Gulf's excess electricity exports fostering energy alliances

Arab News

28-05-2025

https://arab.news/ne8sz
The Gulf region's move toward clean energy sources in recent years has been lauded by the international community. The region's states are rapidly investing in renewable energy, particularly solar and wind, to diversify their economies and reduce their traditional reliance on fossil fuels. These initiatives not only meet domestic demand sustainably but also free up hydrocarbons and excess energy for export, in turn positioning the region as integral to the global clean energy transition.
Oil and gas have traditionally dominated the region's exports, with Saudi Arabia being the largest exporter of oil worldwide. However, there has been an uptick in the export of surplus electricity by the Gulf states, in line with the region's economic diversification and move away from hydrocarbon dependence. Although hydrocarbons continue to dominate the Gulf states' export portfolios, renewable energy trade is a pillar of their long-term visions and they are increasingly investing in sustainable projects to achieve net-zero emissions targets.
As these projects bear fruit thanks to significant investments over recent years, the region is faced with excess sustainable energy supply, particularly during off-peak seasons. Using this opportunity, the Gulf states are expanding their export of surplus clean energy to markets with supply shortages or growing demand. Saudi Arabia and the UAE are at the forefront of this move, with the latter having nearly 50 percent spare capacity generation. In fact, the UAE's clean energy capacity is expected to double by 2030.
The region's clean energy capacity will continue to grow given the ongoing investment in the sector. In Saudi Arabia, the NEOM project includes an $8.4 billion green hydrogen plant that aims to produce 650 tonnes daily. The UAE, through Masdar, is also at the forefront of sustainable development, producing green hydrogen for aviation fuel and shipping. Oman's Hyport Duqm is one of the world's largest gigawatt-scale green hydrogen projects.
Renewable energy trade is a pillar of the Gulf states' long-term visions and they are increasingly investing in sustainable projects
Zaid M. Belbagi
In this context, the UAE is assessing the feasibility of linking its grid to India via a subsea cable. Saudi Arabia, on the other hand, will next month launch a 3 GW subsea high-voltage direct current connection to Egypt, while the Kingdom is similarly looking into a possible connection with India.
The shift toward Asian partners is not a coincidence — it is a strategic opportunity. Asia's energy demand is increasing steadily, with the Asia-Pacific today accounting for more than 40 percent of global primary energy consumption. Amid geopolitical volatility and disruption in global supply chains due to US tariffs, the Gulf Cooperation Council has emerged as a reliable market and trade partner. Renewable energy sources, particularly solar and wind, are key to meeting the growing Asian demand.
By next month, India's electricity demand is projected to peak at 273 GW, driven primarily by rising cooling needs during the summer. Similarly, China has the highest electricity needs globally at nearly 10,000 terawatt hours in 2024. This demand is growing by about 7 percent a year primarily due to strong industrial electricity consumption. The growing need for energy in these markets presents a valuable opportunity for the Gulf states, which are promptly stepping in to meet the demand.
European markets also have a growing appetite for alternative energy sources. Since the 2022 Russian invasion of Ukraine, the EU has attempted to reduce its reliance on Russian energy. The Gulf states are playing a role in filling this gap, forging new partnerships with European partners like France, Germany, Italy and the Netherlands.
The UAE is exploring greater cooperation through opportunities such as a $1 billion renewable power subsea connection to link with Italy and Albania. It has also invested in Xlinks, a proposed pioneering power link between Morocco and the UK. And the region is exploring the potential of the Elmed link between Tunisia and Sicily to provide both Gulf and North African energy in EU markets.
Given the region's established expertise in hydrocarbon trade, it has the necessary risk appetite for this new phase of exports
Zaid M. Belbagi
Over the last decade, the region has been preparing to face geopolitical disruptions and strategic risks. Shifts such as the rising energy demand in India and China, low oil prices, increased shale self-sufficiency in the US and Canada, Brexit, and regional conflicts have prompted Gulf states to expand their trade ties to bolster economic resilience. They have increasingly turned toward multipolar alliances to preserve their strategic autonomy.
As traditional Western partners show signs of reduced engagement, the region is strengthening ties with other powers like China, India and the EU. They are capitalizing on their growing renewable energy capacity by positioning themselves as future exporters of electricity. Investments in solar and wind power, combined with advancements in grid connectivity and energy storage, are enabling the Gulf to generate surplus electricity. Given the region's established expertise in hydrocarbon trade, it has the necessary risk appetite for this new phase of exports.
By developing transnational electricity grids and forging energy-sharing agreements, the Gulf states can manage their excess electricity supply and secure non-oil revenue streams. They aim not only to monetize their renewable resources but also to strengthen their geopolitical relevance in the global energy transition.
The export of excess electricity from the Gulf to the growing markets of Asia and Europe highlights the emergence of multipolar alliances and diversified trade partnerships. By linking their energy infrastructure with diversified territories, the Gulf states are reducing their dependence on traditional Western markets and deepening ties with markets with supply shortages. This is key to enhancing the region's strategic autonomy, while positioning it as a significant player in the global energy transition.
Simultaneously, this transition is reforming the image of the region as oil-dependent, as global partners are realizing the Gulf's value in other critical sectors.