Iran is facing increasing global scrutiny over its nuclear programme, with the threat of additional western sanctions, as the country struggles to boost its economy and deal with a power crisis.
Tehran is to resume talks with the International Atomic Energy Agency on restarting site inspections, the UN nuclear watchdog said this week. An IAEA report on Wednesday gave details of the discussions between the agency and Iran over the past 45 days about resuming inspections.
Last week, France, Germany and the UK triggered a UN procedure to reinstate six sanctions on Iran, saying Tehran has not stuck to a 2015 deal that eased the restrictions.
Iran's stockpile of uranium enriched close to weapons-grade has reportedly been increasing steadily and reached 440kg in June before the war with Israel.
The US also conducted strikes on Iranian nuclear sites at the same time as the Israeli offensive. The attacks were described by Washington as a knockout blow to Tehran's years-long covert effort to develop nuclear weapons.
Iran denies it wants to build a bomb and claims to be pursuing nuclear technology for peaceful purposes.
Energy diversification
Iran set a target of 20 gigawatts of nuclear power generation by 2041, but it is now expected to produce only about 8 gigawatts by that time, analysts said.
The US strikes on its nuclear sites, as well as sanctions and a lack of investment, have "actually affected, or it's going to be affecting, the nuclear ambition of the country", with delays to projects, Nishant Kumar, renewable and power analyst at Rystad Energy, told The National.
The US focused its attacks on the Fordow, Natanz and Isfahan nuclear sites, which President Donald Trump said “were all obliterated”. But Bushehr, Iran's only operational nuclear plant, was not struck during the 12-day conflict.
Iran currently produces about 1 gigawatt of nuclear power at the nuclear plant. Two more units, each with 1-gigawatt capacity, are being built at the site. Both are expected to be delayed by at least three years.
Construction of Unit 1 of the Bushehr plant began in 1975 and it was connected to the grid in 2011. Russia played a key part in completing the project.
Tehran is also building its Hormozgan nuclear plant, with a total capacity of 5 gigawatts, and the Darkhovin plant, with 300 megawatts, in Khuzestan. The Hormozgan project is to be built in four phases of 1,250 megawatts each. Construction of Unit 1 began last year, while the other three units are still in early development.
“Given the ongoing conflict, delays in these projects are highly probable,” Mr Kumar said. “Economic constraints like lack of private investment and fresh sanctions on Iranian oil exports will impact the country's overall economic health."
Struggling in the dark
Iran's economy has suffered under the sanctions reimposed by the US in 2018, when Mr Trump withdrew the country from the nuclear deal. The country is also on the Financial Action Task Force's black list.
The war with Israel in June devastated Iran's economy. Its growth is forecast to flatline at 0.3 per cent this year, down from 3.5 per cent in 2024, the International Monetary Fund said. It is forecast to expand 1.1 per cent next year, the fund said in April.
The IMF also expects Iran’s inflation rate to rise to 43.3 per cent this year, from 32.6 per cent in 2024, before slightly easing to 42.5 per cent next year.
The country has faced severe power cuts during the summer. They have caused businesses to shut down and government offices to close to help conserve energy, stalling the country's economic activity.
Nuclear energy contributes about 2 per cent to the country’s overall power mix, with 80 per cent coming from natural gas, followed by oil at 14 per cent and hydro power at 3 per cent, World Nuclear Association data shows.
Is nuclear an option for power shortage?
Iran aims to develop the Bushehr, Hormozgan and Darkhovin plants. Russia and Iran also signed a deal in June for eight reactors – four at Bushehr, said Umud Shokri, energy strategist and senior visiting fellow at George Mason University.
“Russia’s Rosatom is the primary investor/builder, funding via $10 billion credit lines despite sanctions, with a 20-year partnership ratified in May 2025," he explained.
But nuclear energy is not expected to provide an “immediate solution to current power shortages, as it contributes only 1 to 2 per cent of Iran’s 90 gigawatts capacity, while shortages range from 14 to 25 gigawatts, causing year-round blackouts and $5 billion to $8 billion in industrial losses,” Mr Shokri said.
“Building 25 Bushehr-sized plants to close the gap would take decades and billions, delayed further by sanctions and the June 2025 strikes’ impact on fuel production. It offers long-term diversification, with gas dominating current needs.”
Boosting renewable capacity
Iran, Opec’s third largest oil producer, is also boosting its renewable capacity, with plans to achieve 30 gigawatts in renewable energy capacity by 2030. The country’s current renewable capacity stands at less than 1.5 gigawatts from solar and wind sources, Rystad Energy analysis shows.
"Iran has been installing incremental renewable mainly solar energy," said Iman Nasseri, managing director of Middle East at FGE Nexant. "They are way behind their target, but they have already started a kind of fast development, we think this year, they have done the highest amount of solar generation capacity instalments and solar generation capacity will exceed 2 gigawatts by the end of this year."
A 600MW concentrated solar power plant near Isfahan, launched in 2023, is among the biggest renewable projects under construction in Iran. The first phase of the project being built by Iran's Mapna Group and Mobarakeh Steel Company went online last year.
Countries around the world are boosting renewable capacity to support clean energy goals. Falling costs, especially for solar and wind installation, have encouraged governments to launch new projects.
"The government continues to invest in adding generation capacity, but it is not enough to cover peak loads," Mr Nasseri added. "Overall demand has been going up, [as a result of] more installation of ACs but also mining of the cryptocurrencies, data centres and everything else."
