Power outages, energy imbalances, and their resulting hardships have become one of the country’s most significant national challenges. The nation is grappling with air pollution, power outages, and cold weather, with the issue of energy imbalance frequently arising. In the midst of this, national energy policies and planning, along with their economic, social, and environmental impacts, are drawing more attention than ever.

In this interview, Mohammad Sadegh Mehrjou, a prominent energy analyst, delves into the primary causes of energy imbalance in the country, infrastructure problems, and existing necessities for resolving these issues. He elaborates on current challenges, proposes solutions to optimize energy consumption, reduce pollution, and ensure long-term sustainability, and analyzes the role of macro-level policies and consumer culture in managing these crises.

Below is the detailed interview of Peace Mark Monthly Magazine with Mohammad Sadegh Mehrjou, energy analyst.

Why are we currently facing power outages in the country, considering that such events on this scale had not occurred for years?

In the past, power outages occurred during summer peak consumption. However, this year, the President issued an order banning the use of fuel oil in power plants, particularly in major cities like Tehran, Arak, and Isfahan, where large power plants are located nearby. Burning fuel oil significantly increases pollutant emissions in cities and provinces. The President requested that the electricity generated by burning fuel oil be shared as planned blackouts across the country so that people do not breathe polluted air and various pollutants are not released into the atmosphere.

This was a courageous decision by the President. During past winters, due to shortages of gas and liquid fuels such as diesel, we were compelled to burn fuel oil. Every year, cities like Arak, Isfahan, and Tehran experienced severe pollution due to the use of fuel oil in power plants. That is why such a phenomenon had not occurred before. The President’s order is being implemented now, and while it is a good directive, it has brought hardships for the people. In the past, we did not experience power outages in the winter. Our electricity consumption peak is in the summer, typically between mid-June and September 15. Examining its roots would take time and might not be very interesting.

Why is it uninteresting?

We all know the problem and its solution. That is quite fascinating: knowing the problem, knowing the solution, yet not acting to resolve it. This, in my opinion, is a highly intriguing phenomenon.

Why do you think we are not acting to solve the problem?

We must address the root causes. We have a state-controlled economy, where the government has absolute dominance. Unfortunately, we have historically provided substantial energy subsidies to consumers, and this continues. Breaking this chain has consequences—social, economic, political, and security-related. Our society has not yet matured to accept this issue. The role of transportation and energy in the cost of goods and services is well-defined. If you implement the liberalization or increase of energy carriers—which is entirely justified—it will raise the cost of goods and services, leading to inflation. This also triggers price increases in unrelated goods.

Citizens expect at least a stable electricity supply. In the current situation, as winter approaches, some experts predict widespread, critical blackouts lasting up to ten days due to reduced fuel reserves at power plants. What is your opinion on this?

Why are public offices, schools, and universities being declared closed right now? We are approaching exam season. To reduce the burning of liquid fuel at power plants, we must first examine our power generation mix. Roughly 85–90% of our electricity generation relies on thermal power plants that primarily use gas and liquid fuel. I consider this reliance unreasonable. Linking two major infrastructures—electricity and fuel supply—is problematic, even in terms of passive defense.

To minimize liquid fuel consumption—which is a major environmental pollutant—we have limited gas consumption during this season. Recall that in previous years, we did not shut down schools, universities, or government offices due to cold weather and gas shortages. The reason is that we have not yet reached last year’s peak consumption. By shutting down schools, universities, and public offices and imposing strict laws, we managed to stabilize domestic and commercial gas consumption at around 600–670 million cubic meters per day without exceeding this threshold. Simultaneously, we allocated around 200 million cubic meters of gas to power plants to ensure stable electricity production. This reduced liquid fuel consumption, giving power plants breathing room to replenish their liquid fuel reserves, such as diesel.

Although schools and universities were closed for about a week to ten days due to pollution and cold weather, this served two purposes. First, we burned less liquid fuel at our power plants, thereby producing fewer pollutants, while substituting with gas, which is less polluting. Second, this respite allowed us to increase liquid fuel (diesel) delivery to power plants. The peak gas consumption season usually occurs between mid-January and the end of January, equating to about 660–670 million cubic meters of gas consumed by households and small businesses. However, the unprecedented cold of December brought an early consumption peak. The situation is being managed carefully to meet electricity demand and minimize atmospheric pollution.

The Chairman of the Energy Committee of the Chamber of Commerce recently stated that the previous government over-exported diesel, failed to stockpile adequately, and thus caused power outages. Do you agree with this assessment?

I do not have detailed statistics on power plant reserves. Anyone making such claims must have data comparing this summer and autumn’s reserves with those of the previous year to justify their statements. What is clear is that diesel shortages exist due to its consumption in both industry and transportation. We provide diesel to buses, trucks, and small-scale power plants, all of which have quotas. Additionally, diesel is used as a lubricant, base substance, solvent, and in other applications beyond fuel. We must analyze how much diesel has been allocated to each sector and how much has gone to power plants. One of the largest diesel consumers in our country is the electricity sector.

Every year, we allocate a specific, significant amount of diesel for import. In 2023 (1402), as far as I know, about $800–850 million worth of diesel was imported. Our domestic production meets the full demand of the transportation sector, with some allocated to other industries. In my opinion, instead of importing diesel at global prices, we should import gas, which is much cheaper. The thermal value of one cubic meter of gas is slightly higher than that of one liter of diesel and equivalent to one liter of gasoline. It is more economical for us to import gas. However, this requires infrastructure.

In previous years, we imported gas from Turkmenistan. Since September 2023, Turkmenistan has refused to renew its contract with Iran, presenting another challenge. A similar issue occurred in 2007 (1386) in Tehran, when an unprecedented cold spell led to gas shortages. Northern and northeastern regions also experienced severe cold and snowfall, resulting in gas outages.

We need long-term planning. The new government has only been in office for three months. Recently, a journalist asked me why the fourteenth administration had not developed shared gas fields. I explained that in three months, especially during autumn and winter, there are more urgent issues to address. Judging a ministry or government requires at least a year. Unfortunately, the current state of our Ministry of Petroleum is far from satisfactory. Some problems are inherited from the past, while others are new.

We have inherited a system that requires reform, and addressing new challenges takes time. Patience and perseverance are necessary. Moreover, the country’s resources and capital must be considered. I think the Ministry of Petroleum’s performance in the past three months has been acceptable. The individuals in charge are professionals and among the best in the country. The situation was far more catastrophic three years ago.

Have these problems only arisen in the past three years, or are they the result of decades of issues?

A revolution in any country causes disruptions and disorder. In our case, we also experienced an eight-year war, which was devastating. After the war, the reconstruction era began, during which the country’s infrastructure was rebuilt over a decade. Many of the power plants you see today were built in the early 1990s (1370s), and some have been operational for over 30 years.

A journalist once asked me why our electricity industry is so inefficient. I replied that the equipment is outdated—some power plants date back to before the revolution. The efficiency of our power plants is approximately 30%, meaning that 70% of the gas subsidized for power plants is released into the atmosphere as heat and wasted. This statistic is catastrophic. No country treats its resources this way, especially non-renewable ones, which should be valued and used in the best possible way.

We are recklessly wasting resources that could otherwise generate significant added value. For example, the additional value generated from a single cubic meter of gas or barrel of crude oil could be much higher. Yet, we are effectively burning our resources and releasing them into the air. No country provides energy to its citizens as cheaply as we do. These are intergenerational assets that must be preserved for future generations. If we want our descendants to live prosperous lives, we must start considering their needs now.

What is the relationship between electricity production in the country and air pollution?

Eighty-five percent of our power plants rely on hydrocarbon fuels, including gas, diesel, and fuel oil. Burning these fuels produces greenhouse gases, which contribute to air pollution and damage the ozone layer. This results in the accumulation of highly toxic air masses overhead, preventing the exchange of heat and cold in the atmosphere. Consequently, the Earth warms unpredictably, leading to reduced rainfall, snow, and the melting of natural ice reserves.

These are the well-documented consequences of greenhouse gas emissions. Climate agreements formed over the past four decades aim to reduce such emissions. We, too, must diversify our energy portfolio by developing renewable energy sources, such as solar, wind, and geothermal power. Our country benefits from more than 300 days of direct sunlight annually and favorable wind conditions, such as the 120-day winds in Sistan, which remain underutilized.

We have the technology to manufacture up to 70% of wind turbines domestically. Being situated between two major bodies of water—the Caspian Sea and the Persian Gulf—provides us with a unique opportunity to harness these natural blessings.

In Europe, a significant percentage of electricity is generated from renewable energy sources, including solar and wind farms. Saudi Arabia has recently committed to developing 200,000 megawatts of renewable energy and signed major agreements with Japan and Germany to reduce its dependency on hydrocarbon energy. Although Saudi Arabia is the third-largest oil reserve holder in the world, it aims to achieve carbon neutrality by 2030 by exporting oil, converting it into capital, and focusing on infrastructure development.

Unfortunately, we are lagging in this area despite our advantageous geopolitical position. As the link between East and West Asia, we have access to major energy consumers in the north, south, and west. We could serve as a bridge for energy transmission in the region, provided we manage and optimize consumption.

Are there any indications that fuel oil burning has been stopped in some areas, or is this merely an excuse for power outages?

Every year, we have been forced to burn fuel oil. The country’s diesel production capacity has been evident in previous years. Since the commissioning of the Persian Gulf Star Refinery near Bandar Abbas in 2018 (1397), we have become self-sufficient in diesel and gasoline production. Before that, we were importers. Unfortunately, diesel and gasoline consumption in our country has increased significantly.

In 2020 and 2021 (1399 and 1400), we had zero exports of diesel and gasoline, mainly due to reduced demand for intra- and intercity travel during the COVID-19 pandemic. Consequently, fuel reserves in our refineries filled up, forcing us to export these products, even at prices lower than their actual value.

The issue of fuel oil burning has been a norm in the electricity industry. This year, the President ordered planned blackouts to manage fuel supply in a way that primarily relies on natural gas for power generation. While we have burned fuel oil annually in cities like Tehran, Arak, Isfahan, and Ahvaz—particularly near large power plants—this year, the aim has been to reduce reliance on it.

Where gas shortages arise, we first turn to diesel, and when diesel reserves diminish, we resort to fuel oil. These measures are taken to address electricity shortages.

How do power outages impact small and large industries, as well as the economic, production, and agricultural sectors? What are the consequences?

Shutting down industrial towns and large and small industries leads to economic losses and a reduction in the country’s GDP. These issues have economic, social, and security consequences, causing dissatisfaction. To meet demand during summer and winter, we must focus on optimization and savings, especially in industries.

The thirteenth administration mandated large industries to become independent of the national electricity grid by building small-scale renewable power plants. This policy aimed to separate large industries from the national grid.

Keep in mind that our energy production is not low. For example, the gas consumed by households is equivalent to the total gas consumption of Europe. Europe, with an economy 22 times larger than Iran’s, consuming over 22% of the global economy’s energy, uses as much gas as we do. This indicates that our gas consumption is inefficient—it produces heat and pollution instead of generating wealth and value.

To manage, we have resorted to measures that carry economic and social harm. We need to improve efficiency. Nearly 15–20% of our electricity production is lost during transmission and distribution due to outdated infrastructure. This highlights the need for modernization, optimization, and reconstruction of facilities.

As I mentioned earlier, nearly 70% of the gas supplied to power plants is wasted as heat emitted into the atmosphere. By adopting combined-cycle systems and newer technologies, such as advanced “Class F” turbines that increase efficiency to 60%, we can utilize energy more effectively. These are clear solutions. Again, we know the problem and the remedy.

The costs associated with these measures directly or indirectly affect families and businesses. Shouldn’t solutions have been anticipated to minimize their suffering?

When faced with a crisis, we cannot satisfy all consumers or users, especially when there are shortages. What does imbalance mean? It means the gap between what is produced and what is needed. Demand exceeds supply, so we must distribute what little we have in a way that minimizes damage—but damage will still occur.

There are priorities. Providing electricity for households and related networks, essential for comfort, security, and welfare, takes precedence. Unfortunately, industrial and related sectors are lower in priority, although their indirect impact on families’ welfare and security is significant.

President Pezeshkian has launched the “Two Degrees Less” campaign. Do you think such initiatives are effective, or do they solve the problem?

This doesn’t solve the problem. It works more like a painkiller, but it does have an effect. Unfortunately, we have a wasteful and inefficient consumption culture. Iranian society consumes energy in excess and wastefully. In developed countries like Japan and European nations, you won’t find lights or heating systems running in an unused room. Even in tourist hotels, they regulate energy consumption.

For instance, a friend visiting a hotel in Hamburg, Germany, said he was cold despite wearing multiple layers. When he complained to the reception, they explained that the heating system would be turned on only at 6 PM due to energy costs and suggested wearing another layer.

When energy is cheap, optimization or saving is not a concern. This reflects poor governance in energy management. We must move towards realistic energy pricing gradually and with proper cultural education. Campaigns like “Two Degrees Less” are short-term measures, but long-term programs are also necessary.

For example, in summer, approximately 33,000 megawatts of electricity are consumed by cooling systems, most of which are inefficient. Many air coolers in use have energy ratings of “E,” meaning they waste energy without effectively cooling. Transitioning to better systems with motors that use advanced electromagnetic technology could improve these ratings to “D.”

Providing incentives for public participation in energy optimization is crucial. For instance, if citizens were told, “Every kilowatt-hour you save allows us to allocate that energy to industries, and a portion of the savings will be returned to you,” you would see serious interest in optimization. Not all problems can be solved by raising prices; public culture and behavior are central issues. Unfortunately, our consumption habits are flawed.

In June, the CEO of Tavanir stated that 33% of the country’s electricity is consumed by households. Can this figure alone resolve the issue?

No. The CEO only addressed household consumption. However, if we separate cooling systems in small commercial units, the numbers are significant—about 33,000 megawatts.

This summer, electricity consumption reached 83,000 megawatts, near our total capacity of 93,500 megawatts. If this trend continues, I fear that by the summer of 2025 (1404), we may reach 90,000 megawatts.

These figures are alarming. Addressing peak consumption is imperative. As I mentioned, we need 10,000–15,000 megawatts of renewable energy. While the CEO discussed household electricity, cooling systems in small commercial units, businesses, and offices also consume significant electricity. This underscores the need for energy optimization across all sectors.

Thank you for your time and insights, which you shared with Peace Mark Monthly Magazine.