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Iran: Energy Supply
Country Study > Chapter 3 > The Economy > Energy Supply


Electric power plants were introduced to Iran during the late Qajar dynasty; by the turn of the twentieth century, several small power plants were operating in major cities. In 1964 the Ministry of Power and Electricity (renamed the Ministry of Energy after the Revolution) began managing the production, distribution, and consumption of electric power. Since the mid1960s, rapid urbanization and growing economic activity have prompted increased production and consumption of electricity. Overall production reached 152 million megawatt-hours in 2004. That year, the nominal capacity of installed generators was 39,613 megawatts. Several new generating units came on line in 2005 and 2006.

In 2004 some 23 hydroelectric power plants generated 11 million megawatt-hours of electricity. Although the output of hydroelectric plants increased by 47 percent between 1987 and 2004, their share of total electricity output dropped from 33 percent to 6 percent during that period. The fourth economic development plan calls for an additional 6.4 million megawatt-hours of hydroelectric capacity by 2010. The electricity production of thermal power plants affiliated with the Ministry of Energy was 136 million megawatt-hours in 2004, an increase of 431 percent since 1987. During that period, natural gas has been the fastest growing source of electricity generation. Its share of the total rose from 8 percent in 1987 to 32 percent in 2004. In 2006 natural gas reportedly accounted for about 50 percent of domestic energy consumption (see Natural Gas, this ch.).

Iran has no capacity for nuclear power generation. Plans call for a series of nuclear reactors to be built. However, completion of the Bushehr plant, built with Russian technical assistance, has been jeopardized by disputes with Russia and international objections to the facility’s potential for providing Iran with military-grade nuclear fuel (see Nuclear Issues, ch. 5).

Electricity is distributed to customers nationwide by nine regional organizations and the national Water and Electricity Company. The same state-owned company, Tavenir, oversees generation and distribution of power throughout Iran. Registered users of electricity numbered 18 million in 2004, an increase of 10 million users since 1987. This included 4.1 million registered rural users. In 1977 only 2,360 villages had access to electricity; by 2004 the number had increased to 47,359. Between 1989 and 2004, the consumption of electricity increased from 40 million to 114 million megawatt-hours. The largest consumers were households (33 percent), industry (32 percent), and agriculture (13 percent).

Subsidization of the production and consumption of electricity in Iran has caused over-consumption. In 2004, with the per capita energy consumption subsidy about US$230, per capita consumption of energy was 64 percent above the world average. Between 1967 and 2004, per capita consumption of energy increased by 5 percent per annum. The government projected that per capita consumption would grow at 7 percent per annum during the fourth development plan, the same rate as in the early 2000s. According to estimates, to satisfy demand Iran would have to invest US$20 billion in the energy sector, increasing its electricity production and distribution capacity to 55,000 megawatts. Aside from subsidized energy prices and the waste that they encourage, Iran faces the serious challenges of low energy storage capacity and obsolescence in distribution channels. In 2005 Iran’s electric power industry continued to depend on foreign equipment, parts, and expertise, although to a lesser extent than in prior years. Iran is both an importer and an exporter of electricity. It has reciprocal relationships with Armenia, Azerbaijan, Pakistan, Turkey, and Turkmenistan. Both import and export levels have averaged about 2 million megawatt-hours annually.

Data as of 2008

Last Updated: January 2008

Editor's Note: Country Studies included here were published between 1988 and 1998. The Country study for Iran was first published in 1987. Where available, the data has been updated through 2008. The date at the bottom of each section will indicate the time period of the data. Information on some countries may no longer be up to date. See the "Research Completed" date at the beginning of each study on the Title Page or the "Data as of" date at the end of each section of text. This information is included due to its comprehensiveness and for historical purposes.

Note that current information from the CIA World Factbook, U.S. Department of State Background Notes, Australia's Department of Foreign Affairs and Trade Country Briefs, the UK's Foreign and Commonwealth Office's Country Profiles, and the World Bank can be found on

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