- Operational renewable capacity in the MENA region rose by 44 percent in 2025 to reach 43.7 GW, led by record low cost solar and wind.
- The regional project pipeline has expanded to 202 GW, already surpassing previous transition scenarios and narrowing the gap to 2030 national targets.
- Energy storage and large scale renewables are reshaping power systems, while hydrogen development faces slower execution and structural barriers.
Dii Desert Energy has released its 2026 Outlook, highlighting the rapid acceleration of the energy transition across the Middle East and North Africa. Drawing on its proprietary database tracking clean energy assets across the value chain, the report shows that the region is moving significantly faster than previously expected, particularly in renewable power deployment.
By the end of 2025, operational renewable energy capacity reached 43.7 GW, following the addition of 13.4 GW in just twelve months. Solar PV accounted for the bulk of this growth at 34.5 GW, supported by 7.4 GW of wind and around 1.8 GW of concentrated solar power. The expansion has been underpinned by continued declines in technology costs, with record low levelised costs of electricity achieved at 1.09 US cents per kilowatt hour for solar PV and 1.33 US cents per kilowatt hour for wind.
The scale of development is also increasing. Gigawatt size projects are becoming standard across several markets, supported by more mature supply chains and improved project execution capabilities. Saudi Arabia has emerged as the regional leader, nearly tripling its installed renewable capacity in one year to reach 11.7 GW, overtaking early movers such as Jordan, Morocco and the UAE. The UAE continues to set global benchmarks, including the start of construction on a 5.2 GW solar park combined with 19 GWh of battery storage to deliver baseload renewable power.
Dii’s analysis shows that the regional renewable energy pipeline has surged to 202 GW. This figure already exceeds the conservative transition baseline of 165 GW and has overtaken the balanced transition scenario forecast just a year ago. The pipeline now approaches the region’s combined 2030 national targets of 235 GW, reducing the implementation gap to around 33 GW. In response, Dii has updated its scenarios, projecting three possible pathways for 2030 ranging from 165 GW under a conservative case to 290 GW under a green revolution scenario that reflects the region’s full potential.
Alongside generation, utility scale energy storage is expanding rapidly. Operational storage capacity stands at around 25 GWh and is expected to grow six fold to 156 GWh by 2030, equivalent to a compound annual growth rate of 44 percent. Battery energy storage systems now represent around half of operational capacity, overtaking thermal storage linked to concentrated solar power. Saudi Arabia is becoming one of the world’s top energy storage markets, commissioning more than 10 GWh of standalone battery projects in 2025 and setting new benchmarks for battery capital costs.
In contrast, hydrogen development is progressing more slowly. While the project pipeline includes 127 active projects, only five have reached financial close or construction, including the NEOM Green Hydrogen Project, which is more than 80 percent complete. Dii notes that fossil based energy prices remain artificially low and do not reflect emissions costs, limiting the competitiveness of low emission hydrogen. Regulatory uncertainty, lack of infrastructure and the absence of secured offtake continue to delay execution, despite unchanged regional production targets of around 10 million tonnes per year by 2030.
The Outlook concludes that the MENA region is increasingly well positioned as a global clean energy hub, leveraging some of the world’s lowest cost solar and wind resources. New interconnections and export corridors, including emerging hydrogen and power links to Europe and beyond, are strengthening this position. However, while the transition of electrons is accelerating, further policy clarity and market mechanisms will be essential to unlock investment in molecules and fully realise the region’s clean energy potential.
Link to the full report HERE
Author: Bryan Groenendaal
