The Middle East and North Africa are no longer on the sidelines of the energy transition. The MENA Energy Outlook 2026 by Dii Desert Energy shows the region has reached a turning point. Renewable capacity jumped 44% in 2025 to about 43.7 GW. Solar PV led the surge, accounting for 34.5 GW.
The growth is unprecedented. MENA took five years to rise from about 14 GW in 2020 to 30 GW in 2024. Then, in just one year, it added nearly 15 GW. This was not gradual progress. It was a rapid scale-up driven by cheap solar power, competitive auctions, and a booming project pipeline.
Falling costs are at the core of this shift. In 2025, solar and wind tenders set new global records. Solar PV prices dropped to around 1.09 US cents per kWh. Wind fell to about 1.33 US cents per kWh. These prices are reshaping expectations for large-scale clean energy worldwide.
The region’s renewable energy project pipeline has ballooned to ~202 GW — a figure that now nearly matches aggregated national targets out to 2030. That pipeline isn’t theoretical; it includes 38 GW under construction and a deep roster of gigawatt-scale solar programs ready to move into execution.
Under Dii’s updated scenario framework for 2030, three pathways emerge:
Even the conservative outlook reflects a dramatic acceleration — the result of policy clarity, cost competitiveness, and private capital intent on capturing the region’s unparalleled solar resource.
Saudi Arabia has emerged as a standout. Operational capacity nearly tripled in one year, reaching around 11.7 GW, and it now stands as a regional leader not only in volume but in setting cost benchmarks.
Meanwhile, the UAE continues to punch above its weight with flagship projects. Masdar and Emirates Water and Electricity Company (EWEC) have begun the construction of a 5.2 GW solar park integrated with 19 GWh of battery storage – one of the largest renewable + storage complexes globally. This project is intended to deliver baseload clean power at scale, significantly reducing reliance on gas-fired generation.
Solar is the centerpiece of the MENA transition — and for good reason.
This solar dominance aligns with broader global forecasts that see solar accounting for most of renewable growth in the decade ahead, especially as project cost declines continue to outpace projections.
The critical driver here is not just sunshine but economics: solar power in MENA is now among the cheapest baseload energy available, challenging even entrenched natural gas generation in many markets.
One of the most interesting insights in the Outlook is the emergence of AI infrastructure as a renewable energy demand driver.
The report highlights that data centers — spurred by the rapid adoption of AI — are becoming “super offtakers” of clean energy. These facilities require long-term, high-capacity power contracts, which in turn improve the bankability of large renewable power purchase agreements (PPAs).
This is a structural shift. Traditionally, renewable PPAs in the corporate sector were dominated by manufacturing and export industries. Now, the AI ecosystem’s appetite for reliable, low-carbon power is helping unlock financing and long-duration contract structures that support gigawatt-scale solar and storage.
In effect, AI is not just a user of clean power — it’s becoming a market catalyst, compressing risk premia and enabling developers to sell projects at scale with predictable cash flows. This is exactly the type of demand signal that carbon markets and corporate net-zero strategists value most: stable, creditworthy offtake linked to decarbonization commitments.
Solar’s growth creates a natural need for storage solutions, and MENA is responding. Battery Energy Storage Systems (BESS) are rising fast — with about 25 GWh operational today and projections showing ~156 GWh by 2030 (a more than six-fold increase).
This shift is pivotal: storage enables firm, dispatchable renewables, bridging gaps between peak solar output and evening demand. It also reduces grid stress and curtails reliance on fossil peaking units — which, in carbon accounting terms, lowers actual emissions and improves marginal grid intensity.
The shift toward BESS over thermal energy storage reflects global trends in cheaper lithium-ion systems and increased merchant storage markets, signaling that long-duration storage will be a defining piece of the region’s decarbonization story.
MENA’s transition — led by solar — has direct implications for carbon reduction pathways:
However, challenges remain. Natural gas still dominates power generation in many countries and will likely remain part of the mix through 2030. That underscores the importance of carbon pricing, power market reform, and long-term PPAs to accelerate coal-to-solar displacement and enable hydrogen sectors to scale.
Global modeling from other sources also suggests that solar and wind could respectively represent the majority of electricity growth in the next decade — a pattern that amplifies the MENA trajectory.
MENA has shifted from potential to performance, driven by low-cost solar, strong project pipelines, and rapid growth in energy storage. New demand from AI is adding fresh momentum.
This progress creates fertile ground for carbon markets. Large, contract-backed renewable projects offer credible, long-term emissions reductions. As power markets mature, MENA is emerging as a key player in energy security and global decarbonization.








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