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A view is being seen of the northeast of Tehran at sunrise on August 17, 2012.
Iran’s energy crisis pushes economy to the breaking point
After weeks of increasingly severe blackouts caused by massive natural gas shortages in Iran, the state power company warned manufacturers on Friday that they need to brace for power cuts that could last weeks and cost billions of dollars. The government is facing a difficult choice between cutting fuel for power plants or for residential heating — and are taking the first option in a bid to keep a lid on public discontent.
Markets took small comfort, however, with the Iranian rial plummeting to 770,000 to the dollar, its lowest value ever. Ordinary Iranians spent most of last week not knowing whether they would be able to send their children to school or go to work themselves the next day, a situation which seems likely to continue.
Wait, doesn’t Iran have tons of natural gas? Yes, and generous subsidies for consumers to boot, which means the overwhelming majority of Iranians depend on — and arguably overconsume — natural gas for home heating and cooking. But even though the Islamic Republic sits on the world’s second-largest reserves, sanctions and international isolation have left its infrastructure and technology woefully inadequate to supply its own needs.
Iranian producers already burn off huge quantities of natural gas released in oil extraction because they lack the technology to collect it instead. And much of the natural gas Iran does extract is then exported to Turkey and Iraq, where it brings in much-needed hard currency.
The New York Times also reported on Saturday that Israeli strikes against two pipelines back in February forced Tehran to eat into reserves that it was unable to replenish over the summer.
Will the crisis reach a boiling point? With temperatures plunging as low as -20 C in many parts of the country, cuts to gas for domestic heating could put lives at risk. We’re watching for unrest, but keep in mind that hundreds of Iranians lost their lives and thousands more were arrested and abused by regime forces in 2022 and 2023 during the protests over the killing of Mahsa Amini. As long as the regime is willing to kill its own people in the streets, protest may be futile.A woman sitting at her house, looks on as Cuba suffers a third major setback in restoring power to the island, with millions still without electrical service, in Havana, Cuba, October 20, 2024.
Will Cuba’s government collapse with its grid?
Millions of Cubans remain in the dark amid a worsening power crisis. The collapse first hit Cuba’s western provinces, including the capital of Havana, on Friday, with no clear timeline for restoration. While the Antonio Guiteras power plant was brought back online over the weekend, its 500-megawatt output falls far short of the 3 gigawatts the island needs, and its output has dropped to 370 megawatts.
Residents are cooking on open fires, water supplies are threatened, bread is running out, and people are running out of patience – which led to protests in Marianao and Cuatro Caminos on Saturday.
Power cuts and food rationing prompted protests earlier this year, and while theregime remained in charge, this latest crisis is the worst since Hurricane Ian damaged Cuba’s power grid in 2022. President Miguel Díaz-Canelblames the US embargo, which has left Cuba unable to maintain electric plants due to a lack of foreign reserves to pay for parts. Cuts in subsidized oil imports from Venezuela also made it impossible to operate facilities due to lack of fuel, leaving some households without power for eight hours a day this year.
The crisis has been compounded by Hurricane Oscar, which made landfall on Sunday with winds of up to 85 mph and 5 to 15 inches of rain. We’ll be watching how the regime and public anger weather the storm.FILE PHOTO: The Three Mile Island Nuclear power plant is pictured from Royalton, Pennsylvania, U.S. May 30, 2017.
The return of Three Mile Island
The nuclear plant on Three Mile Island in Pennsylvania, home to one of the worst nuclear accidents in US history, is getting a second life, thanks to artificial intelligence.
Under a new, 20-year deal, Constellation Energy will restart the famed power plant, which closed in 2019, and sell the energy to Microsoft to fuel its data centers. This is an opportunity for the computing giant to meet its incredible demands for computer processing power required for its AI ambitions and do so with a so-called clean energy source. The White House and tech leaders recently discussed a plan to use more clean energy sources for AI data centers amid conflict between the government and private sector’s AI ambitions and climate goals. Still, it could take years for the plant to get inspected, licensed, and gain federal approval from the US Nuclear Regulatory Commission to restart.
The Electric Power Research Institute has estimated that data centers could consume 9% of US electricity annually by 2030, up from just 4% in 2023. In May, Microsoft also signed a deal with Brookfield Asset Management to deliver the tech company 10.5 gigawatts of new renewable energy between 2026 and 2030, a massive amount that The Verge remarked was equivalent to half of California’s wind and solar capacity.
Three Mile Island’s Unit 2 had a partial meltdown in 1979, but its Unit 1 was undamaged and remained operational until 2019, when it was shut down due to financial pressures. Constellation Energy told The Wall Street Journal that Unit 1 was “arguably the best-performing reactor in America.” There are currently 94 active reactors in the country.