Renewable energy investments are increasing dramatically across the globe, and our recent trip to Southeast Asia to meet with renewable energy developers gave us interesting insights into recent funding sources. In one case, during a meeting in Indonesia, the topic of renewable and storage project funding came up. We were made aware that one of the more recent sources of substantial funding was coming from the Middle East. That statement caught our attention since, as we all know, the Middle East is the largest oil-producing region in the world and oil is the source of much of its wealth. On our return to the United States, we began researching recent investments into renewable energy from Middle Eastern countries. To our surprise, the Middle East has quickly and quietly become a major player in renewable energy investments.
Saudi Arabia
Saudi Arabia has been one of the largest oil producers in the world for the past century. The Kingdom and the people of Saudi Arabia have benefited greatly from the production and export of oil. The rise of renewable energy and the beginning of a fall in fossil fuel demand from the global economy is threatening to diminish the role of the Kingdom in the world economy. To prevent this fall over a precipice, both government related investment firms and private sector firms have started playing an increasing role in global clean energy investment. Domestically, Saudi Arabia targeted tripling renewable energy production to around 25 GW by 2029. It has also made commitments to multiple Chinese solar panel manufacturers to begin solar panel manufacturing in the Kingdom. Outside the Kingdom, Saudi companies have become very aggressive in Southeast Asia, Central Asia and North Africa. The announced agreements, if completed, would amount to tens of billions of dollars of investments.
The breadth of deals announced by Saudi companies over the past year is rather impressive. In May, ACWA Power, one of the main power companies in Saudi Arabia, announced a PPA worth $4.85 Billion with National Grid of Uzbekistan. It is also funding a wind farm in Azerbaijan with a nameplate capacity of 240 MW that is expected to come online in 2025. Multiple deals were signed with Egypt, involving the construction of multiple megawatts of clean energy generation. Outside of its geographical area, ACWA also signed a PPA agreement with Indonesia’s state-owned PT to develop a floating solar project, with a capacity of 60 MW. Saudi Arabia is currently in discussions with Malaysia to invest more than $10 billion in industrial parks throughout the nation to power green data centers. Almost all these deals and more have been signed only in the past year as the Kingdom of Saudi Arabia looks to become a major player in clean energy. Yet, with all that Saudi Arabia is doing, it is hardly the largest player in the Middle East in clean energy
UAE
The UAE is also becoming a major player in clean energy and storage investments, with Dubai and Abu Dhabi leading those investments. Yet, even in clean energy investments, the rivalry between the two Emirates is obvious. What is most interesting is the different investment styles and locations of the two rivals.
Dubai is currently focusing on investments in African nations and central Asian countries. It seems to have a much broader but smaller project focus than Saudi Arabia but is impacting more countries with this smaller but broader approach. Amea Power, one of the main power companies in Dubai, recently broke ground on a solar project in Uganda, to provide energy to different regions of the country. It also recently reached a financial close for a 120 MW solar project in South Africa. Two agreements were signed in Ethiopia to construct a 200 MW wind farm. In May of 2024, Amea Power broke ground for a 120 MW solar project in Tunisia. These smaller scale deals have allowed Dubai to reach a larger geographic area than Saudi Arabia, potentially allowing for more deals in countries with established relations.
Not to be outdone by Dubai, Abu Dhabi is playing an increasingly larger role in clean energy investing. Abu Dhabi related firms have focused efforts on Southeast Asia, Europe and the United States. Unlike Dubai, it is using a slightly different approach to renewable energy investing. It is still funding the development of projects, such as the approval for the 2 GW of clean energy projects for the new Indonesian capital, funding BESS projects with a 55 MW capacity in the United Kingdom, and wind and solar projects in Azerbaijan. The uniqueness of Abu Dhabi’s renewable energy projects comes from the varying stakes it has bought in several renewable energy companies and projects across the world. It recently acquired a 50% stake in the United States company Terra-Gen, a 67% stake in the Greek company Terna Energy (Gek Terna), and a 49% share in an offshore wind farm in the United Kingdom. All this activity has only occurred in the last year, hinting this is only the start of future investments from the UAE.
Our observation of the landscape of the Middle East and clean energy suggests the emergence of a growing trend of investment led by Saudi Arabia and the UAE. To reduce the risk of being left behind as the world increasingly relies on clean energy, other countries, such as Qatar, are entering the market as well. Obviously, the Middle East is not a monolith, and every country and company within those countries has its own strategy in how to invest in energy of the future. But what is clear is that those countries with the deepest petrodollar pockets are starting to invest assets that expand far beyond diversifying the investment base; rather building a formidable foundation to make the Middle East a hub for clean energy finance. Even though the Middle East is a place known for oil, the ruling parties of those countries understand energy diversification is key for the best future for their economies and people. Its energy diversification strategy is even more important as the world is slowly using less Middle East oil. To witness the heart of oil country investing heavily in clean energy is certainly a trend worth following.
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