Economic diversification is crucial for the Gulf Cooperation Council (GCC) to ensure sustainability and navigate global energy market fluctuations—and renewable energy sources like solar power, may be the answer.
While fossil fuels still dominate as the source of electricity generation in the region, countries are increasingly embracing other, more sustainable sources such as solar energy, as well, with the UAE leading the pack, according to the International Renewable Energy Agency.
About 9 per cent of UAE’s electricity generation is done through solar power, as of 2020. About 83 per cent of the country’s electricity generation is using fossil fuels- one of the lowest rates in the region. For comparison, countries like Bahrain and Kuwait rely 100 per cent on fossil fuels, and Saudi Arabia relies 99 per cent on fossil fuels for electricity generation.
This is reflective of the vision that the country has set for itself. At the Abu Dhabi Sustainability Week (ADSW), from January 12 to 18, 2025, Suhail Bin Mohammed Al Mazrouei, UAE’s Minister of Energy and Infrastructure, delivered a clear message emphasising the country’s role in stabilising global energy markets and championing sustainable development.
By emphasising the need for a balanced approach that integrates both traditional and clean energy sources, Al Mazrouei highlighted the UAE’s commitment to its visionary Energy Strategy 2050 and the National Hydrogen Strategy 2050.
This forward-thinking energy policy is not only critical for the UAE but also a cornerstone of the region’s solar energy ambitions, a sentiment echoed in the recent Solar Outlook Report 2025 released by the Middle East Solar Industry Association (MESIA).
The report, launched during the World Future Energy Summit 2025 in Abu Dhabi, outlines the rapid growth of solar energy in the Middle East and North Africa (MENA) region and the UAE’s key role in this transformation.
The UAE, with its substantial solar PV capacity, is firmly positioned as a leader in the Middle East. The International Renewable Energy Agency reports that the UAE hosts 65 per cent of the GCC’s solar PV installed capacity, highlighting its dominant role in driving global solar power innovation.
Reliable off-takers minimising financing risks, a pegged currency reducing currency risks, successful Independent Power Producers (IPPs) ensuring stability, and stringent prequalification stages attracting experienced and financially stable bidders all contribute to UAE’s success story here.
This combination draws low-cost financing from local and international banks, highlighting the UAE’s leadership in the renewable energy sector.
As of 2024, the UAE’s clean energy capacity has doubled to six gigawatts from 3.1 gigawatts (GW) in 2022, primarily driven by solar PV projects.
UAE cities pioneering the solar initiative
Key regions like Dubai, Abu Dhabi, and Sharjah lead the country’s solar energy initiatives. Dubai, with its ambitious Mohammed Bin Rashid Al Maktoum Solar Park—set to be the world’s largest single-site solar project with a planned capacity of 5,000MW by 2030—aims to produce 75 per cent of its energy from clean sources by 2050, establishing itself as a global clean energy hub.
The AED 100 billion Dubai Green Fund, another big project, will provide low-interest loans for clean energy investments, with the aim of making Dubai the city with the lowest carbon footprint by 2050.
Additionally, Abu Dhabi’s Vision 2030 focuses on renewable energy with projects like the Noor Abu Dhabi Solar Project (1.2GW) and the Barakah Nuclear Energy Plant, which is expected to fulfil 25 per cent of the UAE’s electricity needs. Further projects like Al Dhafra (2GW) and Al Ajban (1.5GW) are also expected to boost Abu Dhabi’s renewable capacity.
Sharjah’s largest solar project is a 60MW solar PV plant at the SNOC Sajaa Gas Complex, developed by Sharjah National Oil Corporation (SNOC) and Emerge—a joint venture between Masdar and EDF Group. This project will offset 66,000 tons of CO2 annually, equivalent to removing over 14,600 cars from the road each year.
Opportunities and players in the UAE
Leading companies in the UAE energy market include Masdar, ACWA Power, Yellow Door Power, Enviromena Power Systems, Total Energies, Nebras Power, EDF Renewables, RWE Renewables, TSK Group, and Enerwhere Sustainable Energy.
The UAE solar energy market, as per MarkWide Research study, features a competitive landscape with both domestic and international players. Significant opportunities lie in distributed generation (solar PV systems), energy storage integration with solar installations, and using solar energy for desalination.
With abundant opportunities, robust initiatives, and strategic plans in place, UAE is already on its way to realising its vision of a sustainable, green future, further consolidating its position as a global leader in renewable energy.
This story is done in collaboration with DataLEADS, which is an award-winning global digital media and tech company
