Iraq continues to invest heavily in power generation as clean energy growth remains slow. Iraq electricity spending exceeded $4.3 billion by September 2025, according to new data.
The Eco Iraq Observatory released the figures on Saturday in Baghdad. The report highlighted major gaps between electricity demand and supply. Moreover, it showed limited progress in renewable energy adoption.
According to the Observatory, Iraq relies almost entirely on fossil fuels for electricity generation. Traditional energy sources currently account for about 98 percent of total output. In contrast, renewable energy contributes only around two percent.
This renewable share includes hydropower and solar energy projects. However, these sources remain far from meeting national demand. As a result, Iraq continues to face power shortages during peak periods.
Electricity production currently reaches approximately 28,000 megawatts. Meanwhile, actual demand requires nearly 50,000 megawatts to ensure full coverage. Therefore, the existing gap places pressure on infrastructure and public services.
The report also highlighted electricity pricing across the country. Iraq sells power at some of the lowest rates globally. Tariffs range between 1.5 cents and 4.6 cents per kilowatt hour.
These prices place Iraq seventh worldwide for cheap electricity. Additionally, the country ranks second among Arab states for low tariffs. While low prices support consumers, they also strain government finances.
Eco Iraq explained that Iraq electricity spending continues to rise because of inefficiency. Power waste remains widespread across residential and commercial sectors. Furthermore, violations on the national grid worsen supply losses.
The Observatory stressed the need for urgent reforms. These include reducing illegal connections and upgrading outdated household equipment. At the same time, authorities must encourage responsible consumption nationwide.
In October, the government launched a major renewable energy initiative. The program carries an estimated value of $6 billion. It aims to produce up to 12 gigawatts of clean power by 2030.
The plan involves partnerships with international energy companies. These include TotalEnergies, Masdar, and PowerChina. Together, the projects could add nearly 10,000 megawatts to national capacity.
Officials hope renewable expansion will reduce fuel dependence. Moreover, it could lower long-term costs and improve environmental sustainability. Still, progress remains slow compared to investment levels.
Observers argue that funding alone cannot solve the electricity crisis. Instead, structural reforms must accompany financial commitments. Grid modernization, energy efficiency, and accountability remain essential.
Despite ambitious plans, Iraq electricity spending continues to favor conventional power sources. Until renewable projects accelerate, fossil fuels will dominate the energy mix.
Analysts warn that delays could deepen future shortages. Therefore, consistent implementation and oversight remain critical. The coming years will determine whether Iraq can close its power gap sustainably.
