The escalating conflict in the Middle East is beginning to disrupt the region’s renewable energy ambitions, creating new pressure on supply chains, project financing, and infrastructure timelines, according to analysis from Rystad Energy.
The crisis, centered around disruptions to the Strait of Hormuz and wider regional instability, is reshaping global energy markets and affecting renewable energy deployment across the Gulf and neighboring economies. Analysts estimate active renewable energy projects in the Middle East could face delays ranging from three to 12 months, even as governments strengthen their long-term commitment to energy transition strategies.
Countries including Saudi Arabia, United Arab Emirates, Oman and Türkiye are expected to experience short-term setbacks followed by accelerated investment in clean energy. Meanwhile, Qatar, Kuwait, Iraq, Bahrain and Jordan may face moderate delays tied to market stabilization. Higher-risk countries such as Iran, Israel, Syria, Lebanon and Yemen are expected to see prolonged disruptions to renewable development.
A major challenge comes from supply chain disruptions affecting key maritime routes. Solar photovoltaic imports across Gulf countries dropped sharply in March 2026 compared with 2025 averages. The UAE’s imports fell from 767 MW to 160 MW, while Saudi Arabia’s dropped from 704 MW to just 80 MW. Oman recorded no imports during the month. In contrast, Türkiye and Israel increased imports, largely because they are less dependent on shipping routes through Hormuz and the Red Sea.
Developers are also facing rising project costs. Freight rates on the Asia-Mediterranean route have surged, while China’s removal of its VAT export rebate has added roughly 9% to module prices. Higher silver prices are further increasing solar cell manufacturing costs, forcing engineering, procurement and construction contractors to renegotiate contracts and reassess investment risks.
The region’s ultra-competitive renewable energy auctions — where bids can fall between $10.5 and $20 per megawatt-hour — leave developers operating on extremely thin margins. With war-related financial risks now being added to project financing calculations, many companies are repricing logistics and force majeure exposure into new bids. Countries like Kuwait, which is moving forward with its first large-scale solar projects totaling 1.6 GW, are considered especially vulnerable to these pressures.
Despite near-term setbacks, analysts say the crisis may ultimately reinforce the economic case for renewables in Gulf oil-producing states. With Brent crude prices above $90 per barrel and LNG prices elevated, every megawatt of solar or wind energy used domestically allows more oil and gas to be exported at premium prices. This has strengthened the long-term strategic importance of renewable energy across the Gulf, even as logistical and financial challenges temporarily slow deployment.
