Alarm bells ring over Iran’s energy shortfall
Experts call for fundamental, immediate reform
Iran, despite being one of the world’s energy-rich nations, has come up against a serious challenge known as the “energy imbalance”. The issue puts the country’s sustainable energy supply at risk and spills over into the economy, industry, and environment, casting a long shadow over the nation’s future.
The sixth pre-event of the International Conference on Industrial Engineering, focused on “Energy Rebalancing Solutions for the Benefit of Production,” brought together a host of experts and officials. The session zeroed in on the energy shortfall and laid out solutions to deal with and break free from the current predicament.
Structural, managerial roots of energy shortfall
Hadi Sahebi, the dean of the Faculty of Industrial Engineering at Iran University of Science and Technology, pointed out the structural and managerial roots of the mismatch between production and consumption of energy. He said that the predicament could be looked at from four angles: technical, economic, environmental, and governance.
He warned that factors such as the low efficiency of gas-fired power plants, the run-down condition of the power transmission network, heavy reliance on natural gas, and falling pressure in the South Pars gas field all play a major role in the energy deficit.
Sahebi also flagged up the decline in energy sector investment over the past 15 years and the failure to put in place comprehensive and effective governance as further reasons for the crisis, calling for a holistic and systematic approach to get to the bottom of the issue.
His proposed solutions centered on improving power plant efficiency, investing in renewables, drawing up smart tariff policies, and optimizing energy consumption.
Need to rethink Iran’s energy diplomacy
Ebrahim Rezaei-Rad, a representative from the Middle East Strategic Studies Center, stressed the importance of energy diplomacy, saying that energy was “one of the most important geopolitical tools in Iran’s foreign policy, playing a vital role in the development and international relations”.
He pointed to the challenges facing Iran’s energy diplomacy under sanctions and competition with countries such as Qatar, underscoring the necessity for Iran to rethink its policies and step up bilateral and multilateral cooperation with regional and global partners.
Rezaei-Rad identified pipeline diplomacy, sanctions, long-term contracts, and pricing as some of Iran’s energy diplomacy tools, and called attention to the drivers of energy diplomacy, such as energy security and sustainable development.
He highlighted the importance of sound governance and comprehensive planning and said that “to get through the energy crisis, the production, transmission, and consumption chain must be managed in an integrated manner. Only then can a sustainable future for the country’s economy and industry be counted on.”
Energy governance, managerial challenges
Mansour Moazzami, a former deputy oil minister, weighed in on managerial and structural problems in the energy sector, saying that the shortcomings across various sectors were the result of poor managerial decisions piling up over the years.
He emphasized the need to go back to scientific rationality in running the country, putting the spotlight on training specialized human resources committed to scientific principles.
Moazzami drew attention to rising energy demand, improper pricing, and inefficiencies in resource management and called for overhauling the managerial framework, lifting sanctions, and bringing energy prices in line with realities.
He reiterated that a return to scientifically grounded decision-making was essential.
“The country must be run based on scientific principles and standards, which not only do not conflict with our cultural values but are also indispensable for better governance.”
He insisted that such a goal must be pursued through training specialized personnel committed to scientific principles.
Iran’s energy policy needed to be redesigned
Farhang Fasihi, the president of the Iranian Institute of Industrial Engineering, took up the issue of structural problems in Iran’s energy sector at the session to highlight the necessity for reform in macro-level policymaking and the creation of integrated management.
He said that a “siloed approach” to energy management over the past decades has led to a lack of coordination between sectors such as industry, agriculture, and energy, and that efforts like forming the Supreme Energy Council have also fallen short.
Fasihi took issue with policy instability and the absence of a long-term outlook and said that tough decisions were often put off, which had resulted in major economic opportunities slipping through the cracks both domestically and internationally.
According to him, reliance on fossil resources and neglect of new energies are among the main weaknesses in Iran’s energy governance.
He pointed out structural problems in the energy sector to underline the need for macro-level policy reform and integrated management.
The union leader criticized the siloed approach and policy instability. “Reliance on fossil resources and neglect of new energies are among the main weaknesses in Iran’s energy governance.”
The president also referred to high household energy consumption and the impact of sanctions on the economy and called for the creation of integrated management structures, a focus on long-term policymaking, managing energy consumption through advanced technologies, and reforming subsidy policies.
Iran’s economy, energy sector require fundamental reform
Hamidreza Salehi, a member of Iran’s Chamber of Commerce, also spoke out against the state of economic governance, calling for sweeping reforms in economic policy and energy management.
He believes that without fundamental changes at the highest decision-making levels, the country’s current economic woes will not be sorted out.
Salehi said that government intervention in the economy, especially in electricity and energy pricing, had held back private sector investment.
He further underscored the need for transparency in government-citizen relations, reforming governance structures, creating investment security, and robust support for the private sector.
Noting that the government treated renewables as a “luxury item,” he said that “getting out of the energy deficit crisis hinged on changing such a mindset and paving the way for energy production using clean and renewable sources.”
Strategy for value creation in production
Kamran Yeganegi, a university faculty member, also called for energy rebalancing as a strategy for turning challenges into economic opportunities.
Yeganegi said that implementing policies based on consumption optimization and balancing supply and demand was the key to boosting productivity and competitiveness in production, and that energy should be seen not as a costly burden, but as a capacity for sustainable growth and development.
He put forward solutions such as optimizing energy use in energy-intensive industries, expanding renewables, and digitizing the energy chain as effective strategic priorities.
The professor argued that leveraging advanced technologies like heat recovery, low-consumption burners, and smart energy management systems could go a long way toward reducing energy use and ramping up output efficiency.
He emphasized the importance of rolling out small-scale solar power plants in industrial parks and the need to come up with innovative energy management models, adding that countries like Denmark, Germany, and Turkey have been held up as successful examples of energy rebalancing.
“Denmark, by developing wind turbine technology, has managed to boost both domestic supply and export capacity. Germany, by cutting fossil energy consumption and offering targeted incentives to industries, has shored up industrial production and energy efficiency. In Turkey, structural reforms and attracting private sector participation in energy have helped the country carve out a role as a regional energy player.”
Urgent need to reform ongoing practices
Experts and academics present at the session agreed that the energy shortfall stemmed from structural, managerial, and policy-level problems and called for a comprehensive and systematic approach to tackle it.
Improving power plant efficiency, investing in renewables, reforming pricing and subsidy policies, managing energy consumption, strengthening energy diplomacy, and creating integrated management structures are among the solutions put forward by these experts to pull the country out of the energy deficit crisis.
It appears that immediate and coordinated action on these fronts is crucial to ward off even more serious consequences for Iran’s economy and industry.
The article first appeared in
Persian on IRNA.