Iraq’s power sector: domestic shortfalls and international supply constraints

Shafaq News/ With temperatures dropping, Iraqis are braving another winter with erratic electricity supply, turning to makeshift methods for warmth as they endure one of the country’s most persistent crises. “We’ve gone back to the Stone Age,” said Karbala resident Umm Alya, describing her struggle to heat water and stay warm without reliable power.

Since the 1990s, Iraq has relied on scheduled power cuts due to insufficient domestic electricity generation, with many households depending on private generators to fill the gap.

To make up for the deficit, Iraq imports electricity and gas from Iran, which supplies 30-40% of the country’s energy needs. However, the country faces difficulties in paying for these imports due to US sanctions, which allow Iran to receive payments only for non-sanctioned goods such as food and medicine.

Meanwhile, Baghdad is pinning its hopes on electricity grid connectivity projects with neighboring countries to secure stable energy supplies without relying on imported fuels, especially given the volatility of Iranian gas deliveries.

Iranian Gas Supply Halted

The Iraqi Ministry of Electricity announced last month that Iranian gas supplies to Baghdad and central and southern provinces were fully suspended for 15 days due to maintenance work. This disruption led to the shutdown of some power generation units and resulted in a reduction of output from production plants, causing a loss of over 6,000 megawatts in the national grid.

Ministry spokesperson Ahmed Mousa told Shafaq News that the suspension was due to ongoing maintenance in Iran. “Once completed, gas will be resumed at the previously agreed quantities.”

Mousa pointed out that Iraqi plants are prepared to operate at full capacity once sufficient gas and fuel are provided.

Regarding Iraq’s dependence on imported gas, Mousa explained that domestic gas production is insufficient to meet the country’s electricity needs, making imported gas crucial for sustaining power generation.

He also stated that the long-term solution lies in increasing reliance on domestic gas. “Unlike previous administrations, the government, through the Ministry of Oil, is taking swift action to develop national gas resources. Several gas fields were included in Iraq’s fifth licensing round, and exploitation is currently underway. A sixth licensing round also covered gas fields. However, domestic gas utilization will take 3 to 5 years to fully address electricity needs, meaning imports will remain necessary,” He explained.

Iraq Secures Turkmen Gas Supply

Bassem Al-Ghribawi, a member of the Iraqi Parliament’s Oil and Gas Committee, said that Iraq’s electricity crisis is deeply rooted. He explained that many power plants rely solely on either gas or kerosene, both of which are in short supply in the country.

These plants should ideally operate on multiple fuel sources, he said.

In an interview with Shafaq News, Al-Ghribawi attributed the current power outages to the halt of Iranian gas supplies. “To prevent similar crises in the future,” he noted, “efforts are underway to diversify Iraq’s gas import sources.”

On October 19, Iraq signed an agreement for the supply of Turkmen gas, which outlines the delivery of 20 million cubic meters of gas per day. Swiss company Loxstone Energy will be responsible for transporting the Turkmen gas to Iraq using Iran's pipeline network through a swap mechanism.

Mousa clarified that implementing this agreement requires several procedural steps. “These include establishing credit for the Turkmen gas company with Iraqi chambers of commerce and depositing an advance payment into the TPI account for the benefit of the Turkmen side.”

He confirmed that the Ministry of Electricity, in coordination with the Ministry of Finance and the Trade Bank of Iraq, is currently working to complete these procedures.

Iraq’s Electricity Crisis: Key Issues Identified

Energy expert Govand Sherwani outlined the core issues of Iraq’s ongoing electricity crisis, identifying three main areas of concern.

First, the country currently generates around 27,000 megawatts of electricity, according to the Ministry of Electricity. “However, peak demand can reach up to 45,000 megawatts, resulting in a shortfall of approximately 17,000 to 18,000 megawatts.”

Sherwani also highlighted deficiencies in the transmission and distribution networks, which led to further losses. “While the Ministry of Electricity has worked to resolve technical faults and shutdowns, the gap between generation and demand remains substantial.”

“Despite efforts to import 50 million cubic meters of Iranian gas daily under a five-year contract, and recent attempts to secure gas from Turkmenistan, the imported gas only covers 10,000 megawatts, leaving the shortfall unresolved. The losses in generation, transmission, and distribution exacerbate the deficit, making it difficult to bridge even with these measures.”

Furthermore, the energy expert noted that electricity demand peaks during both summer and winter, with the latter seeing higher energy consumption due to heating needs. This seasonal surge creates even greater demand and amplifies the existing shortfall. As such, he recommended that the Ministry of Electricity pursue two main courses of action.

“The first course involves repairing and upgrading transmission and distribution networks, as well as modernizing power plants and building new ones in coordination with the Ministry of Oil to ensure adequate fuel, particularly natural gas.”

Natural gas, Sherwani explained, is the optimal fuel for power generation due to its cost-effectiveness, efficiency, and lower environmental impact.

According to him, Iraq holds significant natural gas reserves, estimated at 143 trillion cubic feet, yet only about 65% of this resource is being utilized. “A large portion of gas, especially associated gas from oil fields, is flared rather than captured. If fully harnessed, this gas could address the electricity crisis and provide sufficient fuel for power plants, significantly reducing the current shortfall.”

Sherwani’s second recommendation is for Iraq to invest in renewable energy, particularly solar power. “With low setup costs, solar energy could rapidly provide substantial capacity, with the potential for building large-scale plants of 1,000 megawatts each, covering more than a third of the shortfall within a year.”

These plants require minimal maintenance and fuel, and they can be quickly integrated into the national grid, Shirwani pointed out, arguing that even energy-sufficient nations, like the UAE and Saudi Arabia, are expanding solar energy capacity to export electricity to neighboring countries.

If sufficient domestic gas is made available, new power plants could be built, helping to address the current deficit, which exceeds 15,000 megawatts.