Iran is an energy-rich country possessing 11% of global oil reserves and 15% of the world’s natural gas reserves.
Ranked 11th in the world in terms of oil processing capacity, it is the ninth and 13th biggest producer of gasoline and diesel respectively.
Regarding hydroelectric power capacity, Iran ranks 19th in the world and sixth in Asia. With an installed capacity of 65 gigawatts, Iran ranks ninth in terms of thermal power capacity in the world, the Energy Ministry’s news portal reported.
Nevertheless, Iran’s rapidly growing power consumption has raised concerns not only about the country’s ability to continue to meet the rising domestic demand but also its capability to export electricity in the next decade.
While average global electricity consumption rises by less than 3% per annum, Iran's demand for power jumps to almost 6% every year, which is alarming.
The main driving force behind Iran’s rising trend of electricity use stems from three misconceptions: wide availability, inexpensiveness and eco-friendly nature.
Given the fact that 80% of power in Iran are generated in thermal power plants that run on natural gas and liquefied fuels, the first pernicious myth that must be shattered is that contrary to popular belief, electricity is not a clean source of energy even if thermal power stations burn natural gas all year round.
There are close to 120 thermal power plants in Iran that have to use diesel and mazut between October and March, as they are not supplied with gas.
There is no denying the fact that by burning fossil fuels, including oil and gas, pollutants such as carbon monoxide, carbon dioxide, nitrogen monoxide, nitrogen dioxide and sulfur dioxide are released into the air.
Pollutants directly emitted into atmosphere are considered primary, such as SO2, NO2, NO, CO and PMs. Through their exposure to atmospheric elements like sunlight and high temperature, these pollutants can be converted into other carcinogens like nitrate and sulfur trioxide, which are called secondary pollutants.
Put simply, the more electricity is used, the more pollution will be produced.
Moreover, the construction of dams and hydropower plants can cause several problems, one of which is that they cause considerable harm to rivers, as they deplete fisheries and degrade river ecosystems.
There is a general consensus among experts that solar and wind farms are the cleanest sources of energy, but it is regrettable that they are among the least developed renewables in Iran.
Cheap Electricity
The second contributing factor to high power consumption is that many people opine electricity is cheap, so power bills are not a cause for concern among Iranian households.
Those who think power is inexpensive in Iran are oblivious to the fact that Iran remained the single largest provider of energy subsidies across the world in 2020.
Based on data from the International Energy Agency, Iran paid $29.7 billion in energy subsidies last year to rank first globally, leaving behind China with $25.5 billion, India with $23.7 billion and Saudi Arabia with $10.9 billion.
Iran spent $69.2 billion and $48.66 billion as fossil energy consumption subsidies in 2018 and 2017 respectively.
In 2020, Iran’s subsidies for natural gas consumption reached $12.2 billion, fossil-fueled electricity $12.5 billion and oil $5 billion.
IEA data show Iran accounted for 16.2% of the total volume of global energy subsidies that stood at $181 billion worldwide.
In 2020, the fall in fossil fuel prices and energy use brought the value of fossil fuel subsidies to a record low, as the estimated $180 billion are 40% down from the 2019 level.
Iran is experiencing the most significant increase in subsidies for fossil fuel-based electricity, alongside Venezuela, Mexico, Egypt and China.
Referring to electricity subsidies in 2020, IEA put it at $50 billion, 25% of which were paid in Iran.
According to information from the National Iranian Gas Company, each cubic meter of natural gas [that can generate 3 kilowatt hours of electricity] is exported at 30 cents.
In other words, if power was not subsidized in Iran, each kilowatt hour of power would be sold at 10 cents and this is while consumers are currently charged less than 1 cent per kilowatt hour.
The noteworthy issue is that subscribers in Turkey are levied 10 cents per kilowatt hour.
Removing Subsidies
What is making the rounds in economic and political corridors is the undeniable truth that as long as subsidies are not removed and prices are not real, boosting the production of electricity or other forms of energy will not solve the burgeoning problem of high consumption and waste.
As per the new plan that took effect on Jan. 21, those who consume up to 300 kWh per month are charged 1,000 rials [0.5 cents] per kWh.
If consumption stands between 300 kWh and 450 kWh, subscribers are charged 6,000 rials [3 cents] per kWh. Subscribers whose consumption level stands between 450 kWh and 600 kWh are expected to be levied 5 cents per kWh. If consumption exceeds 600 kWh, consumers will have to pay 7 cents per kWh.
All industrial units that consume more than 2 megawatts of electricity per month will be charged 2.5 cents per kilowatt hour as of the next fiscal year (starting March 2022).
As per the new bill passed by the Majlis, electricity tariffs for energy-intensive industries, namely cement factories, oil refineries and petrochemical and steel companies, will increase fivefold as of March 2022.
Industries account for 40% of Iran’s annual power consumption of 280 billion kilowatts-hour.
Last but not the least, the lion’s share of power in Iran and in the globe is generated from fossil resources that also belong to future generations.
Fossil resources are finite and the sooner they deplete, the less power will be available in the world.
The bottom line is that despite all development in generating electricity from renewable sources, fossil-based power is here to stay in less developed countries like Iran and persuading consumers to use power as wisely as possible is a necessity.
