The electricity industry, as a vital lifeline of a country’s economic and social development, plays a key role in industrial progress and improving quality of life. The growing demand for electricity across various economic sectors—especially in industry—underscores the importance of ensuring a reliable and efficient power supply. Despite technical advances in electricity generation and transmission, challenges such as supply–demand imbalances, tariffs that do not reflect actual costs, and managerial inefficiencies have affected the sector’s development. Therefore, examining and analyzing these issues is crucial for designing effective solutions that ensure a sustainable electricity supply and support industrial growth.
Electricity Consumption in the Industrial Sector
Industrial electricity consumption in Iran has grown rapidly—about 5.5% annually over the past decade—making industry the largest consumer. The number of industrial users has also risen by roughly 4% each year. Electricity intensity in industry increased by 87% from 2011 to 2020, indicating inefficiency or higher energy use per unit of output. After the 2021 tariff reforms, this intensity began to decrease, partly due to improved efficiency and increased industrial production.
Electricity Tariffs for Industrial Consumers and a Review of Relevant Legal Provisions
Since the late 2000s, Iran has raised industrial electricity tariffs toward real cost, with major increases after 2021 for energy-intensive industries. Tariffs are now adjusted for fuel, transmission, and renewable energy costs. Despite reforms, issues like unequal pricing and added expenses persist.
Impacts of Industrial Electricity Tariff Reforms
Electricity tariff reforms raised Tavanir’s revenues significantly while imposing only limited additional costs on most industries. Only a few highly energy-intensive companies were noticeably affected. However, inconsistencies remain between tariffs, electricity intensity, and export shares, highlighting the need for more coherent industrial policy.
Key Recommendations for Improving Industrial Electricity Tariffs and Optimizing Power Consumption
- Align tariffs with legal indicators: export share, energy intensity, and electricity cost share.
- Consider the strategic importance of each industry in tariff design.
- Set tariffs based on real energy-conversion costs after ECA contracts expire.
- Expand market-based electricity procurement: bilateral contracts and energy exchange.
- Promote non-price tools, e.g., energy-saving certificates, to optimize consumption.
This study was conducted at Islamic Parliament Research Center of The Islamic Republic of IRAN in collaboration with Reza Sharifi, Iman Ramezani, and Seyedeh Maryam Mousavi in 2025
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