2012 (ktoe)

Sector		in ktoe	in %
Industry		41,499	25.52
Transport		42.252	25.98
Other sectors		61,942	38.09
of which	Residential	44,970	27.65
	Commercial and public services	9,892	6.08
	Agriculture/ Forestry	6,764	4.16
	Non-specified	316	0.19
Non-energy use		16,927	10.41
Total		162,620	100

Import and Export

The Islamic Republic of Iran is a net exporter of crude oil and natural gas. However, since the United States and the European Union tightened sanctions targeting Iran’s oil exports, these have dropped to 1.1 million bbl/d in 2013 from 2.5 million bbl/d in 2011. The largest remaining customers for crude oil and condensate are China, India, Japan, South Korea and Turkey.

Subsidies

Iran’s energy is highly subsidized. In 2014, the second phase of its targeted subsidy plan under President Hassan Rohani was started. Petrol prices were raised by 75% from 4,000 to 7,000 rials ($0.16 to $0.28) per liter. In consequence of the higher prices, consumption is expected to drop. 

The first phase had taken place in 2010 under then President Mahmoud Ahmadinejad. Half of the money saved was supposed to be redistributed to the poor. However, due to lack of reliable data, this approach was abandoned and money handed out to everyone.

Renewable Energy

The starting trend towards renewable energy is caused by a high potential of resources and the increasing energy demand as well as an inefficient use of cheap fossil energy sources. In terms of installed capacity of renewable energy, Iran is the leader in the MENA region with 9,612.3 MW.

The majority of this capacity is hydro (9,500 MW). Hydropower has been used to generate electricity since the beginning of the 1990s. In 2005, the share of power plant output to generate electricity was 7 percent. Hydropower capacity in Iran increased by about 2 GW between 2008 and 2013.

In the field of wind energy, the Renewable Energy Organization of Iran (SUNA) prepared a wind atlas. The result was that, out of the countrywide potential for wind power capacity of 60,000 MW, 18,000 MW are economically useful. Nevertheless, in 2010 with only 1% of the total energy production, the share of energy produced by wind power is still low. In 2013, the wind capacity has increased to 93 MW. 

In the field of solar energy, Iran has the potential of yearly 2,800 hours of sunshine and an average solar radiation of 2,000 kWh/m² every year. Iran’s first CSP plant started operation in 2010.

The Deutsches Zentrum für Luft- und Raumfahrt (German Aerospace Center) estimated the potential of power generation by biomass until 2050 on 3,500 MW. In 2009 the first Iranian biogas plant was put into operation with a capacity of 1 MW (in 2013: 2.6 MW biomass capacity).  The exploitable potential of geothermal energy for electricity generation is according to SUNA 5,000-6,000 MW (in 2013 55 MW geothermal were in the pipeline).

Electricity

Installed Capacity and Generation

According to the US Energy Information Administration (EIA), Iran generated about 221 billion kWh of electricity in 2012. The majority, 95% was generated using fossil fuels, mainly natural gas (almost 70%). Marginal contribution comes from a nuclear power plant that started commercial production in 2013. These figures differ slighty from those presented by the International Energy Agency (IEA) shown in table 2, however they show the same dependency on fossil fuels, gas in particular.  

According to the Iranian news agency Farsnews, during the past 10 years Iran’s power generation capacity has grown by 7 percent annually. There are plans to further increase generation capacity in order to keep up with the domestic demand, but also to ensure that it continue exporting electric power. Among the countries Iran exports to are Armenia, Pakistan, Turkey, Iraq and Afghanistan. According to the Central Bank of the Islamic Republic of Iran, in 2013/14 about 68% of electricity exports were delivered to Iraq.

Table 2: Electricity production by type of generation (in GWh) 2012

Production from	in GWh	in %
Coal	400	0.16
Oil	69,338	27.27
Gas	170,014	66.87
Biofuels	23	0.01
Nuclear	1,847	0.73
Hydro (incl. pumped storage plants)	12,447	4.90
Wind	207	0.11
Total	254,276	100

Consumption

Electricity consumption in Iran has been steadily increasing in the last years. The main sector consuming electricity in 2012 was industry (36.1%), followed by residential (30.8%). 

Table 3: Electricity consumption by sector (in GWh) 2012

Sector	in GWh	in %
Industry	71,989	36.10
Transport	371	0.19
Residential	61,351	30.77
Commercial and public services	30,409	15.25
Agriculture/ Forestry	31,647	15.87
Other non-specified	3,635	1.82
Total	199,402	100

Electricity Prices

As a result of the energy subsidy reform (mentioned above), the Iranian government in 2014 announced an increase in electricity prices of about 25%.  

Energy Policy

Renewable Energy Policy

In 2011 a plan was adopted to increase the capacity of wind and solar generated electricity in cooperation with the private sector to 5,000 MW until 2016. One important step to reach this political objective is the feed-in tariff paragraph 62 of the "Law of Regulation”. The Ministry of Energy (MOE) is obligated to buy electricity from renewable energies for a fixed price. In addition, a feed-in tariff was enacted in 2009. It consists of an annually determined tariff, varying according to daytime and load.

Key Actors in the Energy Sector

Governmental Bodies and Agencies

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The relevant ministries in the energy sector are the Ministry of Energy (MOE) and the Ministry of Petroleum. However, reliable information on the work of these ministries is rarely available, since the website of the Ministry of Energy has been updated last in 2013 and the website of the Ministry of Petroleum is only available in Farsi. The MOE is responsible for the water and energy sector. The responsibility for the oil sector, the gas sector and atomic energy lies with the Ministry of Petroleum (MOP) and the Atomic Energy Organization of Iran (AEOI). Several agencies are subordinated to the MOE in form of holding companies. They are legally independent but 100% state owned.

Since 1951 the National Iranian Oil Company (NOIC) (website) is responsible for policies concerning oil, gas and petroleum products. According to the Iranian constitution, foreign or private ownership of natural resources is illegal, international oil companies can only participate by signing buyback contracts.

In the energy field, two holding companies are particularly important: the Iranian Electrical Power Equipment Manufacturing and Provision Company (SATKAB) and the Iranian Power, Generation, Transmission and Distribution Management Company (TAVANIR). SATKAB has to organize the procurement and supply of machines, installations and equipment on behalf of the MOE. TAVANIR is the most important actor in the field of operation and development of the electricity sector and responsible for the generation, distribution and transmission of electricity all over Iran. Another task of TAVANIR is the calculation of electricity prices to provide suggestion for the electricity tariff to the MOE. For the implementation of their tasks TAVANIR has various independently working subsidiary companies. The development of renewable energies is also part of the responsibilities of TAVANIR. Therefore the subsidiary company Renewable Energy Organization of Iran (SUNA) was established, which is working almost independently. Founded in 1995, originally to generate or prepare current information about renewable technologies, the implementation potential of renewable energies and realizable projects SUNA has become the main actor in the field of renewable energies. Since 2003, SUNA has been responsible by law for all tasks in the field of renewable energy.

Energy Cooperation

Since October 2012, the Iranian Ministry of Energy has been on a sanctions list of the European Union. Therefore, cooperation in the energy sector between Iran and the EU is very limited. According to the Iranian news agency Farsnews, in January 2015 Russia and Iran announced that they plan on increasing cooperation in the energy sector.