Beyond Barrels and Generators: Solar Power Economics and Market Potential in Iraq

Abstract

Iraq faces a critical electricity deficit, with generation capacity of approximately 18,000 MW against demand exceeding 30,000 MW. Despite possessing the world’s one of the largest oil reserves, the country experiences daily power outages lasting 8-18 hours. This comprehensive review examines the techno-economic viability of solar photovoltaic (PV) systems as a sustainable solution to Iraq’s energy crisis. The Levelized Cost of Energy (LCOE)-defined as the per-unit cost of electricity over a system’s lifetime, calculated by dividing total lifetime costs (capital, O&M, financing) by total electricity generated-for solar projects in Iraq ranges from utility scale PV LCOE  $0.03-0.05/kWh, significantly lower than fossil fuel alternatives at $0.08-0.12/kWh. This review synthesizes findings from previous studies and presents economic calculation models including Net Present Value (NPV), Internal Rate of Return (IRR), and payback period analyses. Regional analysis reveals solar irradiance varies from 1,522 kWh/m²/year in northern provinces to 2,120 kWh/m²/year in southern regions. Hybrid PV-battery storage systems demonstrate payback periods of 3.6-7 years under various conditions. The study identifies policy frameworks, financing mechanisms, and institutional barriers affecting solar adoption, providing a roadmap for Iraq’s transition toward its 12 GW solar capacity target by 2030.