# Iranian energy crisis

Despite being a country with huge oil and gas reserves Iran suffers from a severe energy crisis. The Iranian energy crisis is a multifaceted problem that has been exacerbated by a combination of factors, including poor governance, foreign policy failures, and the dominance of industries under the Islamic Revolutionary Guard Corps (IRGC). As of November 2024 Iran faces its most severe energy crisis in decades, with frequent power outages and disruptions to natural gas supplies. The country's energy infrastructure is outdated and in disrepair, with many refineries and power plants operating below capacity. Iran's energy supply is unreliable, with frequent blackouts and shortages affecting daily life, industries, and essential services. The IRGC's control over key industries, including power generation and distribution, has hindered efficient management and strategic planning. The regime's prioritization of political and economic interests over efficient management and infrastructural development has exacerbated the crisis.
Despite ongoing power shortages, Iran continues to export electricity, with a surge of nearly 92% in the first four months of 2023 compared to the same period in 2022.
The crisis has put stop to 50% of industry.
The government was plotting to move capital from Tehran to Makran to alleviate water shortages.
In January and February 2025 constant global shutdowns were conducted with the schools as well as Iranian industries.
Since February 2025 Everday power goes out nationwide for 3 to 4 hours.

## Power shortages and energy imbalance

As of winter 2024 Iran suffers, not for the first time, its most severe energy crisis in decades, with frequent power outages and disruptions to natural gas supplies. The authorities announced widespread closures of schools, universities, and government offices, and shopping centers in the capital Tehran and 17 Iranian provinces to save energy. Numerous highways and streets have experienced blackouts, including a 24-hour power outage on the critical Haraz road, which connects Tehran to northern cities. Many schools have switched to remote learning, while others remain closed across several provinces.
As of the summer of 2024 Iran's electricity shortage is estimated at around 14,000 megawatts, a significant figure equivalent to twice the total electricity production of Azerbaijan. Previous estimates by the Ministry of Energy and the Majlis Research Center indicated that Iran needed to add 5,000 megawatts (7%) to its electricity production annually to avoid shortages. However, official statistics show that this target has not been met in recent years. In total, the energy imbalance in 2024 is about 300 million cubic meters a day.
Iran's energy supply is unreliable, with frequent blackouts and shortages affecting daily life, industries, and essential services.

## Energy imbalance

Iran has faced a decade-long imbalance in its energy market. Electricity consumption has been increasing by 4% year since 2010, reaching 292 TWh (Terawatt hours) in 2022. The residential sector represents 33% of electricity consumption, followed by industry (33%) and services (18%) sectors. The remainder (16%) is consumed in the oil and gas industries.
Per capita energy consumption stands at 3.2 TOE (Tons of Oil Equivalent - this measure represents the quantity of energy contained in a ton of crude oil). The per capita consumption of energy in Iran is similar to the Middle East or the EU averages.
Since 2016, natural gas has accounted for about 70% of total energy consumption, with its share steadily increasing by 10 percentage points since 2010. In contrast, the share of oil in total consumption has decreased by nearly 10 percentage points, reaching 30% in 2022. Primary electricity, mainly from hydro sources, represents a marginal share of 1%.
Each year, Iran supplies 70 bcm of gas to power plants, nearly 1.5 times Turkey's total gas consumption. In summer 2024, Iran experienced a 14,000-megawatt electricity shortage. Despite a nominal capacity of over 92 GW, much of Iran’s power plants are outdated, with significant portions of steam and gas plants exceeding 30 years in age. The reason for the underinvestment is the economic sanctions on Iran and government restrictions. The Ministry of Energy, the sole buyer of electricity, has limited private sector incentives by preventing the formation of energy market, thus creating a growing government debt to private plant owners has further hindered investment. By early 2024, the government’s debt to private power plant owners had surpassed $2 billion. Iran’s financial strain is worsened by $30 billion in electricity subsidies and $52 billion for petroleum products in 2023 which causes an increase in the consumption. Moreover, 13% of electricity is lost in the outdated transmission and distribution network, costing the country $4-5 billion annually.
This results in frequent power outages during peak summer and a daily gas deficit of 250 million cubic meters in winter, costing industries at least $8 billion annually.

## Causes for the gas imbalance

Iran is the world's fourth-largest gas consumer, consuming more gas than 30 European countries combined. The country produces around 260 billion cubic meters (bcm) of natural gas annually, with 18 bcm allocated for export and the rest consumed domestically. Iran's gas demand has grown significantly, from 153 bcm in 2013 to 245 bcm in 2023, driven primarily by the residential sector, vehicles, and power plants.
Iran's gas infrastructure is inefficient, with significant losses due to flaring, leaks, and low productivity. The country flares 18 bcm of gas annually due to inadequate collection equipment, and 7 bcm is lost in the transmission and distribution network each year. Furthermore, Iran's thermal power plants operate at just 33% efficiency, and 13% of electricity is lost during transmission.
Economic sanctions over the past two decades have hindered foreign investment in Iran’s energy sector, limiting the development of gas production capacity and power plants. Despite having substantial gas reserves in joint fields, many remain undeveloped due to lack of investment. The stalled development of the South Pars gas field has worsened the imbalance, and Iran's oil minister warned in 2022 that without $240 billion in investment, Iran could become a net energy importer.
While neighboring countries like Turkey diversify their energy mix by balancing coal, natural gas, oil, and renewables, Iran remains heavily reliant on natural gas.

## Cryptocurrency mining

The cryptocurrency market in Iran is flourishing. Bitcoin mining is highly energy-intensive, requiring substantial electrical resources. Iran's power grid is both fragile and costly to maintain, with frequent outages and a loss of about 13% of electricity during transmission. The regime's pursuit of expanding cryptocurrency mining farms, particularly for Bitcoin, which began to bypass the imposed international sanction has diverted significant amounts of electricity (approximately 600 megawatts) away from the public grid.

## Corruption and mismanagement

Iran, heavily reliant on petroleum revenues, has some of the largest reserves of oil and natural gas in the world, but it struggles with energy shortages due to poor planning, outdated infrastructure, and the impact of international sanctions. Despite these challenges, Iran's government has failed to modernize its electricity sector, leading to frequent power outages and energy crises throughout the year. One of the main issues exacerbating Iran’s energy shortages is the rampant smuggling of fuel. The government claims to have increased fuel exports. Iran’s subsidized fuel, which is much cheaper than in neighboring countries, makes it highly attractive to smugglers. As a result, large quantities of gasoline and diesel are illicitly exported, leaving the domestic market with insufficient supplies. Lawmaker Malek Shariati revealed that around 1.5 billion liters of liquid fuel are smuggled from power plants each year, with smuggling activities often involving forged documents and low fines that make such crimes profitable.
The privatization of key power plants in recent years has also contributed to the deterioration of Iran’s energy sector. Faced with budget constraints, the government transferred many power plants to private, often politically connected, investors. However, these new owners have failed to invest in necessary upgrades or maintenance, allowing the plants to fall into disrepair. For example, power plants such as the Abadan and Zagros plants were handed over to powerful organizations like Setad and the Foundation of Martyrs and Veterans Affairs at highly discounted prices, enriching regime insiders while doing little to address the country’s energy needs.
A further complication arises from a controversial new privatization plan in the latest budget, which allows military and state-connected entities, such as the General Staff of the Armed Forces, to sell oil and retain the profits. This practice, used in the past for illicit oil exports during sanctions, has raised alarms about ongoing corruption within the regime. A notable case of such corruption occurred in 2013 when businessman Babak Zanjani was arrested for embezzling $2.7 billion through illegal oil sales.

## 2024 Blackouts

In November 2024, after demand for electricity during the summer caused frequent blackouts, a severe gas shortage caused the government to prepare to impose more blackouts on the population during the winter. By December 2024, Iranian government offices were operating only partially or were closed entirely, schools and colleges transitioned to online learning only, power to shopping malls and highways were was cut off and due to reduced power supply industry almost halted. The result of the power shortage was shutdowns in 23 Iranian provinces.

## Blackouts 2025

In 11.2.25 Tehran was hit by a major blackout which caused shutdown of all school, universities, and public offices. As a results of the blackout anti-government protests have erupted across the country.