Following a summer of widespread blackouts and record heat, and in the wake of June military strikes by Israel and the U.S. on its nuclear sites, Tehran is pursuing an ambitious—and contentious—energy pivot. Confronted with a crippling domestic energy crisis, the recent snapback of U.S. and UN sanctions has sharply constrained access to technology, finance, and specialized imports necessary to operate and modernize its energy infrastructure.
Iran has leaned harder on Russia and China to stabilize its power sector and pursue long-term energy self-sufficiency, expanding nuclear plans and accelerating renewables deployment. But these projects may never materialize—and even if they do, they are years from offering relief. For now, Tehran still faces power shortages, industrial strain, and public frustration, underscoring the limits of foreign partners in easing its immediate crisis. With winter approaching, another energy crunch looms.
A Crisis Decades in the Making
Iran’s energy crisis did not erupt overnight. It is the culmination of decades of policy distortions, chronic underinvestment, and international isolation. The country—endowed with the world’s second-largest proven gas reserves and fourth-largest crude oil reserves—ought to be an energy superpower. Instead, it is struggling to keep the lights on.
Over 70% of the country experienced unannounced blackouts by February 2025, some lasting hours or even days. In August, 16 of Iran’s 31 provinces were forced into complete shutdown amid what state media described as an “energy imbalance.” Schools and government offices were closed; streetlights and public lighting in Tehran went dark. President Masoud Pezeshkian took to national television to plead with citizens to lower home temperatures by two degrees Celsius to ease the grid’s burden.
Years of sanctions and mismanagement have left Iran’s energy infrastructure decrepit. More than 86% of its electricity comes from gas-fired plants, leaving it dangerously exposed to supply disruptions. Even before the latest attacks, shortages of natural gas had forced authorities to burn mazut—a cheap, polluting heavy fuel oil—to keep power plants running. The environmental consequences have been severe. Tehran’s air quality ranks among the world’s worst, with pollution levels wildly disproportionate to its economic output.
Compounding the problem, Iran’s energy efficiency is abysmal. It consumes more energy per capita than many developed nations, yet its energy intensity (i.e., energy used per unit of GDP) is one of the highest globally. The government spends an estimated $127 billion annually on energy subsidies, a fiscal hemorrhage that discourages conservation and entrenches waste. Last December, then-Minister of Economic and Financial Affairs Abdolnasser Hemmati emphasized that the country is nearing the limits of its capacity to fund subsidies and stressed that structural reforms are urgently needed. Echoing those remarks, President Pezeshkian has recently warned that Iran’s energy use, costing roughly $180 billion a year, is untenable without deep structural reforms and broad national cooperation.
Sanctions, Sabotage, and Systemic Weakness
The crisis deepened following the devastating 12-day war in June, during which Israeli strikes damaged oil storage sites, refineries, and power stations. A year earlier, Israel had blown up two major Iranian gas pipelines, disrupting supplies that provide roughly 70% of the country’s energy use. The physical destruction compounded what sanctions had already inflicted: a sector starved of capital, technology, and spare parts.
Iran’s grid is also increasingly vulnerable to cyberattacks. Outdated control systems and fragmented oversight expose refineries and transmission lines to both foreign and domestic threats. U.S. and allied sanctions—reactivated under the UN’s “snapback mechanism” after the rejection of a China- and Russia-backed resolution seeking a delay—have made even basic maintenance a logistical challenge. As a result, power losses during transmission and distribution remain high, and major industrial producers are periodically ordered to halt operations to conserve electricity.
Against this backdrop of mounting pressure, Tehran has turned to its few remaining allies for relief and for legitimacy.
The Russian Reactor Gambit
In September, Tehran and Moscow signed a $25 billion agreement to construct four new nuclear reactors in southern Iran’s Hormozgan Province. The project, centered in the coastal city of Sirik across from the UAE and Oman, envisions four Generation III units generating up to 5 GW of electricity. Iranian officials later revealed that the long-term goal is to reach 20 GW of nuclear capacity by 2040, including eight planned reactors.
The new accord builds on earlier cooperation: Russia’s state nuclear agency, Rosatom, built Iran’s only operational nuclear plant at Bushehr and has now committed to constructing both large-scale and small modular reactors (SMRs) under the Iran–Hormoz Nuclear Power Plant Project. The deal was signed amid broader bilateral discussions under the Comprehensive Strategic Partnership Treaty inked in January 2025, which also covers energy swaps and infrastructure cooperation.
For Tehran, these agreements serve multiple purposes. Domestically, they project an image of defiance and self-reliance. Internationally, they signal Iran’s determination to pursue civilian nuclear energy despite sanctions and sabotage. Yet the arrangement carries clear risks. Moscow’s leverage over Tehran—already deepened by cooperation on oil swaps and defense ties—will only increase as Iran becomes more dependent on Russian financing, technology, and nuclear fuel supply.
Moreover, the project’s timing—just as the UN Security Council rejected a Russia–China resolution to delay snapback sanctions—raises questions about its viability. International suppliers are unlikely to provide critical components under renewed restrictions. Even if construction proceeds, delays and cost overruns are almost certain. The specter of further Israeli or U.S. strikes on nuclear infrastructure looms large.
Betting on Beijing: Solar, Storage, and Barter
If Russia offers nuclear capacity and strategic backing, China offers the hardware and capital Tehran desperately needs to modernize its power mix. Under Iran’s 25-year Comprehensive Cooperation Agreement with China (concluded in 2021), Beijing has emerged as the indispensable partner for the country’s renewable energy ambitions.
According to Caspian News, Tehran is negotiating with several Chinese firms to develop large-scale solar power plants and battery energy storage systems (BESS). In August, Bushehr provincial officials announced the construction of a 200 MW solar project involving over $70 million in Chinese investment in partnership with Iran’s Renewable Energy and Energy Efficiency Organization (SATBA). Weeks later, Energy Minister Abbas Aliabadi declared that Iran would install 7 GW of new solar capacity by year’s end, with construction proceeding at roughly 100 MW per week.
Chinese suppliers are central to this push. In September, SUNROVER, one of China’s top photovoltaic manufacturers, secured a 15 MW solar contract in Iran. Another major deal, between LDK Solar and Iran’s Ghadir Investment Group, is valued at roughly $1.2 billion and expected to produce 2 billion kWh annually.
Beijing’s dominance in the solar supply chain gives Tehran access to affordable, rapidly deployable technology—something Western sanctions have long denied. In May 2025, Iran received two trainloads of solar panels from China via the Incheh Borun border crossing, with customs clearance at the new Aprin logistics hub, marking the start of regular solar panel shipments to Iran. Pezeshkian has emphasized solar development in the country’s southern regions along the Persian Gulf and the Sea of Oman, where coastal desalination projects make renewable power even more critical.
For a country with 300 days of sunshine annually and high solar irradiation, the pivot makes sense. Yet execution remains uncertain. Financing large-scale renewable projects is hampered by the plummeting value of the rial and a banking system cut off from international finance. According to Deutsche Welle, political instability and sanctions continue to discourage long-term investment. Even with Chinese backing, Iran’s ability to absorb and maintain imported technology is constrained by shortages of skilled labor and materials.
Between Aspiration and Reality
Tehran’s drive to diversify its energy mix reflects both necessity and ambition. Official data show that Iran’s renewable generation capacity recently surpassed 2,550 MW, with another 400 MW under construction. But that figure still represents barely one percent of total power generation—far too little to alleviate the strain.
The government’s energy-saving incentives (i.e., offering discounts on appliances, EVs, and internet packages to households that cut consumption) have achieved only marginal results. Critics argue these schemes treat symptoms rather than causes. Without reforming pricing, reducing subsidies, and modernizing infrastructure, the grid will remain overstretched.
Meanwhile, Tehran continues to export electricity to Afghanistan and Pakistan, even as domestic users endure outages. In October, Iran’s power company admitted that the country imports nearly twice as much electricity as it exports, yet still faces persistent shortages. The contradictions underscore the regime’s struggle to balance economic imperatives with political image.
The Regional Context
Iran’s energy predicament stands in stark contrast to its Gulf neighbors. The United Arab Emirates has completed four large reactors at Barakah, producing nearly 6 GW. Saudi Arabia, Egypt, and Turkey are all advancing nuclear programs of their own. Over 30 countries globally have now pledged to triple nuclear capacity by 2050, and major financial institutions, including the World Bank, have reversed earlier prohibitions on nuclear investments.
Iran’s new partnership with Russia seeks to place it back within this global nuclear renaissance. Yet given Tehran’s past violations of nuclear agreements and ongoing concerns about weaponization potential, the program remains under scrutiny. U.S. officials, including President Donald Trump, have called for the “total dismantlement” of Iran’s nuclear program but have hinted at tolerance for civilian energy projects. The challenge lies in convincing the international community that these reactors will not provide cover for military ambitions.
A Fragile Lifeline
Both Russia and China view Iran’s energy predicament through a geopolitical lens. For Moscow, helping Tehran expand civilian nuclear capacity enhances its regional influence and solidifies a sanctions-proof partnership at a time when both nations are isolated by the West. For Beijing, Iran is a crucial energy partner and a node in the Belt and Road Initiative, linking Central Asia to the Gulf. Its investments in Iran’s solar infrastructure complement its long-term goal of dominating global clean-energy supply chains.
But Iran’s growing reliance on these two powers may prove a double-edged sword. Moscow’s track record on nuclear cooperation, marked by cost overruns and delivery delays, raises doubts about whether the new reactors will ever be completed on schedule. Beijing, for its part, rarely invests in projects that do not serve its own strategic or economic interests. Iran’s mounting debt, currency collapse, and lack of transparency make it a risky partner even for China’s state-backed firms.
Furthermore, technological dependence on Russia and China risks locking Iran into asymmetric relationships that limit its autonomy. Nuclear cooperation agreements often entail decades-long fuel and maintenance contracts; solar supply chains can be disrupted by export controls or political pressure. If either ally recalibrates its foreign policy, Iran could again find itself isolated—and in the dark.
A Contested Path Forward
Iran’s current trajectory reveals both the urgency of its energy transition and the hazards of its geopolitical entanglements. Pursuing nuclear and renewable energy simultaneously may appear pragmatic, a bid to stabilize the grid while signaling defiance of Western pressure. Yet without broader economic reform and infrastructure renewal, these efforts could amount to little more than crisis management.
Rising electricity tariffs introduced in late August 2025 have sparked public outrage. Citizens see the hikes as punishment for a crisis not of their making. Meanwhile, industrial productivity continues to decline, and air pollution worsens as mazut-burning persists. Unless Tehran can attract consistent foreign investment and manage its subsidy system, its energy woes will persist despite technological advances.
The irony is that Iran’s immense hydrocarbon wealth has become a liability. Overdependence on natural gas for power generation has created a brittle system ill-suited for the era of climate change and geopolitical volatility. As droughts intensify and water scarcity worsens, energy and environmental crises are converging. The regime’s short-term fixes—importing electricity, bartering oil for solar panels—cannot substitute for structural reform.
Conclusion
In theory, Iran’s partnership with Russia and China could help it overcome its immediate energy shortages and modernize its grid. The Russian-built reactors might eventually provide a stable baseload, while Chinese solar investments could harness the country’s vast natural potential. But these projects are unfolding under immense uncertainty—political, technical, and financial.
In practice, Tehran’s energy pivot reflects a defensive adaptation rather than a coherent strategy. Sanctions, sabotage, and internal mismanagement have left it few options. Turning to Moscow and Beijing may offer short-term relief and symbolic defiance, but it deepens structural dependence and postpones the reckoning with decades of policy failure.
As Iran struggles to power its homes and factories, its leaders are betting that atomic energy and Chinese solar panels can light the way forward. Whether those bets pay off or merely entrench new dependencies will determine not only Iran’s energy future but also the contours of its geopolitical survival. Addressing parliament in mid-November during an open session reviewing the first year of Iran’s Seventh Development Plan, President Pezeshkian asserted that, unlike last year’s power cuts and fuel shortages, “many of those problems have now been resolved.” With winter fast approaching, it remains to be seen whether his confidence is justified.
