On September 22, Iranian official media disclosed that the country has signed a 7GW solar module supply contract with relevant Chinese parties. Fully funded by Iran’s National Development Fund, this transaction marks the largest renewable energy equipment procurement project in Iran’s history.
According to the latest report from the Iranian Parliament’s Energy Committee, the national electricity shortage during the summer of 2025 has reached 15 GW, with peak electricity demand climbing to 77.5 GW, while the power generation capacity remains only 62.5 GW. Persistent high temperatures have led to a surge in air conditioning-related electricity consumption, compounded by reduced output from hydropower plants due to drought. This has expanded power outages from industrial sectors to residential areas, significantly impacting the economy and society. This “dual peak demand in winter and summer” has become a chronic issue for Iran’s energy system. The average daily electricity shortage during the summer of 2024 already reached 20,000 MW and is projected to further increase to 25,000 MW in 2025.
As a core part of the solution, this 7GW solar module supply agreement will be integrated into the expansion plan of Iran’s Ministry of Energy. According to the plan, once the project is fully operational by the end of 2026, it will not only effectively alleviate summer electricity pressure but also provide a roadmap for building a long-term energy security system for the country. Iranian Energy Minister Abbas Aliabadi previously announced plans to add 11.5 GW of solar capacity by March 2026, with this China-Iran cooperation project contributing nearly two-thirds of the target.
Notably, the project adopts an “oil-for-equipment” funding model, where Iran’s crude oil sales revenue in China is earmarked for purchasing solar equipment. This mechanism effectively bypasses financing restrictions caused by international sanctions. In fact, China and Iran have a long history of cooperation in the renewable energy sector. As early as October 2024, the two sides finalized a framework for importing 3,000 MW of solar power plant equipment. This 7GW contract represents a continuation and upgrade of their earlier collaboration.
Currently, Iran’s annual solar module production capacity is only 700 MW, and while solar accounts for 60% of its total renewable energy installed capacity of 1,561.66 MW, it represents only 0.7% of the country’s total electricity generation. Analysts believe that for Iran to achieve a fundamental transformation of its energy structure, it must not only introduce Chinese equipment but also strengthen the absorption of local technology and capacity building.
