Iraq has an electricity production deficit, hindering light from reaching homes. Although the sun is a good investment, successive Iraqi governments have preferred to dig deep into the ground to extract energy. This is a story about lost electricity opportunities and deals in Iraq.

Out of the 8,700 hours that make up each year, the sun shines on Iraq for more than 3,000 hours. Every square meter the sun shines on can turn into more than 1,900 watts per hour, potentially lighting up the nights of Iraq’s cities. Despite this, government plans prefer to waste that light, and cling to producing electricity through fossil fuels, which costs the country financially and environmentally. 

Investing in the sun 

In 1981, Iraq established a center for renewable energy research focused on wind and sun – the first of its kind in the Arab world. But this project did not develop, and the country and its electrical power stations began to collapse and go out of service after missiles and bombs from the Second Gulf War fell on them. 

The economic sanctions of 1990 – 2003 made it difficult for Iraq to obtain the raw and basic materials needed to rehabilitate the damaged power stations and develop what survived, so the country suffered from a deficit in electrical production, distribution, and lighting in homes. 

After the invasion of 2003, the energy crisis expanded, due to corruption in energy contracts, population growth, and a greatly increased ability to import electrical appliances. Between the years 2003 and 2021, Iraqi administrations spent more than $80 billion on the energy sector, but many problems still plague it, including production, distribution, transportation, collection of fees, as well as high costs. 

Iraq ranks among the countries that burn the most gas in the process of oil extraction. The naturally-occurring wealth of its gas reserves is therefore wasted. Despite this, successive policies went against logic and relied on gas stations that produce electricity, and thus tied itself almost entirely to Iranian gas. This amounts to a daily import volume of 50 million standard cubic meters used to operate gas stations with a capacity of 16,000 megawatts, which constitutes 57 percent of total electricity production, in addition to the 1,200 megawatts that are imported. 

In this scenario, the production of a megawatt operating on fossil fuels costs the country $900,000, according to the former Minister of Electricity, Majid Hantoush, who worked for many years as a production official in the Ministry of Electricity before taking on the role of minister. 

The Ministry of Electricity expects peak demand to rise to 41,000 megawatts in 2030, and has developed a strategy to produce some of that needed electricity using Iraqi-produced gas, and for solar power to cover 5 percent of the total production. 

Impossible Strategies  

Iraq has large, empty tracts of land that can be exploited. In these areas, power stations can be built which can very easily be connected to the national grid. These stations are cheap to build compared to fossil fuel stations, contribute less to pollution in the country, while also bringing it closer to its Paris Climate Agreement obligations by reducing carbon dioxide emissions, intended to limit global warming. 

Iraq took its first steps in advancing solar energy contracts in 2019 when it offered investment opportunities to establish seven stations with a capacity of 755 megawatts, in the governorates of Karbala, Wasit, Babil, and Muthanna. These were soon followed by more offers to a number of international companies. 

According to official documents, the Council of Ministers authorized the Ministry of Electricity to sign a contract with the Norwegian SCATEC consortium, on 22 December 2021. This would implement two solar energy projects, one in Karbala (300 megawatts) and the other in Alexandria in Babylon (225 megawatts) and purchase the energy produced for a period of 25 years at a rate of $40.7 per megawatt. The cost of purchasing electricity during the investment period of 25 years is $891.7 million, reaching $35.6 million annually. 

However, the prices of a megawatt (1000 kilowatts) were high in Iraq compared to the United Arab Emirates (UAE) ($16.2 per megawatt) and Egypt ($23 per megawatt.) This high cost has several explanations, including the size of the risks that result from the weak business environment in Iraq, as well as rampant financial and administrative corruption in state institutions. 

The contract with the Norwegian consortium coincided with the signing of an agreement with the French company Total, with a capacity of 1,000 megawatts, at a fixed tariff price of $38 per megawatt, and an investment period of 25 years, to be completed within 36 months. The contract was approved in an emergency session, as part of a deal worth $27 billion concluded with the French company. This was described as the quickest-to-close deal in Iraq’s history. 

As a result of contracts and agreements, the Ministry of Electricity presented in 2022 a 3-stage strategic plan, the first of which would lead to the production of 5 percent (1,200 megawatts) of total production from renewable energy during the year 2024. This has not been achieved. 

The fate of solar electricity production contracts 

A turtle…or slower 

Iraq is currently offering 8 investment opportunities to establish solar energy stations with a capacity of 1,300 megawatts in Basra, Dhi Qar, and Muthanna, and the government says that it has supported the energy sector with a 15-billion-dollar annual budget line in the financial budget. Companies, however, did not come forward to compete for these opportunities, and they were not tempted by money on offer either. 

Companies that want to implement large clean energy projects in Iraq have been facing – and still face – many obstacles and fears, including the Council of Ministers’ ruling that was issued after the formation of the government of Muhammad Shia’ al-Sudani in the Fall of 2022. This ruling halted the customs orders of the government of his predecessor, Mustafa Al-Kadhimi, initiated a review of the signed contracts, prevented the transfer of the land on which the projects are being built, and it did not advance existing energy agreements into concluded contracts. 

In addition, Iraq wants to produce electricity from solar energy, but has not created a law to regulate this process. This is while three ministries, Science, Information Technology, Electricity, and Environment, fight over this subsector, pulling it apart due to fragmentation and loss. 

These problems make solar energy projects – for the time being – simply “concepts on paper”, which compel foreign companies to be cautious before working in Iraq, or to withdraw entirely, as did the Norwegian company SCATEC. The SCATEC executives say they experienced delays, disruptions, and lack of legal regulatory frameworks. 

Politicians also attribute the slow progress in the electricity sector to political pressure exerted by Iran, since Iraq consumes Iran’s gas and electricity at a cost of up to or exceeding 4 billion dollars annually. Because Baghdad is allowed to avoid US sanctions on Iran and purchase Iranian gas and electricity, Iran has a strong interest in preventing electricity production projects that depend on Iraq’s own gas exports, including solar power plants. 

Outdoor opportunities 

It is true that the cost of building a solar power station vs. a fossil fuel-powered station is now much lower, as a result of the technical development that reduced the price of photovoltaic panels. This means that a megawatt could cost $40, instead of $120, which is the price at fossil fuel stations. Yet, Iraq still needs to put this large-scale experiment into practice, and in the process get to know the practical obstacles that solar energy systems may face. 

Iraq, which has become a live example of the effects of climate change on this planet – as it is experiencing desertification, increasing dust storms, and high and higher temperatures – is likely to also see its solar energy systems face some challenges. 

If dust accumulates on the solar panels for example, it can lead to reduced productivity, so the panels need to be cleaned – despite the emergence of modern devices to address this problem. High temperatures during the summer can also lead to problems with lowering the panels’ “voltage”, which leads to a decrease in “amps” or may reach the point of destroying internal cells. Energy storage problems may also emerge, due to lack of production and increased demand during very hot days. 

In fact, government plans should not continue to subsidize electricity at about 70 percent of its cost, especially since these subsidies have not served their intended purpose of getting factories and agricultural projects moving. According to Louay Al-Khatib, Iraq’s former Minister of Electricity, the economy’s losses due to poor electricity amount to $17 billion annually. Therefore, to satisfactorily plan building solar power plants, citizens need to be encouraged and provided with loans and facilities to install solar panels in homes, factories, and the countryside. All with the goal of reducing demand on the national grid, and gradually ending the import of gas and electricity from neighboring countries. 

*This article is published in partnership with the Iraqi Network for Investigative Journalism “NIRIJ”