The future of renewable energy generation in the Gulf

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Dr. Karen E. Young

Senior Research Scholar, Center on Global Energy Policy, Columbia University

July 12, 2023

There is a global race to build clean energy infrastructure, and the Gulf states are excelling as key competitors in this race. Across Gulf Cooperation Council (GCC) states, there are state-driven projects to generate nuclear energy for electricity, build new solar and wind power plants, and build new green and blue — meaning zero carbon and low carbon — hydrogen production facilities. There is an essential connection between developing renewable power to expand generation capacity and the goal of building out related industries and products that are by definition "green" or zero-carbon. All of these products will require a reliable and plentiful supply of electricity that is generated without burning gas, coal or oil. This is part of what strategists call a circular economy. And even within industries for oil and gas, there is an increasing use of renewable power to make the extraction cleaner, such that there is a way to qualify the carbon intensity of an oil and gas product as it goes to market. There is a critical need to reconcile regional goals for new energy products like green hydrogen production and industrial products like green aluminum with a realistic timeline of renewable electricity generation capacity. 

Scenario 1: Nuclear power has proven to be a game changer for the UAE to boost its renewable power generation capacity. Saudi Arabia will be able to do the same. 

In addition to solar and wind generation, nuclear power will enable the Gulf states to accelerate their circular economy ambitions, while also building out capacity across the energy sector in hydrogen facilities and the production of green industrial products for export. Nuclear power could also accelerate the distribution of electricity across the broader region, in transmission and interconnection lines to Iraq, Egypt and beyond, making the GCC a regional power supply hub. 

Scenario 2: Solar and wind power generation will accelerate in the GCC, but not in sufficient volume or in sufficient geographic reach to meet demand for industrial or hydrogen acceleration. 

Moreover, a resistance to phase out existing gas-fired and even oil-fired electricity generation in weaker Gulf economies will lead to increasing pressure on electricity supply and further disaggregate the GCC states on their ambitions for net zero targets and their ability to reduce the subsidies of existing electricity rates. In this scenario, we will find more advantage for those GCC members that can sell and transmit excess power to their neighbors, and further economic disaggregation between the six states, weakening their political bargaining power as well as their ability to manage the energy transition that over time makes their oil and gas dependency a severe fiscal vulnerability.

Scenario 3: The global investment ecosystem for green and blue hydrogen production will accelerate more in the United States, along with a more rapid build-out of sustainable infrastructure and renewable power generation that surpasses the projects and viability of that in the GCC. 

The Gulf energy transition in this scenario slows down, becomes more entrenched in traditional oil and gas exports, and struggles to meet domestic and regional electricity demand. 

Karen E. Young is a senior research scholar at the Center on Global Energy Policy at Columbia University. She was previously  founding director of the Program on Economics and Energy at the Middle East Institute. She was a resident scholar at the American Enterprise Institute, and taught courses on the international relations and economy of the Middle East at George Washington University and at the Johns Hopkins School of Advanced International Studies. Before joining AEI, she served as senior resident scholar at the Arab Gulf States Institute, a research and visiting fellow at the Middle East Centre of the London School of Economics and Political Science, and an assistant professor of political science at the American University of Sharjah in the UAE.