Does Geothermal Energy Have a Future in Iran?

There is little good news inside Iran regarding electricity. The government long ago instituted rotations of blackouts and brownouts to manage shortages, but even these are no longer predictable. Although Iranian officials might blame the war, the Islamic Republic’s energy woes predate that. With the government reeling, the regime repeatedly makes “announcements” to provide hope or suggest progress. Most recently, Iranian officials announced the opening of a long-delayed geothermal energy plant.

In July 2026, after a quarter-century of delays, Iran connected the 5.4-megawatt Meshginshahr geothermal plant to the national grid. Situated on Mount Sabalan, Ardabil Province, the $11.5 million project eventually could store 250 megawatts in reservoirs; officials say that existing wells support 30 megawatts. Although exploration started in the 1970s, progress was slow. Rough volcanic rock crippled drills, and international sanctions after the 1979 Islamic Revolution prevented Iran from accessing foreign technology.

While Iranian geologists and government officials say they have multiple potential geothermal regions across the country, from Sabalan and Sahand in the North to Makran in the South, they likely overstate their potential. High-temperature geothermal reservoirs to tap for power generation are limited. Most identified resources fall into the medium- and low-enthalpy range, a measure of their heat content, making them unlikely targets for electricity production.

Nevertheless, geothermal energy can offer stable power that other renewables cannot equal without storage. Efficiently run geothermal projects can reach 70–90 percent capacity and stabilize grids that include intermittent renewables such as wind and solar power. However, such reliability comes at a cost. Geothermal projects carry substantial upfront risk because unsuccessful wells or underperforming reservoirs can absorb large amounts of capital before producing any financial return.

Solar and wind energy, by comparison, can be developed more rapidly, are not subject to the same geological uncertainties, and have become increasingly cost-competitive as hardware prices have decreased. Iran depends largely on natural gas to meet its energy needs, and thus, solar and wind power offer a beneficial addition to capacity, despite needing additional support.

Iran looks at geothermal energy to mitigate Tehran’s wider electricity concerns. Aging thermal power plants continue to operate at low efficiency, and seasonal shortages of natural gas often necessitate the use of fuel oil, which places additional strain on infrastructure and increases emissions. Peak demand has resulted in repeated electricity shortfalls of more than 10 gigawatts during summer months. Geothermal power could ease these pressures by supplying dependable baseload electricity, especially in the mountainous Northwest.

However, even under an optimistic development scenario, the Sabalan field would make only a modest contribution to a power system. Turkey provides a useful regional comparison. Ankara’s policy support has enabled geothermal capacity to reach approximately 1.7–1.8 gigawatts across nearly 70 plants, but even this generates only 3 percent of the country’s electricity.

Barriers to development across the region are significant. Geothermal projects require high water volume and drilling costs; seismic risk and hydrogen-sulfide emissions also deter investment. Private investors are wary. Iran amplifies such risks with its lack of transparent regulation, licensing, and royalties.

Meshginshahr’s electricity generation will remain minimal for the foreseeable future and will be unlikely to reach even Turkey’s 3 percent share. High-quality sites will support localized baseload power, industrial heat, and agricultural applications, but will not supplant gas and oil. For the Iranian public, this means that geothermal plants will be unlikely to reverse the electrical grid death spiral they face.