Iran’s president has announced a sweeping restructuring of the country’s energy system, signaling a decisive turn toward efficiency, electrification and renewable capacity as mounting shortages expose deep structural weaknesses. Masoud Pezeshkian said the government will begin phasing out household natural-gas consumption and replacing it with electricity—a move designed to redirect more gas to industry and boost national value creation.
Speaking to investors and business leaders, Pezeshkian argued that years of reliance on oil income pushed the country off its productive trajectory. With crude revenues shrinking, he said, Iran must return to an economy grounded in industrial output rather than resource dependence.
The president pointed to last year’s stark energy imbalance as a turning point. Iran faced a power deficit of about 20,000 megawatts, while weakened hydropower—triggered by reduced rainfall—removed an additional 14,000 megawatts from the grid. The combined shortfall of nearly 34,000 megawatts underscored the urgency of reform and the limits of the current system.
Despite these strains, Pezeshkian highlighted notable progress in renewable energy. For years, Iran maintained only 1,000 megawatts of installed solar capacity. Recently, however, 3,000 megawatts of new solar power have come online, and the government expects total capacity to reach 8,000 megawatts by year-end—an unprecedented acceleration that officials say could reshape the country’s energy mix.
Pezeshkian warned that industrial expansion is impossible without stable electricity. Factories cannot open, he said, unless the foundations of energy supply are rebuilt. The government will also push the auto sector toward low-consumption and hybrid vehicles, withdrawing support for models that burn 10 to 25 liters per 100 kilometers.
He said Iran’s fuel-pricing structure has become economically irrational. The government purchases gasoline at costs above 60 cents per liter but sells it domestically at a fraction of that amount (3 cents)—a subsidy imbalance he said ultimately undermines both fiscal stability and long-term growth.
Pezeshkian added that reform is unavoidable, stressing that restructuring energy consumption, modernizing electricity infrastructure and expanding renewables are now central to safeguarding Iran’s economic future.
