Iran isn't short of sunlight. Much of the country gets more than 300 clear days a year, and in the southeastern deserts the direct sunlight is strong enough that a solar panel there will produce roughly a quarter more electricity over a year than the same panel in southern Europe. For a power system that leans almost entirely on natural gas and runs short every summer, that is an awkward advantage to have left largely unused. Tehran is now trying to change that, and the policies it has put in place over the past year are beginning to show up in installation numbers.
The most apparent project is directed towards everyday people. The government aims to have a plan called "Every Home, a Power Plant" where 600,000 houses will be equipped with solar panels and batteries. Currently, approximately 51,000 are completed. State banks provide finance for as much as 80% of the expense through subsidized loans and the owners can return the surplus of electricity to the grid. Officials state that a regular system will return its value in three to four years. Abbas Aliabadi, the Energy Minister, called this program a question of "passive defense" claiming that a network containing thousands of small power generators is more durable than the one that is based on several main power stations.
For larger projects, the government has restored a 20-year power purchase agreement that is indexed to the exchange rate, which matters in a country where currency swings have repeatedly wrecked the economics of long-term contracts. Purchase rates for small and medium-sized plants were raised by roughly half this year. The renewable energy organisation, SATBA, says it has issued permits for more than 29 GW of projects, and the central bank has set aside US$1.7 billion for renewables, with domestically made panels given priority for the cheapest financing.
The results are showing. Installed renewable capacity has passed 6 GW, up from about 1.2 GW two years ago, and solar accounts for the bulk of it. The government is aiming for 12 GW by next summer. A 5 GW complex is planned in Isfahan province, on about 6,000 hectares of land, with private investors putting up most of the US$2.8 billion. Smaller plants are coming online steadily - two 20 MW stations in Fars and Razavi Khorasan provinces began operating on Nov. 1, and an 80 MW plant was connected in Khatam county in late October.
The reasons go beyond adding electricity. Each megawatt of solar installed creates around eight direct jobs, and the sector employed about 33,500 people in 2022, with official projections of more than 600,000 by mid-century if solar's share of the energy mix reaches 2.5%. Solar also displaces gas that can be exported or stored, and it uses almost no water - a real consideration in a country facing chronic drought. Officials estimate the current build-out is already avoiding more than a million tonnes of CO2 a year and saving over 400 million cubic metres of gas annually.
The obstacles are just as real. Domestic factories make only about 23% of the solar cells the country needs, so the supply chain depends on imports and is exposed to sanctions and currency pressure. Grid connection is another bottleneck; officials themselves name it as one of the two constraints most likely to determine whether the 12 GW target is met. And subsidised electricity, priced at around 4 US cents a kilowatt-hour, still makes it hard for households to justify solar without the cheap loans, since grid power remains cheaper than self-generated power in many cases.
Still, the direction is clear. Iran has some of the best sunlight in the world, a power system that struggles every summer, and now a set of policies - subsidised household loans, index-linked tariffs, and priority financing for domestic manufacturing - that address the main barriers. The question is no longer whether solar makes sense in Iran. It is whether the panels, the grid connections and the financing can arrive fast enough to matter.
