The Arab Gulf states are well-positioned to lead globally in solar energy development. With some of the highest solar irradiance levels in the world, the Gulf Cooperation Council (GCC) countries have the opportunity to transform their energy systems, lower carbon emissions, and reduce reliance on hydrocarbons. However, solar energy deployment remains inconsistent across the region, contributing to renewables making up just 2% of generation capacity in 2022. This policy brief examines the state of solar energy in the Gulf, highlights regulatory obstacles impeding its growth, and proposes strategies to accelerate adoption.
Strategic Goals and Supporting Conditions
Expanding solar energy in the GCC aligns with key objectives, such as meeting growing electricity demand, enhancing energy security, reducing the carbon footprint of exports, and tackling climate change. These ambitions are supported by favorable factors, including abundant solar resources, low-cost desert land for large-scale solar plants, transparent auction systems, long-term power purchase agreements, and improving policy and regulatory frameworks. These conditions enable solar power prices as low as 1.35 cents per kilowatt-hour in the UAE.
Electricity Markets and Solar Energy Deployment
State-owned or partially state-owned entities lead large-scale solar initiatives, while private companies focus on distributed solar power for commercial and industrial applications.
GCC electricity markets are at varying stages of development, typically operating through long-term agreements between government entities and independent power producers (IPPs). While Oman has initiated spot markets for electricity trading, they are still in early development stages across the region.
Regulatory environments have become more investor-friendly in recent years, with Saudi Arabia, the UAE, and Oman introducing renewable energy certificates (RECs). Bahrain is piloting a REC program, but Qatar and Kuwait lag behind. The GCC Interconnection Authority (GCCIA) manages the region’s electricity grid, with plans to enhance cross-border energy trade, potentially saving billions and optimizing existing infrastructure.
Progress and Policy Reforms
While the UAE, Saudi Arabia, Oman, and Qatar lead in renewable energy ambitions, Bahrain and Kuwait are catching up. Key developments include:
- Saudi Arabia: Aims to generate 130 GW of renewable energy by 2030 through competitive tenders and state-led projects by ACWA Power.
- UAE: Plans to derive 44% of its energy from clean sources by 2050, with a focus on rooftop solar expansion.
- Qatar: Integrates solar into LNG production to enhance export competitiveness, with ongoing utility-scale solar projects.
- Oman: Implements cost-reflective tariffs for industrial users and incentivizes rooftop solar adoption, aiming for 30% renewable energy by 2026.
Recommendations for Advancing Solar Energy
1. Strengthen Financial Incentives
- Gradually reduce fossil fuel subsidies to level the playing field for solar energy.
- Redirect savings from fossil fuel subsidies to support solar projects through feed-in tariffs and direct funding.
- Offer low-interest loans and issue solar bonds to empower smaller solar developers.
2. Foster Technological Innovation
- Establish solar research centers to adapt and test technologies for local conditions, focusing on efficiency, cost reduction, and recycling.
- Promote partnerships between governments, businesses, and international tech providers to advance innovation and build local expertise.
By capitalizing on its solar potential, the GCC can secure long-term energy resilience, reduce environmental impact, and drive economic diversification. These policy measures provide a roadmap for sustainable progress tailored to the region’s unique strengths and challenges.
