UAE Renewable Energy Market, By Type (Hydroelectric Power, Wind Power, Bioenergy, Solar Energy, and Geothermal Energy) and End Use (Residential, Commercial, Industrial, and Others), By Region, Competition, Forecast and Opportunities, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 4.71 Billion
CAGR (2026-2031)	20.18%
Fastest Growing Segment	Geothermal Energy
Largest Market	Abu Dhabi
Market Size (2031)	USD 14.19 Billion

Market Overview

The UAE Renewable Energy Market will grow from USD 4.71 Billion in 2025 to USD 14.19 Billion by 2031 at a 20.18% CAGR. The UAE renewable energy market consists of the development and deployment of power generation systems that utilize naturally replenishing resources, primarily focusing on solar photovoltaic technology, concentrated solar power, and wind energy. The main drivers fueling this sector include the government’s strategic imperative to diversify the national economy away from hydrocarbon reliance and its binding commitments to the Net Zero 2050 strategic initiative. Additionally, the significant reduction in the levelized cost of solar electricity has improved the economic viability of utility-scale projects, effectively positioning renewable assets as competitive alternatives to conventional thermal power plants.

Despite this positive momentum, the integration of intermittent renewable energy into the national grid presents a substantial challenge, as variable power output requires advanced infrastructure and storage solutions to maintain stability. The harsh environmental conditions, specifically dust accumulation and extreme heat, also demand frequent maintenance to sustain efficiency. According to Dii Desert Energy, in 2024, the United Arab Emirates reached an installed renewable energy capacity of 6.3 gigawatts, reflecting the rapid pace of infrastructure development required to meet its long-term sustainability goals.

Key Market Drivers

The implementation of the UAE Energy Strategy 2050 acts as the primary catalyst reshaping the market, driving aggressive capacity expansion and structural diversification away from fossil fuels. This comprehensive policy framework mandates a substantial shift towards clean energy sources, compelling state-owned utilities to accelerate their decarbonization timelines through binding long-term investments. Aligning with these national mandates, major entities are establishing rigorous renewable targets to support the country's net-zero commitments. For instance, according to the Emirates News Agency (WAM), in January 2025, the Emirates Water and Electricity Company (EWEC) reaffirmed its strategic target to increase Abu Dhabi’s solar power capacity to at least 10 gigawatts (GW) by 2030. Such targets underscore the government's direct influence in stimulating market activity and ensuring procurement visibility for developers.

Concurrently, the development of utility-scale solar parks and mega-projects serves as the tangible execution mechanism for these strategic goals, utilizing the region's high solar irradiation to deliver cost-competitive electricity. The market is characterized by the frequent tendering of gigawatt-scale independent power projects that attract global consortiums and significant foreign direct investment. Highlighting this trend, according to PV Magazine, in January 2025, EWEC issued a Request for Proposals (RFP) for the development of the 1.5 GW Zarraf solar photovoltaic project in the Al Dhafra region. These mega-projects are rapidly expanding the operational footprint of renewable assets across the emirates. According to Energy Global, in June 2025, the Dubai Electricity and Water Authority (DEWA) reported that the Mohammed bin Rashid Al Maktoum Solar Park reached a total production capacity of 3,860 MW, reflecting the successful integration of large-scale infrastructure.

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Key Market Challenges

The integration of intermittent renewable energy into the national grid constitutes a structural barrier that critically hampers the expansion of the UAE renewable energy market. As the sector aggressively scales up solar photovoltaic capacity, the power generation profile becomes increasingly variable and non-dispatchable, creating substantial deviations between peak energy production and peak demand periods. This intermittency forces grid operators to manage severe frequency and voltage fluctuations, which threatens network stability and limits the technical capacity of the grid to absorb new utility-scale projects without risking curtailment or supply interruptions.

Consequently, the market growth is constrained by the capital-intensive requirement for parallel grid modernization and flexibility assets. The dependency on developing simultaneous storage infrastructure creates a bottleneck, delaying the commissioning of generation assets and increasing the overall complexity of project deployment. According to the Middle East Solar Industry Association (MESIA), in 2025, the announced pipeline for battery energy storage projects across the MENA region, with the UAE as a primary contributor to this flexibility infrastructure, exceeded 20 gigawatt-hours. This magnitude of required storage highlights the significant infrastructural gap that currently restricts the seamless addition of further renewable capacity.

Key Market Trends

The emergence of commercial-scale green hydrogen production hubs represents a pivotal shift in the market, transitioning the focus from solely decarbonizing electricity to producing export-oriented clean fuels for hard-to-abate sectors. This trend is driven by the strategic alignment of national industrial capabilities with global demand for low-carbon energy vectors, leveraging abundant solar resources to power electrolysis infrastructure. A key development in this domain is the formalization of rigorous demand targets to secure early market share and justify the capital expenditure for these hubs. According to SolarQuarter, January 2025, in the article 'UAE Accelerates Green Hydrogen Production to Achieve National Energy Goals', the National Hydrogen Strategy forecasts that local demand for low-carbon hydrogen will reach 2.7 million tonnes per annum by 2031, necessitating a rapid scale-up of domestic production facilities.

Simultaneously, the acceleration of utility-scale waste-to-energy project deployments is diversifying the renewable energy mix by converting municipal solid waste into a reliable source of baseload power. This trend addresses the dual challenges of landfill management and energy security, providing a continuous generation profile that complements the intermittency of solar assets. The expansion of existing facilities highlights the commercial viability and scalability of this technology within the emirates as a critical component of the circular economy. Highlighting this growth, according to Waste & Recycling Magazine, February 2025, in the article 'UAE forges ahead with waste-to-energy solutions', the Phase Two expansion of the Sharjah Waste to Energy plant will double the facility's electrical output from 30 megawatts to nearly 60 megawatts.

Segmental Insights

The Geothermal Energy segment is currently emerging as the fastest-growing category within the UAE Renewable Energy Market, driven by a strategic breakthrough in decarbonizing the energy-intensive cooling sector. This rapid expansion is anchored by a pioneering collaboration between ADNOC and the National Central Cooling Company (Tabreed), which successfully deployed the region's first geothermal district cooling project in Masdar City. Unlike intermittent solar resources, this segment is gaining unprecedented momentum because it offers a consistent baseload power supply, prompting the UAE government to actively accelerate its integration into the national grid to support the Net Zero by 2050 strategic initiative.

Regional Insights

Abu Dhabi maintains a leading position in the UAE renewable energy market due to extensive government backing and the ongoing implementation of large-scale solar infrastructure. The region’s market dominance is supported by the Abu Dhabi Department of Energy, which provides the necessary regulatory oversight to encourage sector growth and investment. Additionally, the Emirates Water and Electricity Company actively drives capacity expansion through the strategic procurement of utility-scale photovoltaic independent power producer projects. This cohesive approach between regulatory governance and strategic project development secures Abu Dhabi’s status as the central driver of renewable energy progress across the Emirates.

Recent Developments

• In October 2025, Masdar entered into a strategic partnership with Etihad Rail by signing a Memorandum of Understanding to develop logistics solutions for the green hydrogen sector. This collaboration investigates the feasibility of using the UAE's expanding national railway network to transport green hydrogen and related derivatives, such as ammonia and methanol, between production facilities and seaports. The initiative supports the national objective of positioning the UAE as a key global exporter of low-emission hydrogen by 2031. By integrating rail transport, the companies aim to reduce the carbon footprint associated with the logistics of renewable fuel distribution.
• In December 2024, the Emirates Water and Electricity Company (EWEC) announced that it had successfully secured land for the development of new solar and wind energy projects with a combined capacity of 4.6 gigawatts. The approved sites, which cover approximately 75 square kilometers in Abu Dhabi, are designated to host three new solar photovoltaic plants and one wind farm. These developments are integral to the company's strategic plan to increase its total solar power capacity to 10 gigawatts by 2030. The allocation of this land represents a critical step in decarbonizing the region’s electricity sector and meeting local energy targets.
• In September 2024, Etihad Water and Electricity (EtihadWE) collaborated with the Ministry of Energy and Infrastructure to launch the Distributed Solar Systems project across the Northern Emirates. This initiative permits residential, industrial, and agricultural customers to install rooftop photovoltaic panels and connect them directly to the main power grid. The program enables consumers to generate their own clean electricity and export any excess power back to the utility, thereby reducing their monthly energy costs. The launch supports the UAE's broader strategic goal to diversify its domestic energy mix and triple the contribution of renewable energy sources by 2030.
• In April 2024, the Emirates Water and Electricity Company (EWEC) awarded the development of the 1.5 gigawatt Al Ajban Solar Photovoltaic Independent Power Project to a consortium comprising EDF Renewables, Korea Western Power Company, and Masdar. This utility-scale solar facility, situated in the Al Ajban area of Abu Dhabi, is expected to supply power to approximately 160,000 homes once fully operational. The awarding of this contract marks a significant progression in the UAE's efforts to increase its renewable energy adoption and reduce carbon emissions. The project operates under a long-term power purchase agreement signed with the procuring entity to ensure a stable energy supply.

Key Market Players

• Abu Dhabi Future Energy Company
• Dubai Electricity and Water Authority
• Emirates Water and Electricity Company
• Abu Dhabi National Energy Company
• ACWA Power
• Yellow Door Energy
• Enerwhere Sustainable Energy DMCC
• SirajPower
• Enviromena Power Systems LLC
• Shams Power Company
• First Solar Middle East

By Type	By Region
Hydroelectric Power Wind Power Bioenergy Solar Energy Geothermal Energy	Dubai Abu Dhabi Sharjah Rest of UAE

Report Scope:

In this report, the UAE Renewable Energy Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• UAE Renewable Energy Market, By Type:

• Hydroelectric Power
• Wind Power
• Bioenergy
• Solar Energy
• Geothermal Energy

• UAE Renewable Energy Market, By Region:

• Dubai
• Abu Dhabi
• Sharjah
• Rest of UAE