Kurdistan Showcases Renewable Energy Capacities in the Middle East

Protestors at Pro-Independence Rally in Erbil. Photo by Levi Clancy.

The Iraqi government has mismanaged the country’s national electric grid, resulting in frequent power outages, and subnational governments have taken matters into their own hands to resolve the issue. The Kurdistan Region of Iraq believes the solution is more renewable energy—particularly solar power—and is working to draw private investors to its renewable energy sector. The Kurdistan Regional Government (K.R.G.) already manages the region’s independent electricity network, separate from federal Iraq, including two hydropower dams. Expanding this independence, K.R.G. leaders claim, would allow the region to advance the transition to renewable energy and reduce the length and frequency of power outages that plague the rest of federal Iraq. 

Yet this embrace of renewable energy promises salutary effects beyond greater energy security. Indeed, the K.R.G.’s move towards renewables could offer a new model for local economic development and sustainability beyond the oil-export-led growth model that underpins the rest of the Iraqi economy. Furthermore, reducing dependency on oil and gas for electricity would increase environmental sustainability and make the economy more inclusive of non-elite populations. By divorcing themselves from the national economic system centered around fossil fuels, Iraqi Kurds could break from the federal government on other policy matters and allow for more political independence. Nevertheless, optimism about the potential for this new development model must be tempered by the likelihood that limited funding sources will hamper renewable energy development.

K.R.G. leaders’ plan to decentralize renewable systems could accelerate economic development, stabilize governance, and advance sustainability goals. On the environmental front, reducing dependency on gas and oil will continue to shorten electricity outages, lower carbon footprint, and reduce water consumption from fossil fuel power plants, mitigating water stress in a region plagued by water scarcity. Economically, reducing reliance on fossil fuels diversifies the K.R.G.’s energy mix, which makes the energy sector more resilient to price fluctuations and supply disruptions in the global oil market. The K.R.G. renewables plans likewise challenge the predominant political-economic model in the Middle East, where elites profit from infrastructure contracts, fuel imports, and informal systems of electricity provision. In particular, the K.R.G. plans to utilize local Kurdish investors for private investment rather than relying solely on political neighbors or elite donors. 

Concerning increasing political independence, K.R.G. leaders’ current plan to fund this expansion of solar through increased private sector investment would reduce K.R.G.’s reliance on neighboring states and the national government. As a landlocked entity, the K.R.G. is dependent on its neighbors—Syria, Iran, federal Iraq, and Turkey—for imports and exports. While relying on private sector investments still attracts elites to the sector, it could increase independence from neighboring states that are politically and economically unstable. Rather than relying on foreign actors, the region could receive significant investments from Kurdistan companies, such as recent investments made into solar farms in remote villages. Together, this sustainable development model has the ability to strengthen the local economy and help wean off its dependence on neighboring states.

The merits of this development model notwithstanding, many roadblocks to successful implementation exist—the first among which is public opinion. Analysis by the Center for Strategic and International Studies (CSIS) found that Iraq’s oil wealth has cultivated a belief that the government must provide cheap electricity. This mindset is deterring Iraqis—who have money to invest—from contributing to the sector. Coupled with confusion about technical details, misinformation, and the lasting damage caused by failed projects, public reception is complex to win over. Although the K.R.G. residents of the region are already accustomed to renewable energy concepts and are thus less resistant than residents of federal Iraq, public reception remains a critical impediment to project funding.

Another difficulty of this model is the financial constraints of the K.R.G. Already, the K.R.G. has established the foundation for private actors to push solar power into the grid and installed over 1.2 million smart meters for households across the region. These households receive credits for their energy bills if they export energy into the grid, but the K.R.G. is still working on solving the complicated process of defining a billing process for commercial actors, which has proven difficult. Budgetary constraints also mean that the government needs more ability to purchase electricity, which limits the expansion of solar power and furthers the need for external actors. Additionally, because of its unique political status within Iraq, the K.R.G. struggles to secure international finance for expanding its renewables. For example, the K.R.G. cannot interact directly with the World Bank and many leaders. Thus, while decentralizing renewable systems could accelerate economic development, stabilize governance, and advance sustainability goals, obstacles to private investors and stakeholders deter new projects. 

Agriculture and water management would be the primary beneficiaries of this renewable energy plan, and yet it is precisely these industries that struggle to secure investment. It is reported, for example, that the region's agri-tech scene needs greater innovation and yet investors hesitate to fund new projects because climate change makes the investment even more complex and risky. Similarly, green technology and agri-tech firms are attracting investment, albeit slowly, because of high barriers to entry for investors. The solar power plant announced in Erbil early this year, for instance, costs $100 million—a price tag requiring more private investment than is likely available. 

Similarly, the solar equipment costs for farms, which can be several thousand dollars, act as a barrier for many farmers in the Kurdistan Region. The K.R.G. announced that the plant will have a production capacity of 25 megawatts of electricity per hour, costing $100 million. These barriers, therefore, make renewables a challenging industry to break into for non-elites. If the K.R.G. wants to attract Kurdish companies and other local stakeholders, these barriers must be overcome to foster a greater sense of security in their investments. Kurdish officials can expand investments by increasing incentives, ensuring project bankability—the level of willingness of prospective lenders to finance the project—through government subsidies, and implementing broader power sector reforms to provide renewable energy systems' viability, sustainability, and optimization. 

Iraq is considered the fifth-most vulnerable country to the impacts of climate change globally, so while diversifying regional power supply is challenging, it is increasingly necessary due to the limited lifespan of the region’s oil resources. It is also increasingly attainable with the advances of non-fossil technologies and overall global pressure. Increasing access to more reliable and cleaner electricity would save government and private funds spent on diesel, thus improving business and living conditions for the region. Still, if the K.R.G. wants to meet its goal of nearly 50% of energy derived from renewables, it needs to cultivate significant changes to prove the security of investments, lower perceived risks, and encourage diverse investors. Kurdish leaders must also face the daunting task of addressing the consequences of decades of energy instability. Ultimately, commitment to this sustainable development model is worth its challenges to boost economic development, enhance governance stability, and further sustainability goals.

Colette Yamashita Holcomb (GS ‘26) is a second-year student in the dual degree program with Sciences Po, studying political humanities and human rights. When not writing for CPR, she enjoys overpriced chai lattes, scouting additions to her overflowing tote bag collection, and reading books of all kinds.