KARBALA, Iraq, Sept. 23, 2025 – Iraq marked a significant milestone in its energy transition on Sunday as Prime Minister Mohammed Shia’ al-Sudani inaugurated the first phase of the country’s largest solar power plant to date in the desert of Karbala province, a crucial step toward addressing chronic electricity shortages that have plagued the oil-rich nation for decades.

The video-conference inauguration ceremony represents Iraq’s earnest commitment to diversifying its energy supply and reducing its reliance on fossil fuels and imported energy. The project is the first industrial-sized solar project in a country that has long struggled to meet its electricity needs despite being endowed with large oil and gas reserves.

Strategic Importance of the Karbala Solar Plant

Situated in the al-Hur desert, southwest of Baghdad, the Karbala Solar Power Plant is approximately 1,000 hectares (2,500 acres) in size and dozens of rows of solar panels are spread across the whole expanse. Seen from above, the site evokes what one of the project executives described as “a city in black, surrounded by sand.”

According to the Prime Minister’s Office, the plant now produces 22 megawatts (MW) of energy, and it is expected to reach 75 MW of output in the next two months. The plant will produce up to 300 MW of power when it reaches maximum production during peak hours, making it the largest large-scale renewable energy project in Iraq currently.

Nasser Karim al-Sudani, head of the national team for solar energy projects in the Prime Minister’s Office, stated, “These projects represent part of a larger vision to help satisfy a portion of Iraq’s electricity needs, utilizing utility-scale solar power plants which can help alleviate the electricity crisis in addition to minimizing the negative environmental impacts from gas emissions.”

Safaa Hussein, the chief executive of the new solar plant, indicates that the aim of the facility is to “provide the national network with electricity, and reduce fuel consumption, particularly during daytime peak load, and reduce the negative impact on the environment from gas emissions”.

Addressing Iraq’s Electricity Crisis

For many years, Iraq has experienced ongoing electricity shortages even though it has abundant oil and gas reserves. Power outages are a result of the war, corruption, and poorly managed resources. Most electric failures take place in the summer months when the hot weather reaches temperatures above 50 degrees Celsius (122 degrees Fahrenheit). On days when the grid goes down, many Iraqis have no choice but the to pay for costly diesel-powered generators.

Iraq’s power shortage is considerable. Adel Karim, the Deputy Minister of Electricity, states that Iraq generates a total of electricity between 27,000 and 28,000 megawatts, while demand is between 50,000 and 55,000 megawatts. Because of the supply to demand gap, Iraq depends on energy from other nations, primarily Iran.

Iranian gas power plants provide an estimated current supply of 8,000 megawatts to the Iraqi grid; however, there have been additional complications due to the U.S. sanctioning Iran. Earlier this year, Washington revoked its waiver that permitted Iraq to purchase electricity out of Iran, but it has extended a waiver for Iraq to import gas.

The Karbala facility is one component of a wider solar project that includes several additional noteworthy projects across the country. Officials report construction is underway on a 225 MW solar facility in Babil province, and work will begin soon on a large 1,000 MW facility in Basra province in the south.

Iraq’s Ambitious Renewable Energy Goals

The Karbala solar project marks a notable milestone for the advancement of Iraq’s ambitious, long-term aims for renewable energy and has the potential to be both a precursor and model for a diverse and cohesive renewable energy structure. Iraq is currently looking to produce 20% of its energy from renewables by 2030 – they aim to have 12 GW of renewable energy capacity installed. Deputy Minister Karim announced their current renewables capacity through solar projects, either underway, approved, or under negotiation, is 12,500 MW.

“If they are all constructed and filled with panels we would provide 15% to 20% of the entire country’s electricity load,” not counting the semi-autonomous northern Kurdish region, said Karim. “All the companies that we have a signed contract with, or are in negotiation with, will sell us electricity at very favorable prices, and then we sell it to the consumer.”

Iraq enjoys one of the best natural resources for solar development, with over 3,000 hours of sunshine every year, and 2,200 kWh/m2 of solar irradiance levels in the southern parts of the country, making Iraq one of the best regions in the world in available irradiance for solar photovoltaic energy.

International Partnerships and Future Prospects

Under Iraq’s invitation to invest in solar energy, there is significant international interest. Iraq is currently negotiating with major regional players such as mega-project builders Saudi Arabia’s ACWA Power and the UAE’s Masdar for projects of 2 GW. Additionally, significant investments are coming from French and Chinese firms for larger solar projects.

In April 2025, Iraq entered into memoranda of understanding with U.S. firms to develop 3 GW of solar generation capacity, including 500 MWh of energy storage and upgrades to transmission. Included in the memoranda are expectations for technology transfers, training of personnel, and management of maintenance for power stations in the first two years of planning.

The government has pursued national policies to promote distributed solar generation. In April 2025, the Central Bank of Iraq bore the preconditioned criteria for providing low-interest loans for individuals’ and businesses’ solar panel capacity installations.

Karbala Governor Nassif al Khattabi has located a tract of land of 8,000 dunums (~20 square kilometers) for a new renewable energy project to produce energy at 1,000 megawatts, which may help the expansion of solar capacity in the province.

Challenges and the Road Ahead

Although the opening of the Karbala plant is a positive step, Iraq is still facing major challenges in making the transition to its energy systems. The country’s grid system must be improved in order to ramp in intermittent renewable energy sources. Political instability, corruption, and security issues continue to hinder foreign investment in the energy sector.

According to the World Bank, Iraq needs approximately $350 billion to rebuild its electricity system after decades of under-investment and conflict. The country has committed to halve greenhouse gas emissions by 2030 and to stop gas flaring, but these aspirations will require significant international financial support.

The opening of the Karbala solar plant comes at a time when Iraq is exploring new possibilities to solve its energy challenges, including using natural gas produced in Iraq, as well as importing electricity from Jordan, Turkey, and Turkmenistan.

As Prime Minister al-Sudani said during the opening ceremony, “Projects in solar energy are a main pillar for Iraq’s social and economic behaviours today and for the country’s future energy strategies,” adding “the importance of equipping residential units and housing projects with solar energy.”

The successful realization of the Karbala solar project and other projects could help alleviate Iraq’s persistent electricity shortages and establish the country as an emerging renewable-energy player in a region that has largely acted as an oil-producing nation.

Concerning the Renewable Energy Initiative in Iraq

Iraq’s National Energy Plan for 2030 aims to increase the share of renewable energy in the electricity mix to 33% by that date, with an installed renewable capacity goal of 12 GW. The plan will include both utility-scale solar developments and distributed generation efforts to increase electricity access in under-served areas and improve reliability of the grid.