Saudi Arabia and the United Arab Emirates (UAE) are accelerating their shift toward renewable energy, fueled by plummeting prices of Chinese battery storage systems that are critical to solar and wind energy integration.
Battery Storage: The Missing Link in Renewable Integration
With falling costs and improving technology, battery energy storage systems (BESS) have become central to energy strategies across the Gulf. These systems capture surplus power during the day — especially from solar plants — and release it at night or during low production periods, stabilizing the grid and enabling a reliable flow of clean electricity.
Both Saudi Arabia and the UAE, traditionally reliant on oil and gas, are ramping up their renewables portfolios to meet ambitious energy targets. Battery storage is emerging as a linchpin in this transition.
From Oil to Clean Energy: A Strategic Pivot
Historically slower to adopt renewables due to abundant domestic fossil fuels, Saudi Arabia and the UAE are now pivoting. Saudi Arabia continues to burn oil for electricity — accounting for nearly half its capacity as of 2023 — while both nations remain major players in global fossil fuel markets.
Yet, this is changing. According to the International Energy Agency, while the Middle East represents 13% of global fossil fuel investments, it accounts for just 2% of clean energy investments. Both Gulf states are aiming to shift that balance.
Riyadh has committed to sourcing 50% of its energy from renewables by 2030, while the UAE targets 44% clean energy by 2050. Achieving these goals requires large-scale battery storage to back intermittent power sources like solar and wind.
Battery Storage Capacity Booms in the Kingdom
Consultancy firm Rystad Energy projects that Saudi Arabia will go from zero battery storage capacity at the start of 2024 to over 11 gigawatt-hours (GWh) by year’s end — positioning the kingdom to rank fifth globally in utility-scale battery storage, behind China, the U.S., Australia, and the U.K.
These rapid gains are due in large part to low-cost Chinese battery imports and lower labor costs. Rystad estimates that battery storage installation costs in Saudi Arabia are below $200 per kilowatt-hour, compared to around $250 in the U.S. or Europe.
UAE’s 24-Hour Solar Power Ambition
The UAE is also betting big on solar-plus-storage. In Abu Dhabi, the Emirates Water and Electricity Company (EWEC) has teamed up with renewables giant Masdar to launch a “gigascale” solar and battery project that promises to deliver uninterrupted, round-the-clock energy.
The project features a 19GWh battery system, making it one of the largest of its kind in the region. Masdar COO Abdulaziz Alobaidli called it the company’s “largest and most ambitious project to date.”
China’s Battery Tech Rises to the Challenge
Experts note that advancements in Chinese battery technology have made deployment in the Gulf’s extreme environment more viable. Batteries are now packaged in cooled, dust-resistant containers — ideal for desert climates.
“First it was solar technology to change — that’s got so much cheaper. And now the battery technology has actually improved in itself,” says Dave Jones, Director of Global Insights at think-tank Ember.
He notes that battery units from China have improved “by an order of magnitude” in just two years, largely driven by a greater-than-expected lithium supply and manufacturing scale. Prices hit an unsustainably low $50 per kilowatt-hour in 2024, according to the Volta Foundation, which has sparked concern among manufacturers but benefited major buyers like Saudi Arabia.
BYD and CATL Lead the Charge
Chinese manufacturers BYD and CATL are leading battery suppliers for these Gulf mega-projects. BYD, already known for its electric vehicles, supplied the 2.6GWh Bisha project in Saudi Arabia — touted as the world’s largest single-phase grid-connected energy storage system. A new 12.5GWh deal with Saudi Electricity Company is also underway.
In Abu Dhabi, CATL will provide battery technology for the 24-hour solar-battery plant. The Chinese firm recently held the largest IPO of 2025 on the Hong Kong Stock Exchange, attracting major investors including Kuwait’s sovereign wealth fund.
A Battery-Powered Future for the Gulf
The Gulf’s renewable energy strategy is now clearly tied to the fortunes of low-cost Chinese battery tech. While the global battery market contends with oversupply and low profit margins, for energy-hungry nations like Saudi Arabia and the UAE, it’s an ideal moment to supercharge their green ambitions — at record-low prices.
