Iraq has faced a severe electricity crisis since 2003 and is expected to increase in the long term. Efforts to date have focused on the supply side, neglecting the equally important aspect of improving energy efficiency on the demand side. Technical and commercial losses exceed 50% of the power generated, and the majority of these losses come from the residential sector, which represents the highest proportion of energy consumption on the demand side. This research addresses the current state of energy efficiency in Iraq’s residential sector, including policies and the regulatory framework. The research addressed the issue of institutional, financial, and technical challenges that could form the overarching basis of the principle for moving towards a common vision of environmental protection, reducing toxic emissions, resource efficiency, ensuring energy supply, and consumer protection.