After insurgent violence and the divisions that have stymied attempts for nine months to form a representative government, sceptics often cite the appalling state of Iraq’s electricity system as clear evidence that the 2003 invasion has failed to deliver the results promised by the US-led coalition almost eight years ago.

At the end of 2002, Iraq had capacity to produce about 4,500MW of electricity, though production was down to 3,300 MW by the time the Saddam Hussain was deposed. In the chaos that followed, the power industry was vandalised. Yet power production was reported at about 4,500MW in June 2004.

Figures presented at the MEED Iraq Utilities 2010 Conference in Istanbul this week showed that practically no progress has since been made, other than in the Kurdish areas, in lifting Iraqi power generation capacity. According to the executive director of the Iraq Energy Institute, Luay al-Khateeb, Ministry of Electricity power stations were delivering 4,792MW of electricity in August 2010. This was just 26MW more than they produced in August 2002.

Electricity has now become the government’s top priority and recent survey shows that more Iraqis think power cuts are a bigger issue than security

More than 1,000MW is being imported from Iran, Iraq and Syria and power plants operating in the Kurdish areas are producing 1,250MW. But demand has soared and is now estimated to be about 13,000MW, roughly twice what it was in 2003.

Electricity has now become the government’s top priority and recent survey shows that more Iraqis think power cuts are a bigger issue than security. Economic growth and domestic harmony is impossible without more power in a country wrecked by 30 years of war, sanctions and internal conflict.

The Iraqi government’s response is finally becoming tangible. About 3,380MW of new capacity is being built and contracts for another 7,200MW are soon to be signed. Bids are due in January for the first Ministry of Electricity independent power plants (IPPs), which call for total capacity of 2,750MW. Iraq’s third IPP is due to start test operating on 18 December. The private Mass Global Investment Company owns all of Kurdistan’s IPPs.

The projects planned or under way should ensure that electricity supply across Iraq will be more or less in balance with demand by early 2014. That is the good news. The bad news is that power shortages are likely to get more intense in the summer of 2011 and even worse in 2012.

Iraq’s government is unveiling a long-term electricity master plan, which has been prepared in partnership with Parsons Brinckerhoff (PB). The document’s baseline forecast is that power demand outside the Kurdish areas will rise to 32,000MW in 2030. The high-growth projection is for consumption to hit 45,000 MW that year. Either way, the figures suggest Iraq’s economic ascent in the next two decades will be startling.

A key element of the master plan is recommendations about technology and fuel use. It says gas is the most economical fuel for generation and that Iraq should phase out crude-oil-burning power stations and slash heavy fuel oil use. It recommends that all new capacity should be combined cycle, where waste heat is reused.

Iraq’s power plans only make sense if there is matching investment in transmission and distribution

The master plan shows that Iraq should have more than enough gas to meet projected demand from power generation. Iraq this year will produce less than 1 billion standard cubic feet a day (cf/d) of non-associated gas. Plans to lift oil production radically imply a sharp rise in gas availability to 6 billion cf/d in 2019. The master plan’s projections show gas used to produce electricity will rise to 2.5 billion cf/d that year. Whether Iraqi oil production will rise to the extent required was outside the scope of the master plan.

Iraq’s power plans only make sense if there is matching investment in transmission and distribution. The master plan calls for massive investment in the grid and network connections. A loss reduction programme will raise the efficiency of the entire network.

For those looking for business in Iraq, the most impressive figure is the projection that Iraq will need to spend $55bn in 2015-30 at constant 2009 prices to deliver the baseline forecast electricity capacity. But there is much more at stake than juicy contracts and the opportunity to invest in an economy with unique potential for long-term growth.

Iraq plus electricity could finally end the torments the nation has suffered since it was created almost 90 years ago. The electricity masterplan offers power for all and the promise of a modern Mesopotamian miracle that will transform the lives of every Iraqi to the lasting benefit of the region and the world.