Baghdad, November 10 (QNA) - Iraq is moving toward expanding its investments in the renewable energy sector, particularly solar energy, as part of an effort to bolster energy security, diversify electricity generation sources, and reduce reliance on fossil fuels. This comes amid growing challenges posed by the gap between production capacity and domestic demand, especially during the summer months, when consumption levels surge significantly.
The Iraqi government is moving toward adopting parallel paths to develop this sector, which include establishing large-scale, investment-based solar power plants and deploying solar systems across government buildings, service institutions, and homes, alongside providing the necessary financial and legislative facilities to encourage citizens and the private sector to invest in clean energy sources.
In an exclusive interview with Qatar News Agency (QNA), official spokesperson for Iraq's Ministry of Electricity Ahmed Turki Jiyad said that the Shams Al-Basra project is currently operating with a production capacity of 250 megawatts. The ministry aims to bring an additional 250 megawatts online before the end of 2026, which would bring the project’s total capacity to 500 megawatts.
Jiyad added that the solar energy project in Karbala Governorate is currently operating with a capacity of 25 megawatts, with plans to increase this to 100 megawatts before summer 2027. He further noted that work has begun on other projects, including a 650-megawatt plant in Anbar Governorate, 250-megawatt plants in both Nasiriyah and Al-Muthanna, and a 100-megawatt plant in Maysan Governorate.
He explained that the ministry is working to expand electricity generation from solar energy and encourage citizens to acquire residential solar power systems. This includes requesting the Prime Minister’s Office to eliminate customs duties on such systems, as well as coordinating with the Central Bank of Iraq to provide low-interest loans for their purchase.
Regarding financing, the Central Bank of Iraq launched an initiative to fund the purchase and installation of solar energy systems through various state-owned and private banks with the aim of encouraging the use of renewable energy sources and reducing reliance on the national electricity grid.
In this regard, official spokesperson for the Central Bank of Iraq Mahmoud Dagher told QNA that the initiative is part of the Bank’s efforts to support projects that contribute to sustainable development and promote the use of renewable energy sources by providing the necessary financing to citizens and entrepreneurs across various sectors.
He explained that the initiative enables citizens, as well as owners of industrial, agricultural, commercial, and service-oriented enterprises, to obtain low-interest loans for the purchase and installation of solar energy systems. He noted that the loan limit for individuals is up to 30 million Iraqi dinars, with an annual interest rate of 3%, and a repayment period of up to seven years, including a six-month grace period.
He emphasized that the initiative aims to expand the use of solar energy systems in homes and economic projects, and to provide alternative energy sources, thereby helping to alleviate pressure on the national electricity grid and creating opportunities for increased investment in the renewable energy sector.
Regarding the economic viability of this transition, specialist in renewable energy Dr. Abdul Rahman Mohammed explained to QNA that Iraq possesses significant natural and economic assets that position it well to expand renewable energy production, particularly solar energy, given the country’s high levels of solar radiation and the availability of vast land suitable for such projects. He noted that leveraging these potential resources could help strengthen energy security and reduce reliance on fossil fuels.
Dr. Mohammed explained that Iraq’s electricity sector remains heavily dependent on oil and gas. Data from the US Energy Information Administration indicates that approximately 99% of electricity generation relies on these two sources, while the contribution of solar energy remains limited, despite the available potential and the government’s stated intent to diversify energy production sources.
He added that Iraq faces a clear gap between available energy and the volume of demand, particularly during the summer season. During the 2024 peak, available electrical capacity reached approximately 25,000 megawatts, compared to an estimated requirement of about 48,000 megawatts, a situation that necessitates the expansion of power generation projects, the development of transmission and distribution networks, and the enhancement of the efficiency of existing power plants.
Dr. Mohammed pointed out that solar energy could help reduce the electricity deficit, particularly during daylight hours, when high demand coincides with the availability of solar radiation, while also lowering fuel consumption in power generation plants and freeing up additional quantities of oil and gas for use in other economic sectors.
He emphasized that the transition toward renewable energy does not mean an immediate abandonment of oil and gas; rather, it entails integrating traditional and clean energy sources, while simultaneously utilizing associated gas, improving the efficiency of power generation plants, and developing transmission and distribution networks.
For her part, Shaimaa Al Tamimi, rapporteur of the National Initiative for Energy Support and Emission Reduction, a government-led initiative involving approximately 80 Iraqi state entities, affirmed that the initiative has made progress in implementing solar energy projects, including expanding the development of investment-based solar power plants, installing clean energy systems in government buildings and public service institutions, and promoting the use of such systems within the residential sector.
In a similar statement to Qatar News Agency (QNA), Al Tamimi said that the Ministry of Electricity has entered into contracts with international companies, including the French company TotalEnergies, to carry out investment projects for the construction of solar power plants with a total capacity of 12,000 megawatts, as part of efforts to boost electricity generation from renewable energy sources.
She added that the government plan aims to install solar energy systems in 850 government buildings, 550 of which are funded by the government and 300 by international funding, noting that approximately 220 buildings will be completed this year at a total cost of about 90 billion Iraqi dinars, as part of the project's first phase.
She explained that clean energy projects have expanded to several governorates and ministries. In Kirkuk Governorate, systems were installed in 90 government buildings, while more than 400 solar-powered systems were supplied to pump water from wells for the Ministry of Water Resources, and 450 telecommunications towers were powered using clean energy.
For his part, the official spokesperson for the Baghdad National Investment Commission (NIC) of Iraq Salam Al Rubaie, an Iraqi government body with an independent legal status, affirmed that renewable energy and waste-to-energy projects are a priority within the Iraqi government’s strategy to diversify energy sources and reduce reliance on fossil fuels, noting that several investment licenses have already been granted for the implementation of solar and clean energy projects.
Al Rubaie told QNA that one of the most prominent of these projects is a solar power plant in Basra Governorate, being developed by the French company TotalEnergies. The plant will have a production capacity of 1,000 megawatts, an estimated investment cost of around $820 million, and will span an area of 9,000 dunums, with an investment term of 25 years.
He added that the company has granted two investment licenses to ALBILAD for General Contracting Co. Ltd. to develop solar power plants: the first in the Al-Iskandariya district of Babylon Governorate, with a capacity of 225 megawatts, and the second in Karbala Governorate, with a capacity of 300 megawatts, a combined output of 525 megawatts, adding that the Authority is also encouraging investors in residential complexes to utilize alternative energy sources to supply electricity to residential units, thereby helping to ease the load on the national grid and reduce reliance on it.
Regarding the waste-to-energy sector, Al Rubaie noted that Iraq granted the first investment license for 2025 to a specialized Chinese company for a project focused on waste processing and clean electricity generation, a site has been allocated for the project in Al-Nahrawan area, southeast of Baghdad, with a contract value of approximately $497 million. He explained that the project entails the construction of a facility designed to receive and process 3,000 tons of solid waste per day, supplied by the Baghdad Municipality, to generate between 90-100 megawatts of clean electricity, which will be fed directly into the national grid.
From an economic perspective on the importance of transitioning toward clean energy, Chairman of the Board of the Green Islamic Bank for Sustainable Development and head of the Baghdad Center for Renewable Energy and Sustainability (BRESC) Mohammed Shakir Al Dulaimi emphasized that expanding this sector is no longer merely an environmental choice; it has become an economic and strategic necessity to bolster energy security, reduce reliance on imported fuels, and shield the national budget from the volatility of oil markets.
In a statement to the QNA, Al Dulaimi said that recent developments in the region have highlighted the extent to which the Iraqi economy is vulnerable to external shocks, a result of its heavy reliance on oil revenues, with an ongoing need to import gas to fuel its electricity generation plants.
He explained that this interdependence reveals a dual challenge for Iraq: the vulnerability of its financial resources to any decline in oil exports, and the impact on its capacity to provide electricity whenever fuel supplies are disrupted, noting that investing in renewable energy could help address a significant part of this problem by providing local, sustainable energy sources and reducing the consumption of conventional fuels.
He added that Iraq has significant solar energy potential with annual sunshine exceeding 3,000 hours, and one kilowatt of solar panels can generate about 1,800 kilowatt-hours annually, levels that make economically viable projects possible. However, renewable energy's contribution remains limited compared with the country's available potential, underscoring the need to move from the stage of planning and agreements to the actual implementation of projects.
He explained that the cost of financing is a critical factor in determining the price of electricity generated by solar power plants, noting that if the cost of financing rises to approximately 16%, the production cost per kilowatt-hour could increase to nearly 6.7 cents; conversely, if the cost of financing drops to 8%, supported by long-term contracts and reliable guarantees, the price could fall to around 4.1 cents, emphasizing that this difference has a direct impact on production costs and government expenditure; for a 1,000-megawatt plant, it could yield annual savings exceeding $40 million, underscoring the importance of investment guarantees in reducing the final cost of projects and enhancing their attractiveness to investors.
He stressed that a successful transition to renewable energy requires building an integrated system that combines solar and gas-fired power plants, with solar plants meeting part of the daytime load and gas-fired plants helping meet demand during the evening and nighttime hours, thereby ensuring a stable and uninterrupted electricity supply.
He concluded by affirming that the next phase requires moving from signing framework agreements to implementing actual projects, which entails enacting specialized legislation for renewable energy, establishing independent oversight and regulatory mechanisms, providing reliable financial guarantees, and preparing project sites, indicating that the success of these measures would transform renewable energy into an economic driver, helping to alleviate the state’s financial burdens, reduce electricity costs for citizens, and bolster both energy security and sustainable development. (QNA)