Iran Unplugged

The Islamic country’s electric grid, gas sector, and currency, are all collapsing. Is the theocratic regime next?

Electricity grids reflect the societies they power. Countries with strong governance and accountability have robust electric grids. Countries with corrupt governments have weak ones.

Examples of this are easy to find. Nigeria has spent tens of billions of dollars trying to upgrade its tattered electricity system. However, due to widespread corruption, electricity theft, and vandalism, the oil-rich country is regularly hit by widespread blackouts, including one earlier this month. The situation is so bad that almost all Nigerian households have a backup generator.

In Lebanon, decades of war, sectarian division, and endemic corruption have left the country’s electric grid in tatters. Nearly every Lebanese household and business pays two electric bills, one to the state-owned grid operator, EdL, and another to the “generator mafia.” (For more on Lebanon’s grid, watch our first film, Juice: How Electricity Explains The World, and read my latest book, A Question of Power: Electricity and the Wealth of Nations.)

By contrast, residents of Iceland, a small country with enormous hydro and geothermal resources, enjoy cheap and abundant electricity. Their grid is highly reliable and emits no carbon dioxide.

The inescapable truth about electric grids is this: theft is the enemy of light. Electricity networks depend on steady cash inflows. The wires, poles, generators, and transformers, must be continually maintained and upgraded. That can only happen if the grids pay for themselves. In places where theft is rampant — theft of electricity, equipment, or cash — grids eventually fail.

That preface brings us to Iran, which, despite its vast hydrocarbon wealth, can’t keep the lights on. On December 18, Al Jazeera reported:

Tens of millions of people across Iran are facing major disruptions as authorities shut down services in the face of an exacerbating energy and currency crisis amid historic regional tensions...There have been renewed power outages to homes across the country, most of which have come unannounced and lasted for hours. There have also been massive industrial power cuts, impacting not just large energy-intensive industries but also many small and medium-sized enterprises across the country. (Emphasis added.)

The crisis is so bad that many of Iran’s power plants, which rely heavily on natural gas — 85% of the country’s power plants are designed to burn gas — are now burning mazut, a low-quality heavy fuel oil, to generate electricity. That has resulted in increased air pollution in Iran’s cities.

It sounds — and is — incredible: Iran, which has the world’s second-largest proven natural gas reserves and fourth-largest oil reserves, is now seeing widespread electricity and gas shortages. The country, which the State Department calls the “world’s largest state sponsor of terrorism,” is in the throes of its worst energy crisis since the overthrow of the Shah in 1979.

Could the deepening energy crisis result in another regime change? Here’s a deep dive into Iran’s energy crisis, with six charts.