"Today, a fire occurred at the Zargan power plant in Ahvaz due to a transformer explosion", the head of the city’s fire department told the agency.
The country’s Tasnim agency reported that the fire was quickly isolated, which prevented the blaze from spreading further within the facility.
The explosion, which officials have blamed on overheating, took place at 15:30 local time [11:00 GMT], according to domestic media reports.
Several videos of the moment have already appeared online.
An explosion and a fire at a medical facility in northern Tehran this past Tuesday killed 13 people and left six more with injuries. This incident was blamed on a gas leak.