Home News & Insights The Middle East’s Evolving Renewable Energy Landscape
Introduction
The Middle East, historically synonymous with vast oil reserves and fossil fuel-based energy sources, is experiencing a significant shift towards decarbonisation. Global environmental concerns, in addition to the growing economic competitiveness of energy powered by non-fossil fuel sources, have led to a drive towards renewable energy. In this regard, the figures speak for themselves. Renewable energy sources produced just over 30% of the world’s electricity in 2023,[1] with global annual renewable capacity additions increasing by almost 50% to nearly 510 gigawatts in 2023 – the fastest growth rate in the past two decades, and the 22nd year in a row that renewable capacity additions set a new record.[2]
This upward trajectory is likely to continue. During 2023’s United Nations Climate Change Conference (COP 28), held in Dubai, negotiators from almost 200 signatories agreed during the world’s first ‘global stocktake’ to ratchet up climate action before the end of 2030, with the overarching aim of keeping to the agreed global temperature rise limit of 1.5 degrees Celsius (as agreed by 194 ratifying parties to the Paris Agreement).[3]
Key Renewable Energy Projects in the Middle East
To keep pace with these objectives, countries in the Middle East are increasingly investing in solar, wind, and other renewable projects to diversify their energy sources, reduce carbon emissions, and align with global sustainability goals. In addition, the cost-competitiveness of solar and onshore wind power, and their abundance in the Middle East, has led to government policy decisions across the region incentivising local and international investment in these sectors. As a result, some of the largest renewable energy projects in the world have been and are presently being implemented in the Middle East. By way of a few examples:
This transition from oil and gas to renewable energy sources presents unique opportunities, as well as challenges. The renewables sector’s characteristics – uncertain political landscape, cross-border investment, changing prices and evolving technology – often coalesce to create the ‘perfect storm’ for a range of potential energy disputes.
Strategic Shift
The backdrop to the Middle East’s strategic shift towards renewable energy is made up of a number of factors.
In general, the increase of production of energy from renewable sources is a key element to Middle Eastern government policies encouraging diversification and sustainability. This forms part of a broader strategy to create a diverse and sustainable economy in sectors such as tourism, technology and finance, in order to support the economy’s move away from oil and gas.
As such, renewable projects are seen as pillars for the sustainable economic growth of countries across the Middle East, attracting investments from across the globe and providing opportunities for investment in new industries. With increasing government support (in the form of subsidies) for renewables, various renewables sector initiatives can sometimes (whether rightly or wrongly) be seen as a ‘safe’ bet.
Conclusion
The Middle East’s renewable energy sector will continue its substantial growth apace, driven by governmental policies, economic diversification, and rapid advances in technology. However, the complexity and scale of these projects, combined with the significant investment required, will inevitably lead to potential legal disputes.
[1] World passes 30% renewable electricity milestone | Ember (ember-climate.org).
[2] Executive summary – Renewables 2023 – Analysis – IEA.
[3] COP 28: What Was Achieved and What Happens Next? | UNFCCC.
[4] Mohammed bin Rashid Al Maktoum Solar Park (dewa.gov.ae).
[5] Masdar | Al Dhafra Solar PV.
[6] NEOM Green Hydrogen Company completes financial close at a total investment value of USD 8.4 billion in the world’s largest carbon-free green hydrogen plant.
[7] “Benban”, the Largest Solar Power Plant in Aswan (presidency.eg).
[8] Al Shuaibah Solar Power Plant – (vision2030.gov.sa).
[9] ACWA POWER | Suez Wind Energy – 1.1 GW.
[11] https://u.ae/en/about-the-uae/strategies-initiatives-and-awards/strategies-plans-and-visions/environment-and-energy/dubai-clean-energy-strategy#:~:text=Dubai%20Clean%20Energy%20Strategy%20aims,clean%20energy%20and%20green%20economy.
[12] https://arabdevelopmentportal.com/sites/default/files/publication/sds_egypt_vision_2030.pdf.
[13] https://www.kapsarc.org/research/publications/saudi-arabia-net-zero-ghg-emissions-by-2060-transformation-of-the-electricity-sector/#:~:text=The%20Kingdom%20has%20recently%20amplified,from%20renewable%20sources%20by%202030.
[14] https://energymodellinglab.com/net-zero-emissions-in-kuwait/#:~:text=The%20government%20has%20pledged%20to,less%20than%201%20%25%20of%20demand.
[15] Renewable Energy Market Size, Share, Growth Report, 2030 (grandviewresearch.com).
[16] See Rapid progress of key clean energy technologies shows the new energy economy is emerging faster than many think – News – IEA.
Posted by: Emma Nierinck
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