This article is the second in a special NETA World International Series, opening a global window into electrical power system commissioning, acceptance testing, maintenance testing, and system management.
Commissioning Services International (CSI) is the first InterNational NETA Accredited Company (INAC) to join the Association. CSI has established itself as a leading international provider of mechanical, electrical, and plumbing (MEP) engineering services, known for delivering top-quality results and exceeding customer expectations. The company serves the Middle East market and is committed to continuously promoting awareness of the ANSI/NETA Standards and promoting adherence to the NETA requirements across the industry.
The Spring NETA World article discussed the energy sector in the Middle East, covering its current state, how different energy sources contribute to energy production and consumption, and how the region fits into the global industry. We also looked at key market drivers and the factors shaping its position in the energy world.
This article continues that discussion by focusing on the challenges and opportunities in the sector. We explore issues including aging infrastructure, economic and regulatory barriers, geopolitical factors, and emerging opportunities in the renewable energy sector. Our goal is to shed light on key projects and initiatives shaping the region’s future energy landscape.
REGULATORY AND ECONOMIC CHALLENGES
With its rich history and vast resources, the Middle East is at a turning point. By understanding these challenges and developments, we can see how the region is shaping its energy future in a fast-changing world.
Potential and Barriers
The Middle East and North Africa (MENA) region has exceptional potential for renewable energy. Positioned within the global solar belt — between 35 degrees north and 35 degrees south — it receives some of the highest solar radiation levels on Earth. With long hours of strong sunlight and minimal cloud cover, the region is naturally suited for large-scale solar energy production. In addition, several areas, including Morocco’s Atlantic coast, the Gulf of Suez in Egypt, northwestern Saudi Arabia, and southern Oman, have been identified by the Gulf Cooperation Council in Washington as prime locations for wind energy projects. These natural advantages provide a strong foundation for the region to become a leader in renewable energy.
However, despite these strengths, economic and regulatory challenges continue to slow progress. One major issue is the region’s reliance on traditional energy sources. While many countries have abundant oil reserves, natural gas, which is an efficient and relatively clean energy source, is in short supply in some areas. As a result, many countries still depend heavily on oil, which is both expensive and inefficient for electricity generation.
Another key challenge is the long-standing system of energy subsidies. In many MENA countries, fossil fuel subsidies have been in place for decades, making traditional energy appear cheaper than it actually is. This has discouraged investment in renewable alternatives. According to the International Energy Agency (IEA), fossil fuel subsidies in Gulf Cooperation Council (GCC) countries alone reached $76 billion in 2022, accounting for approximately 4.5% of their total GDP. Over the years, these subsidies have cost the region hundreds of billions of dollars — funds that could have been directed toward economic growth, technological development, and an overall higher quality of life. Addressing this issue is crucial to unlocking the region’s full renewable energy potential and creating a more sustainable future.
Despite these obstacles, positive developments are emerging. One of the most promising initiatives is the increasing use of the Independent Power Producer (IPP) model. This financial framework allows private companies to invest in, develop, and operate power plants, selling electricity to the grid through long-term agreements. By shifting some of the financial responsibility to private entities, this model reduces the burden on public utilities while accelerating the transition to clean energy.
A prime example is the Mohammed bin Rashid Al Maktoum Solar Park in Dubai, which is the world’s largest single-site solar park developed under the IPP model. With a planned capacity of 5,000 MW by 2030 and a total investment of AED 50 billion, this project highlights the success of private-sector involvement in renewable energy. Similarly, Saudi Arabia’s Dumat Al Jandal Wind Farm, the country’s first utility-scale wind project, was launched in 2019 under the IPP model. This $500 million project features 99 turbines and supplies electricity to approximately 70,000 homes.
While these projects represent significant progress, more needs to be done to attract large-scale investment in the renewable energy sector. Expanding financing options — such as green bonds, public-private partnerships, and dedicated renewable energy funds — can provide the necessary capital to support future projects
Climate Finance Challenges
The transition to renewable energy in the Middle East and North Africa faces a major financial obstacle, as global climate funds allocate only 6.6% of their total financing to the region. To meet their Nationally Determined Contributions (NDCs) under the Paris Agreement, MENA countries require at least $495 billion in climate funding — yet current funding levels stand at just $24.4 billion. This financial shortfall limits large-scale renewable energy projects, making it difficult to shift away from fossil fuels.
Furthermore, accessing climate finance remains a regulatory challenge. Strict eligibility criteria, complex approval processes, and limited financial instruments tailored for the region slow down funding distribution. The lack of direct financial support from major climate funds continues to hinder the region’s energy transition. Addressing these financial and regulatory barriers is essential for accelerating renewable energy deployment in MENA.
GEOPOLITICAL AND ENVIRONMENTAL FACTORS
The Middle East sits at the crossroads of three continents — Asia, Europe, and Africa — making it a region of strategic significance. This location has historically brought advantages as well as challenges.
Regional Conflicts
On one hand, the region is a melting pot of diverse cultures and civilizations, creating a rich and dynamic heritage. On the other hand, it has long been a zone of friction, where geopolitical tensions and prolonged conflicts have frequently erupted due to shifting regional and global dynamics.
Today is no exception. Over the past few decades, the Middle East has witnessed numerous conflicts, many of which have had severe repercussions on the countries directly involved. Among the sectors most impacted is the energy industry, where instability has led to varying degrees of disruption, from complete destruction of infrastructure to limitations on energy resources.
For instance, since the outbreak of the Syrian conflict in 2011, power plants and critical infrastructure across the country have been severely damaged or destroyed. Many facilities that remained intact were unable to function due to fuel shortages, leading to a dramatic decline in electricity production. At least 50% of Syria’s power grid has become non-operational as a result.
A similar situation can be seen in Yemen, where prolonged conflict has left entire regions without access to public electricity. In Sana’a, the most densely populated city in the country, the public electricity grid is practically nonexistent today.
Beyond direct warfare, political instability has far-reaching consequences. It drives away investment, disrupts regional cooperation, and weakens international partnerships — all of which are crucial for large-scale energy projects. Cross-border initiatives such as electricity interconnections and gas pipelines rely on mutual agreements between nations, but instability threatens their viability. Additionally, conflicts and uncertainty increase the cost of insurance and financing, making it more expensive and riskier to develop energy infrastructure in the region.
Ultimately, such conflicts do not just slow progress. They set back existing energy systems and hinder the region’s ability to modernize. The only viable solution is to prevent these conflicts altogether. Where that is not possible, minimizing damage to energy infrastructure and ensuring the continued operation of essential services should be a top priority to safeguard the well-being of millions.
Climate Impact
While the region benefits from its strategic position within the global solar belt — receiving some of the highest levels of solar radiation on Earth — and has prime locations for wind energy projects, these advantages only tell part of the story. The environmental conditions of the Middle East and North Africa (MENA) region also pose significant challenges that affect energy production, consumption, and infrastructure.
One of the most pressing concerns is the rapid warming trend observed across the region. Research indicates that temperatures in MENA are rising between 1.5 to 3.5 times faster than the global average. This accelerated warming means that the region could experience temperature increases of 3 to 4 degrees Celsius (5.4 to 7.2 degrees Fahrenheit) nearly three decades earlier than much of the rest of the world. The most intense warming is expected in inland areas of the Arabian Peninsula, where extreme heat events are becoming more frequent and severe.
These rising temperatures significantly impact energy demand, particularly for cooling. Studies have shown that countries such as Qatar, Iraq, the United Arab Emirates, and Oman already experience a minimum of 150 days per year with substantial cooling requirements. As urbanization continues to expand across the region, the need for climate control solutions is becoming even more critical. The increased reliance on air conditioning and refrigeration places considerable strain on electricity grids, leading to higher consumption during heatwaves. This surge in demand reduces grid flexibility and increases the likelihood of blackouts or energy shortages, particularly in densely populated urban centers.
Additionally, the region is renowned for its water scarcity, with countries in this area among the poorest globally in water reserves and precipitation. According to the World Resources Institute, 83% of the population in MENA is exposed to extremely high water stress, and projections indicate that by 2050, 100% of the population will live under such conditions. This persistent issue directly affects the lives of millions, diminishing their quality of life, and if current trends continue, the situation is expected to worsen. This scarcity impacts various sectors, notably the energy sector, where thermal power plants rely heavily on water for cooling processes.
Recognizing this challenge, several countries have implemented measures to mitigate the effects on the power sector. For instance, Egypt has adopted innovative approaches to reduce freshwater usage in its power plants. The New Administrative Capital Power Plant, with a capacity of 4.8 GW, utilizes an air-cooling system equipped with 12 giant fans — a first in Egypt and the Middle East. Similarly, the El Burullus power plant employs wet cooling towers that use water from the Mediterranean Sea instead of freshwater. These initiatives exemplify proactive strategies to address water scarcity challenges in the energy sector.
It remains to be noted that, despite the negative impact of rising temperatures on the efficiency of one of the main alternatives to conventional energy — solar power — it is still one of the most effective solutions for addressing the region’s energy challenges. The decrease in efficiency does not outweigh the overall benefits and advantages that solar power offers.
GRID MODERNIZATION AND RENEWABLE INTEGRATION CHALLENGES
While some countries in the region have taken concrete steps to modernize their energy systems, diversify sources, and adapt to ongoing developments, others still lack practical plans or effective programs for energy transition. Several challenges must be addressed, as they significantly influence the success of this transformation. In general, energy transition should be a structured and well-planned process, guided by technical and scientific studies, aligned with short-, medium-, and long-term goals, and informed by the latest research and practical experiences.
As the global transition to renewable energy accelerates, integrating these sources into existing power systems presents several technical and logistical challenges. To ensure a stable and efficient energy future, planners and policymakers must consider the following key areas.
Balancing Supply and Demand in Variable Energy Systems
One of the primary challenges in renewable energy integration is managing the balance between electricity supply and consumer demand. Sources like solar and wind are inherently intermittent, generating electricity only when weather conditions allow. While production can be abundant during sunny or windy periods, it often does not align with peak demand times.
This mismatch may result in energy being wasted during oversupply and a continued dependence on conventional generation during periods of low renewable output. To address this, energy storage systems (such as batteries or pumped hydro storage) and demand-response strategies are increasingly being explored and deployed. These tools help shift energy availability and manage consumption patterns more dynamically.
Maintaining Grid Stability without Conventional Inertia
Traditional power grids maintain stability through the natural inertia provided by large rotating generators in conventional power plants. This inertia slows down frequency changes during disturbances, giving operators time to respond and stabilize the system.
Renewable energy sources, particularly those using power electronics like solar panels and wind turbines, do not inherently provide inertia. As a result, grids with high levels of renewable penetration become more vulnerable to sudden fluctuations and frequency instability. To mitigate this, technologies such as fast frequency response (FFR), synchronous condensers, and grid-forming inverters are being developed and implemented. These solutions aim to replicate the stabilizing effects of traditional generation and enhance grid resilience in low-inertia environments.
Expanding Transmission Infrastructure and Regional Coordination
Another critical challenge lies in the physical location of renewable energy generation. Unlike traditional power plants, which are often sited near urban centers, renewable sources are typically located in remote or rural areas where sunlight and wind are most available. This creates a significant gap between where energy is produced and where it is needed.
Bridging this gap requires investment in new transmission infrastructure capable of transporting electricity efficiently over long distances. In many regions, this also involves cross-border cooperation and coordinated grid planning to ensure energy can flow where it is most needed, balancing production and demand across larger networks.
EMERGING OPPORTUNITIES IN THE ENERGY SECTOR
To clearly understand the region’s energy landscape, it’s important to examine all the elements that have influenced its development over the years. Energy plays a central role in this region’s economy, closely linked to complex political and social dynamics, and highly responsive to global shifts and trends.
Historically, the region has been characterized by its citizens’ heavy dependence on government subsidies and economic support, shaped by deep-rooted social and political factors. Yet today, economic incentives are driving a significant shift in the region’s energy strategy, aimed primarily at reducing local oil and gas consumption to increase export revenues.
At the same time, regional governments face strong pressure to meet international climate commitments, notably since the COP21 conference. Nevertheless, many countries in the region have ambitions to be among the world’s last resilient producers and exporters of hydrocarbons. Due to their abundant resources and competitive production costs, they aspire to remain economically viable even when global demand for oil and gas eventually declines, positioning them among the last producers standing. This competitive advantage distinguishes them from countries facing higher production costs and weaker economic resilience.
However, there are genuine efforts and ambitious plans emerging across the region to significantly reshape the energy sector. As previously discussed in our last article, economic diversification has led to transformative economic visions in the Middle East — most notably, UAE’s Vision 2050 and Saudi Arabia’s Vision 2030. Both of these strategic visions prioritize the energy transition as a crucial part of broader economic transformation.
Yet, these countries are not alone. Other regional players are also launching influential initiatives and demonstrating significant ambitions in reshaping the energy sector. Morocco and Egypt, for instance, have taken leadership roles in driving the transition toward renewable and sustainable energy. Combined, these two nations account for around 82% of renewable energy investments in North Africa.
In recent years, Egypt and Morocco have initiated substantial projects with investments worth billions of dollars, aimed at accelerating their shift to clean energy. Notable examples include Egypt’s Benban Solar Park and Gabal El-Zeit Wind Farm, along with Morocco’s Noor Ouarzazate and Xlinks projects. These landmark projects illustrate their ambitions and showcase their leadership in renewable energy.
Among these initiatives, Morocco’s Xlinks project stands out as particularly ambitious. It aims to deliver renewable energy directly from Morocco to the United Kingdom through a 4,000-kilometer subsea HVDC cable. The project, located near Tan-Tan, Morocco, involves building solar and wind farms capable of producing approximately 10.5 GW of energy, supported by large-scale battery storage systems providing 22.5 GWh of storage capacity. At an estimated cost of about $21 billion, Xlinks is projected to supply up to 8% of the UK’s total electricity demand. In its first year alone, it is expected to help reduce the UK’s power-sector CO₂ emissions by approximately 10%, significantly contributing toward the country’s climate targets.
CONCLUSION
The Middle East region stands at the threshold of a new phase marked by inevitable changes across various sectors. Successfully managing this transformation will require careful planning and thoughtful strategies to ensure that all parties involved, including regional governments, public and private investors, and the local populations, benefit positively and sustainably. Historically, the region has enjoyed immense advantages from its abundant reserves of fossil fuels and hydrocarbons. This significant wealth of natural resources is expected to continue playing a major role, even as the transition toward renewable and alternative energy sources takes place. Despite the various challenges and obstacles highlighted throughout this discussion, substantial investment opportunities clearly remain, confirming that the strategic value and resource richness of the Middle East region remain strong and undiminished.
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Deyaa Khaled Hammodeh is an experienced electrical engineer with over 13 years of expertise in electrical commissioning, testing, and maintenance. He currently serves as Technical Manager at Commissioning Services International (CSI) and has been a key contributor to ensuring the success of complex projects. Deyaa holds a BS in electrical engineering from the Hashemite University in Jordan.