Energy Tribune
When it comes to economic growth, the vital commodity is always electricity. Peter Huber and Mark Mills, in their outstanding 2005 book about energy, The Bottomless Well, made this point clear, declaring, “Economic growth marches hand in hand with increased consumption of electricity — always, everywhere, without significant exception in the annals of modern industrial history.”
Few countries in the developing world provide a better example of the soaring demand for electric power than Iran. Between 1990 and 2006, according to the BP Statistical Review of World Energy, Iran’s power generation grew by 244 percent. Only five other countries on the planet saw faster growth during that time, and those five — China, Indonesia, Malaysia, South Korea, and the United Arab Emirates — also experienced enormous economic growth. Two factors differentiate Iran: its economy has largely stalled, and it has been forced to use substantial amounts of its oil production to feed its soaring need for power. While exact numbers are not available, Nicole Grant, an economist with the Energy Information Administration, estimates that about 12 percent of the oil consumed in Iran — about 206,000 barrels per day — is used to produce electricity. “That’s what they are reporting,” says Grant, who adds that the rest of Iran’s power is generated from hydro, natural gas, and a small amount of wind.
Iran’s key challenge in the coming years will be to provide sufficient electric power for its 65 million residents while continuing to grow its oil exports. Indeed, increasing domestic oil consumption should be among the country’s biggest concerns. According to the Grant, between 1997 and 2007 Iran’s domestic oil use grew by 41 percent. That growth is crimping Iran’s export capacity. In 1997, exports were 2.5 million barrels per day. In 2007, they were 2.3 MMbbl/d.
Factor in Iran’s burgeoning population — nearly one-fourth of it is 14 or younger — and it’s abundantly obvious that the country faces serious challenges. In an ideal world, Iran would meet all of its electricity needs by tapping its enormous natural gas deposits. However, Iran is a net importer of gas. And its Achilles heel is its shortage of electric generation capacity. The West doesn’t like Iran’s aspirations to join the club of nations that use nuclear power for electricity, but the numbers show that Iran is desperate for electric power. It will keep pushing for nuclear power regardless of what the West wants.
Iran’s thirst for electric power provides a good introduction to our cover section on the electricity gap, which looks at the electricity needs of three other developing countries: Malaysia, Nigeria, and Pakistan. As you will read, Malaysia has seen huge growth in its electric generation and its economy, while Nigeria and Pakistan are lagging. And as Huber and Mills point out, economic growth depends on electricity.
(For the stories referred to above, go to: www.energytribune.com.)
