Middle East Set For Major Shift To Renewable Energy, Projected To Outpace Fossil Fuels By 2040, Says Report

Renewable energy capacity in the Middle East is set to dramatically increase, with green energy sources projected to surpass fossil fuel usage in the power sector by 2040, according to Rystad Energy’s latest research. Solar photovoltaic (PV) is expected to become the dominant source, making up over half of the region’s power supply by mid-century, rising from just 2% last year.

By 2050, renewable energy, including hydro, solar, and wind, is forecast to comprise 70% of the Middle East’s power generation mix, a significant jump from 5% at the end of 2023. However, the region will continue to rely heavily on natural gas in the short term, with usage peaking around 2030.

Traditionally an oil and gas stronghold, the Middle East is shifting towards renewables due to rapid industrial growth, a booming population, and global carbon reduction efforts. The region, home to over 280 million people, has seen a 60% population increase since 2000, leading to a doubling of power demand over the past 20 years. By 2050, power demand is expected to hit 2,000 terawatt-hours (TWh), up from the current 1,200 TWh, driven by industrial development, population growth, and the electrification of various sectors.

Despite this shift, fossil fuels still dominate the Middle East’s power generation, accounting for 93% at the end of 2023. Renewables made up 3%, while nuclear and hydro each accounted for 2%. Natural gas powers almost three-quarters of the region’s electricity generation. By 2030, renewable energy is expected to make up 30% of the installed capacity, potentially rising to 75% by 2050. Battery energy storage will play a critical role in the 2030s, supporting the transition by mitigating the intermittency of solar and wind power.

The Middle East lags behind Asia and Africa in the renewable energy shift, where renewable power is expected to outpace fossil fuels by 2032. Europe has been leading this transition since 2019. With 40% of its power consumed by a growing residential sector, the Middle East faces increasing power demand, necessitating a shift to renewables for long-term sustainability. The rise in electric vehicles also predicts a future surge in energy demand.

Solar energy is becoming crucial in the Middle East’s energy policies, with solar PV in Saudi Arabia achieving a world record-low levelized cost of electricity (LCOE) of $10.4 per megawatt-hour (MWh). The region has significant solar potential, receiving over 2,000 kilowatt-hours (kWh) per square meter annually in countries like Saudi Arabia, the UAE, and Oman. The Middle East’s solar capacity exceeded 16 gigawatts (GW) at the end of 2023 and is expected to reach 23 GW by the end of 2024. By 2030, this capacity is projected to surpass 100 GW, driven by green hydrogen projects and an annual growth rate of 30%.

Countries like Saudi Arabia, the UAE, Oman, and Israel are leading this solar surge. Saudi Arabia’s Sudair solar project, with a capacity of 1.5 GW, is fully operational, raising the country’s total installed solar capacity to over 2.7 GW. The UAE aims to increase its solar PV capacity from 6 GW to 14 GW by 2030, with a target of 44% renewables in its power mix by 2050. Oman plans to expand its renewable energy capacity from about 700 MW to almost 3 GW by 2025 and 4.5 GW by 2030, with a goal of becoming the largest green hydrogen exporter by 2030.

These developments underscore the Middle East’s strategic pivot towards a greener, more sustainable energy future.