Dubai, UAE – The Middle East and North Africa (MENA) region is entering a critical phase in its energy transition, with electricity demand projected to rise by 50 percent by 2035, according to the International Energy Agency’s (IEA) Future of Electricity in MENA report. Rapid population growth, accelerated economic development, and increasing cooling needs driven by climate change are shaping a new power landscape that requires urgent investment and infrastructure reform.
Cooling: The Biggest Driver of Demand
One of the most striking findings of the report is the surge in electricity demand from cooling. By 2035, the region’s peak power requirements for cooling alone are expected to more than double to 500 terawatt-hours (TWh)—a figure that surpasses France’s total annual electricity consumption.
Saudi Arabia already illustrates the trend, with summer peak loads running about 50 percent higher than winter demand. The IEA warns that without adequate preparation, this seasonal spike poses a major electricity security challenge across the region.
Renewable Auctions Unlock Record-Low Prices
To meet soaring demand sustainably, governments across MENA have turned to competitive renewable energy auctions, now the leading procurement method for large-scale projects. Thirteen out of the region’s 17 countries have adopted the model, with the UAE, Jordan, Egypt, and Morocco at the forefront.
These auctions have delivered record-low solar photovoltaic (PV) tariffs, in some cases falling below USD 20 per megawatt-hour, among the cheapest globally. However, challenges remain in execution. The IEA notes delays and hurdles in project commissioning in countries such as Algeria, Iraq, and Tunisia, where bureaucratic and financing barriers slow progress.
A Shifting Energy Mix
The IEA highlights a significant shift in the region’s power generation mix. Oil-fired generation, once dominant, is steadily declining, especially in Saudi Arabia and Iraq, where solar and wind projects are gaining ground. Nuclear power is also entering the equation, with projects advancing in Egypt and the UAE.
In North Africa, natural gas—which currently accounts for more than half of electricity generation—is projected to fall below 40 percent by 2035 under the IEA’s Announced Pledges Scenario (APS). This decline will be offset by rapid growth in solar, wind, and nuclear capacity, reshaping the energy balance in the region.
Grid Limitations: A Bottleneck for Growth
While renewable generation is accelerating, the IEA identifies grid infrastructure as the region’s Achilles’ heel. Over the last decade, Middle Eastern countries expanded their transmission networks by 76 percent, but new projects typically take over 10 years to complete. This creates the risk of bottlenecks, where renewable energy projects come online faster than the grid can absorb them.
The agency calls for urgent investment in digitalisation, smart grids, and cross-border interconnections. Priority initiatives include the expansion of the GCC grid, as well as projects linking MENA with Europe, such as the Great Sea Interconnector. Without these upgrades, the region could struggle to integrate renewable energy at the scale required to meet its climate pledges.
Rising Investment in Clean Energy
The IEA projects that annual power sector investment in MENA will climb from USD 40 billion in 2023 to over USD 60 billion by 2035. Importantly, 85 percent of new spending will go into low-emission technologies, grid expansion, and energy storage, while investments in unabated fossil fuel projects will shrink to just 15 percent.
Country-Level Highlights
- Saudi Arabia aims to generate 50 percent of its electricity from renewables by 2030, aligning the energy transition with its broader industrial diversification plans under Vision 2030.
- United Arab Emirates targets 32 percent low-emission generation by 2030, supported by its nuclear program and continued solar expansion.
- Morocco is leveraging both its renewable potential and phosphate reserves to build an electric vehicle (EV) manufacturing hub, recently signing a USD 1.3 billion gigafactory deal with Gotion High-Tech.
- Yemen and Lebanon, struggling with national grid collapses, are witnessing a grassroots rise in decentralised solar PV systems, showing how distributed energy can step in when centralized infrastructure fails.
The Road Ahead
The IEA concludes that MENA’s electricity future depends on three urgent actions:
- Managing soaring cooling demand, which is set to strain peak supply.
- Accelerating renewable energy deployment, ensuring that project execution matches ambitious auction results.
- Upgrading transmission and distribution networks, including cross-border connections, to integrate renewables and ensure grid resilience.
Without decisive action, the region risks falling short of its 2030 and 2035 climate pledges, despite its abundant renewable potential.
“Electricity is at the heart of MENA’s economic and climate strategies,” the report notes. “The challenge is not whether renewables can supply the demand, but whether grids and regulatory systems can keep pace with the transformation.”
As global energy markets evolve, the MENA region has both the resources and the momentum to become a leader in clean electricity. The question now is whether it can align infrastructure and investment fast enough to meet its soaring demand.
