Cheap solar power is now rewriting long-term energy planning across the Gulf
The UAE’s energy and industrial landscape is undergoing one of the fastest transformations in the nation’s history.
Falling solar prices, a renewed focus on industrial decarbonization, and an assertive global investment strategy by Abu Dhabi’s national energy companies are converging to reshape the country’s long-term economic trajectory.
From massive renewables build-outs to retooled aluminum production and new global acquisitions, the UAE is positioning itself as both a low-carbon manufacturer and a major energy supplier for a diversified era.
In Dubai, the Dubai Electricity and Water Authority (DEWA) has again lifted its renewable ambitions, raising its 2030 clean-energy target from 7.5 gigawatts (GW) to 8.3GW. This is the second upward revision in a year and reflects a broader regional trend: Cheap solar power is now rewriting long-term energy planning across the Gulf.
Renewables are set to account for just over 36 percent of Dubai’s 2030 power mix, a modest but symbolic leap in a city that still relies on natural gas for over three-quarters of its installed capacity.
The Mohammed bin Rashid (MBR) Solar Park already one of the largest single-site solar parks in the world is the centerpiece of this growth. Installed capacity stands at 3.86GW and will more than double to 8GW by the decade’s end.
Several ongoing phases add not only capacity but new capabilities: Phase 7 will introduce a major battery storage component able to hold 8.4GWh, marking the first solar-plus-storage hybrid of its scale in Dubai.
The emirate is also diversifying its clean-energy mix with a pumped-hydro storage facility in Hatta and waste-to-energy generation at the Warsan plant.
Rise of renewables
Yet gas still dominates. Dubai’s expanding population and industrial base have pushed power demand to record highs.
However, the rise of renewables has contributed to a drop in LNG imports the lowest levels since imports began in 2010 illustrating that efficiency gains from solar and nuclear are already reshaping the UAE’s gas balance.
One of the most consequential industrial shifts is being led by Emirates Global Aluminium (EGA), the Middle East’s largest aluminum producer. EGA has initiated a sweeping restructuring of how it sources electricity, particularly at its massive Taweelah site in Abu Dhabi.
In late 2024, EGA agreed to sell its captive 3.1GW gas-powered generation complex to Abu Dhabi’s utilities giants Taqa and Dubal Holding for $1.9 billion.
In turn, EGA will begin purchasing electricity directly from Abu Dhabi’s grid electricity that increasingly comes from solar and nuclear. With 23TWh contracted, EGA becomes the single largest customer on the emirate’s network.
The move cuts the firm’s carbon intensity and boosts production of its low-carbon aluminum brands, CelestiAL (solar) and MinimAL (nuclear). By 2028, nearly half of EGA’s output could qualify as low-carbon, depending on market demand.
This deal dovetails with Abu Dhabi’s broader industrial policy to use its abundant clean energy as a competitive advantage.
The emirate is expanding interconnection capacity to allow more low-carbon electricity to reach EGA’s facilities, while simultaneously ramping up solar development. Projects such as the 1.5GW Al Ajban plant and the similarly sized Al Khazna facility will meet future demand.
Far more transformative, however, may be the new 5.2GW Azeezah solar-plus-storage “round-the-clock” project, capable of delivering 1GW of baseload power from sunlight alone. Scheduled for completion in 2027, it signals how Abu Dhabi sees storage as central to its next generation of renewable projects.
Despite the renewables boom, gas remains a permanent component of the power generation mix. Abu Dhabi is adding 8.3GW of new gas-fired capacity and has contracted long-term offtake from the former EGA generation assets through 2049.
Boost to power capacity
Parallel to the transformation of the power sector, the board of the Abu Dhabi National Oil Company (ADNOC) has approved a sweeping $150 billion investment plan for 2026–2030.
The company aims to maintain its ambitious oil production capacity target of 5 million barrels per day (bpd) by 2027 while strengthening its position in natural gas, petrochemicals, and international energy markets. Significant capital will flow into offshore developments such as Upper Zakum, expansions of the Ghasha sour-gas project, and the ramp-up of unconventional oil and gas resources.
The UAE has updated its reserves estimate to 160 trillion cubic feet of recoverable unconventional gas and 22 billion barrels of unconventional oil. Global partners including TotalEnergies, Petronas, and EOG Resources are already active in UAE unconventional concessions, signaling a long-term bet on the sector.
Conventional oil reserves increased from 113 billion barrels to 120 billion barrels, the sixth largest in the world. Conventional gas reserve estimates were also revised up to 297 trillion cubic feet from 290 trillion cubic feet, confirming the UAE’s status as the holder of the world’s seventh largest gas reserves.
Equally notable this year has been the rise of XRG, ADNOC’s international low-carbon energy and chemicals investment arm.
Launched in 2024 and now valued at $151 billion, XRG has rapidly become a vehicle for overseas acquisitions. Its purchase of German chemical giant Covestro the first major European industrial takeover by a Gulf national oil company marks a turning point in the UAE’s international industrial strategy.
ADNOC is also consolidating its chemicals holdings into a new $60 billion entity, Borouge Group International, positioning Abu Dhabi as a global chemicals powerhouse.
Another emerging opportunity lies in regional electricity trading. Through the GCC Interconnection Authority, the UAE has become a growing exporter of electricity indirectly creating new demand for ADNOC Gas.
Diversification play
Taken together, these initiatives demonstrate a broader national strategy. The UAE is not exiting hydrocarbons; rather, it is channeling fossil-fuel revenues into an industrial base powered increasingly by clean energy, while using global acquisitions as a means of diversification into high-value businesses.
Dubai is pushing solar capacity at an unprecedented speed. Abu Dhabi is deploying some of the world’s largest integrated solar-and-storage projects to power industrial expansion.
EGA is shifting from self-generation to low-carbon grid power, reshaping the aluminum sector. And ADNOC is pairing upstream resilience with global industrial reach.
The UAE’s energy transition, therefore, is not a linear shift away from hydrocarbons but a diversification play built on both renewables and gas.
The country is betting on a portfolio approach: Abundant, cheap solar power for industry; secure gas capacity for reliability; and global investments that secure future revenue streams.
Source: economymiddleeast