The electricity imbalance in Iran has become one of the main challenges of industrial production. This problem not only leads to reduced energy consumption but also has deeper effects on operational capacity and business costs. In 2023, industries accounted for about 36.3 percent of the country's electricity consumption, while the residential sector's share was 31.4 percent.
Consequences of Electricity Imbalance on Industries
The industrial sector is one of the largest consumers of electricity in the country. Power outages in production units can lead to production line stoppages, reduced capacity utilization, disruptions in the supply chain, and increased fixed costs. Moreover, electricity restrictions, especially for energy-intensive industries such as basic metals, have significant economic impacts.
Basic metals, including steel, aluminum, and copper, account for about 48 percent of the monetary energy consumption of listed industries. This dependence on energy means that electricity restrictions quickly impact the performance of these industries. For example, production declines and reduced capacity utilization can directly translate into the costs of energy imbalance.
Structural Challenges and Solutions
The most important challenge in this regard is how to distribute the costs arising from electricity shortages among different consumers. Article 25 of the Continuous Improvement of Business Environment Act states that during electricity shortages, production units should not be prioritized for disconnection. However, in practice, businesses have faced shutdowns or reduced activity during peak imbalance periods.
To solve this problem, merely increasing power plant capacity is not enough. There is a need to reform demand-side management, reduce energy intensity, invest in the grid, and develop self-sufficient power plants. Additionally, long-term energy contracts for large industries can reduce the risk of power outages, although these solutions require significant investments and regulatory stability.
Overall, the electricity imbalance in Iran has become a challenge beyond peak summer consumption, and the recurrence of restrictions on energy-intensive industries has become an influential variable on production and investment plans. Therefore, electricity policy reform should pursue two goals: reducing the gap between supply and demand and distributing the costs of energy shortages with minimal harm to production and investment.
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