Rural areas in Iran are necessarily linked to agriculture with very little diversification. These communities are solely dependent upon the fortunes of one or two primary enterprises. This is an extremely tenuous situation and these communities must diversify to insure economic and social viability. The objectives of this study are to (I) identify problems and difficulties encountered in the social-economic infrastructure as related to rural energy development and (2) present the non-renewable and renewable energy resources and assess the current energy generation and consumption rates. The analysis show that while there are numerous non-renewable and renewable energy resources available, problems such as cultural barriers and lack of appropriate mentality about energy impede the much-needed development in the rural areas of country. To fulfill rural energy needs, renewable energy plants must be developed locally all across the country: hydro and geothermal in the northern and western areas, wind in the eastern and the southern planes, and solar energy in the central desert plateaus. In conclusion, proper distribution of subsidies and adaptation of new efficiency laws are identified as areas for improvements. (c) 2005 Elsevier Ltd. All rights reserved.