The decision is effective pending the completion of an ongoing investigation, according to a statement from his office.
Qasim al-Fahadawi was governor of Anbar province before Abadi appointed him to the ministerial post in September 2014.
Lack of a steady supply of electricity is one of many problems that have brought thousands of protesters into the streets across southern Iraq over the past three weeks.
Protesters accuse the ruling elite of corruption and failing to serve the people. At least 14 people have died in the protests.
Iraq has a chronic shortage of electricity and the grid is further strained during the sweltering summer months.
This is a developing story… Updated at 10.43 am
