The Middle East has long been relying on oil and gas — not just in terms of revenues but also in power generation. But in the past years, the region has tried to position itself as a leader in the renewable energy sector, boasting numerous renewable energy projects. From 2023 to 2028, Mordor Intelligence forecasts that the Middle East renewable energy market will grow 13.43% annually. Various government plans to increase renewables in their energy mix. For instance, UAE targets 44% renewable energy by 2050, while Saudi Arabia is aiming for a more ambitious target of 50% by 2030. International Renewable Energy Agency (IRENA) has also launched the Pan-Arab Clean Energy Initiative. However, the share of renewable energy in the energy mix in the Middle East remains lower than in other regions. While a lot of the renewable energy capacity is expected to come from solar energy due to very favorable irradiation resources, the region also benefits from good wind resources. Climate-related investments are also a major factor driving Gulf-state diplomacy.
Saudi Arabia’s state-owned ACWA Power announced a USD 10 bn investment in Egypt’s green-energy sector in August 2023. The company is already participating in the construction of the Suez Gulf wind farm and the Kom Ombo photovoltaic plant, with ambitions to hold a 50% share in Egypt’s renewable-energy market by 2026. It also plans to expand into China and Central Asia. Qatar’s sovereign wealth fund, Qatar Investment Authority, agreed to invest USD 2.4 bn in Germany’s largest power producer, RWE AG, so that it could acquire the American firm Con Edison Inc.’s clean-energy subsidiary. And, in Central Asia, Abu Dhabi’s clean-energy company, Masdar, has become a leading player, recently signing agreements in Azerbaijan for three renewable-energy projects with a combined capacity of 1 gigawatt and valued at USD 1 bn. Masdar’s joint investment project in the Eastern Mediterranean will produce renewable electricity for the Greece–Egypt subsea power link through its affiliate Infinity Power and Greece’s Copelouzos Group.
Despite this burgeoning activity, however, some perennial issues continue to impede the regional push towards green energy: the continuing imperative to expand Gulf-state oil production and technical know-how.
Regarding oil production, the UAE last year simultaneously held the COP28 presidency while also planning a major expansion of its oil-production capacity. The United Arab Emirates' state oil firm Adnoc may drill 42% more by 2030, according to analysts considered the international gold standard in oil market intelligence. Between 2023 and 2050, only Saudi Arabia is expected to produce more. Adnoc says projections show capacity to produce oil, not actual production. It said it had already clearly stated plans to boost its production capacity by 7% over the next four years. Adnoc's total production would still be dwarfed by Saudi Arabia's national producer, Aramco, which will produce 101 billion barrels by 2050. However, it would be significantly more than all five "supermajors" combined - these are Shell, BP, ExxonMobil, Chevron, TotalEnergies and ConocoPhillips.
In spite of the Gulf states’ potential as future producers of clean energy, their economies currently depend on maintaining or increasing oil exports, which is also necessary for preserving the stability of the global oil market. Domestic consumption of oil has increased significantly in recent years, and governments have begun tapping new natural-gas fields to boost gas exports and offset the cost of the oil that is now used at home rather than exported.
Solar- and wind-energy exports could eventually play a similar role as gas – as a substitute for lower oil exports – but the technology is not yet scalable or cost competitive. Saudi Arabia and the UAE have both begun investing in carbon-capture technology to offset their continuing production and use of fossil fuels. The technology is especially useful because one form, carbon-dioxide injection, can increase the lifespan of old oil-drilling sites once they are deemed economically unviable. Many benefits of carbon capture remain notional, however, and using current technology at the scale required to meet global climate goals would require unfeasibly large amounts of electricity.
And despite these challenges, all these ambitious renewable energy projects reflect the Middle East’s strong commitment to clean energy. Innovative, groundbreaking and boasting millions or billions in price tags, they give the global renewable energy sector a substantial boost — and a great dose of hope that a more sustainable future is attainable.
