Iraq Slashes Solar Tariffs from 33% to 5%

Iraq just made a bold bet on sunshine by slashing solar import taxes from 33% to 5%, making panels and batteries six times cheaper to bring into the country. The new tariff, already in effect at all customs centers, covers everything from solar panels to inverters, cables, and lithium batteries.

It's a surprising move for an oil-rich nation, but Iraq has good reason to change course. Despite having some of the best sunshine in the world, the country had just 42 megawatts of solar capacity by the end of 2024. That's roughly enough to power a few thousand homes in a nation of over 40 million people.

The government is backing the tariff cut with real money. Iraq's Central Bank is offering $4.6 million in loans specifically for solar purchases, with financing staying open until funds run out. Bank officials expect loan demand to surge through 2026.

The timing matters because Iraq's electricity system is struggling. Government buildings alone consume nearly 30% of the country's total electricity production. In May 2025, Iraq installed a 2-megawatt solar array at a government building as a proof of concept for how much money clean energy could save.

The Ripple Effect

The impact is already visible on the ground. The 22-megawatt Karbala solar plant opened in September 2025 as Iraq's largest solar facility, with plans to expand to 300 megawatts. TotalEnergies is building a massive 1-gigawatt project in southern Iraq, while UGT Renewables is developing an even bigger 3-gigawatt solar farm paired with battery storage.

These projects could transform Iraq's energy landscape within a few years. The country currently relies heavily on imported electricity and expensive fuel, draining resources that could go toward rebuilding infrastructure and services.

Iraq's central bank pointed to "weak awareness and societal culture" as barriers to solar adoption, but cheaper equipment changes the math dramatically. When solar panels cost a third less to import, payback periods shrink and the technology becomes accessible to more businesses and homeowners.

The policy also positions Iraq to become a regional solar hub rather than just a buyer. Lower import costs could attract solar manufacturers and installers, creating jobs while reducing the country's carbon footprint.

Iraq's sunshine is finally getting the policy support it deserves.