Iraq, the most oil-dependent economy in the world, is home to nearly 4.3 million people and shares borders with Turkey, Iran, Kuwait, Saudi Arabia, Jordan and Syria. Due to decades of ongoing wars and political unrest in the Middle Eastern country, its electricity grid network has withered, which has led to chronic power cuts across the country. Thus, the supply of reliable and uninterrupted power is a distant dream for the government.
Due to lack of new investment in rehabilitation and expansion of power facilities, Iraq has failed to meets its own power demand, resulting in power cuts and rationalisation. These continuous power shortages have also induced public anger, leading to mass protests across the country. To meet its power demand, the oil-rich country imports electricity from Iran and also consumes Iranian natural gas to feed its power plants even though it is the second largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC) after Saudi Arabia.
This power reliance has created new problems for the Iraqi government. Since 2018, Iraq has been unable to pay its dues to Iran for electricity imports and is now dependent on support from the United States to grant waivers from sanctions, with the last such waiver announced in May 2020 for 120 days.
The waivers have been granted on the condition that Iraq will work towards attaining energy self-sufficiency. Iraq is also opening up to the possibility of importing electricity from Turkey, Jordan, Kuwait and Saudi Arabia.
Currently, Iraq generates around 15 GW of electricity and is 9 GW short of the estimated demand of 24 GW. Iraq’s electricity demand is expected to double by 2030. To meet the increasing demand, the Iraqi MoE hopes to add 1 GW of renewable-based capacity every year until 2030. It also targets generating 20 per cent of its power from cleaner sources as it has huge potential for solar and wind power.
Further, the country’s transmission network is dilapidated and urgently requires upgrade and expansion. As per the Iraq Energy Institute, about 30-50 per cent of electricity generated is lost due to an inadequate transmission and distribution (T&D) network. The majority of the network has become defunct due to years of war. Currently, the majority of the transmission lines are not fully capable of transmitting power and are also unable to accommodate the increasing load on the grid network.
To improve the condition of the T&D network in the country, the Iraqi government in April 2019 signed a USD15 billion contract with Germany-based Siemens for the execution of the Roadmap for the Electrification of the New Iraq. Under the roadmap, Siemens will rehabilitate and reconstruct the electricity infrastructure in a phased manner over four years. Siemens will work on a three-phase overhaul plan to reduce energy losses, introduce smart grids, strengthen the grid, rehabilitate existing power plants, add new generation capacity (around 11 GW) and connect Iraq to the Gulf region.
Iraq has also signed a memorandum of understanding (MoU) with the Gulf Cooperation Council (GCC) Interconnection Authority (GCCIA) for importing 500 MW of electricity through a 300-km-long transmission line from Kuwait to Iraq. The project is also receiving support from the US, as in future it will reduce Iraq’s dependence on Iran for power imports.
Lately, Iraq has been receiving support from several countries, private companies and multilateral donor institutions for improving its power situation and making it an energy independent nation.
Industry structure and power sector overview
Iraq’s Ministry of Electricity (MoE), established in 2003, is responsible for both policymaking and electricity supply throughout the country. Power generation, transmission and distribution of electricity are undertaken by state-owned companies (four for each segment) under the supervision of MoE.
The four companies responsible for power generation are General Company for Electricity Production – Northern region, Southern region, Middle region and Al Furat Middle region. Similarly, for the transmission sector, the General Company of Electricity Transmission – Northern, Southern, Middle regions and Upper and Middle Euphrates are responsible for power transmission in the country as per their respective region. Lastly, the General Company of Baghdad Electricity Distribution, General Company of Middle Electricity Distribution, General Company of South Electricity Distribution, and General Company of North Electricity Distribution are responsible for power distribution in the country.
As per the MoE, Iraq’s installed generation capacity was around 27.6 GW as of the end of 2018. However, the actual available domestic capacity was only 9 GW while another 3.6 GW was imported power capacity. By the end of 2018, the country had about 15,873 km of transmission lines and 54,598 MVA of transformer capacity at the 132 kV and 400 kV voltage levels. Around 73 per cent (11,567 km) of the total line length and 64 per cent (35,098 MVA) of the total transformer capacity are at the 132 kV voltage level.
Recent initiatives and key projects
Siemens roadmap: In 2018Siemens and the MoE entered into a USD15 billion agreement for the implementation of the Roadmap for the Electrification of the New Iraq,which entails short-, medium- and long-term plans to meet the reconstruction goals of Iraq and support the country’s economic development. The first phase entails the development of 13, 132 kV substations and the installation of 35 power transformers; the construction of a 500 MW gas-fired power plant and the upgrade of 40 gas turbines with upstream cooling systems; and the rehabilitation of the Al-Tawheed Clinic. The second phase entails the reconstruction of the Baiji 1 and 2 power plants to power homes in liberated areas. The scope of the last phase is yet to be determined. The roadmap will add around 11 GW of generation capacity to the Iraqi grid.
Grid link with GCCIA: In 2019, Iraq signed an MoU with the GCCIA for importing 500 MW of electricity to help overcome the country’s persistent power outages. The planned power import will be through a 300-km-long transmission line from Kuwait to Iraq’s southern port of Al Faw. The line will be constructed at a cost of USD220 million, which is to be funded by the GCCIA. The project will help in the supply of electricity from the six members of the GCC [Kuwait, Saudi Arabia, Bahrain, Qatar, Oman and the United Arab Emirates (UAE)] to Iraq. The US is taking a keen interest in the project as it will reduce Iraq’s dependence on neighbouring Iran for electricity, and the US has been repeatedly granting Iraq waivers for its import of electricity from Iran. As per the latest development, the grid project has been delayed due to the COVID-19 pandemic, which has led to financial constraints due to weak oil prices. The link was initially scheduled for completion by October 2020.
Electricity Sector Reconstruction Project (Phase 2): The Electricity Sector Reconstruction Project involves rehabilitation of the power infrastructure in Iraq to stabilise the power supply, thereby contributing to socioeconomic reconstruction in the country. The project, which is being financially supported by the Japan International Cooperation Agency (JICA), involves setting up 23 mobile substations (13×25 MVA 132/33 kV; and 10×25 MVA, 132/11 kV) to be installed in Baghdad, Dhi Qar, Babil, Diyala, Anbar, Najaf, Qadisiya, Kerbala and Muthanna. Recently, Linxon, a joint venture (JV) between Swiss-Swedish multinational corporation ABB and Canada’s engineering services company SNC-Lavalin, bagged a USD80 million contract from the MoE for the engineering, procurement and construction (EPC) of four 132/33 kV gas-insulated switchgear (GIS) substations under Phase 2 of the project.
Iraq is also part of the Arab Common Market of Electricity, which will be an integrated electricity supply system for the power grids of the Arab countries. Recently, the Arab Ministerial Council of Electricity approved two key agreements under the programme—the General Agreement and the Arab Common Market Agreement—for the functioning of the joint market. The MoU regarding the same was signed by Egypt, Kuwait, Saudi Arabia, UAE, Bahrain, Algeria, Sudan, Iraq, Oman, Qatar, Comoros, Libya, Morocco and Yemen during the 12th session of the Arab Ministerial Council of Electricity in April 2017.
Other import measures: In 2019, the consultative assembly of Saudi Arabia, or Shura Council (formal advisory body of the Kingdom of Saudi Arabia), approved an MoU signed between Saudi Arabia and Iraq for the supply of electricity to the latter by the summer of 2020 and further cooperation in the sectors of industry and minerals.
As the country continues to struggle to add power capacity due to a political deadlock and the ongoing COVID-19 pandemic, Iraq recently signed a two-year agreement (2020 and 2021) with Iran for importing electricity from the latter. The first power contract between the two countries was signed in 2005, under which Iran was required to export 150 MW of power to Iraq. The contract has been extended every year. In terms of interconnections, Iraq and Iran’s power grids were synchronised via the 73-km-long, 400 kV Amarah–Karkheh transmission line in November 2019. The interconnection allows two-way exchange between both countries and will enable the increase of power export to Iraq in the future.
The country also plans to import 200 MW of electricity from Turkey and 450 MW of power from a Kurdistan-based company, KAR Group. The temporary imports will help improve power supply so as to handle the hot summer season. Iraq also plans to import electricity from its neighbour Jordan.
International assistance: Iraq has been seeking help from various international energy companies to rebuild its dilapidated power infrastructure, which has been damaged by decades of war. The country requires USD3 billion to upgrade its T&D network in order to evacuate power from upcoming power plants and to reconstruct its power infrastructure. Of the total, USD2 billion will be spent on the transmission network and USD1 billion on the distribution network. The plan focuses on making the national grid capable of delivering 20 hours of electricity a day across the country.
The Iraqi power sector is going through challenging times and the country must overcome the bottlenecks in the sector. It is important for Iraq to reduce its power dependence on neighbouring countries by building in-house capacity. It must also streamline its efforts to provide affordable and reliable electricity to consumers by focusing on reducing network losses, strengthening regional interconnections, fully utilising the existing power plants and increasing the share of renewables in the power supply mix. The stakeholders of the sector should now focus on formulating plans and programmes for modernising and expanding the country’s T&D network to address the current issues. In future, the right initiatives in the power sector will help Iraq provide reliable, affordable and sustainable electricity to its citizens, which will help in the economic growth and development of the country.