United Arab Emirates (UAE) Power Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

United Arab Emirates (UAE) Power Market Trends and Insights

Large-scale Solar Program Rollouts under UAE Energy Strategy 2050

The December 2024 update to Energy Strategy 2050 mandates a 30% clean-energy share by 2030, which requires clean capacity to climb from 14.2 GW to 19.8 GW. More than 10 GW of utility-scale solar is in various stages, led by the 5.2 GW Masdar 24/7 initiative that combines photovoltaics with 19 GWh of storage. Procurement cycles have compressed, evidenced by EWEC closing finance for the 1.5 GW Al Ajban project within two months of award. The policy’s emission-factor target of 0.27 kg CO₂⁄kWh effectively sidelines unabated gas, steering capital to solar-plus-storage hybrids. An estimated AED 150-200 billion in investment and 50,000 green jobs are expected by 2030, deepening local supply-chain sophistication. Module manufacturers have already secured multi-gigawatt orders, underscoring confidence in execution.^{[1]Staff Correspondent, “Masdar Launches 24⁄7 Solar-Storage Mega-Project,” PV Magazine, pv-magazine.com}

Green Hydrogen Initiatives Boosting Renewable Integration Into Grid

The Masdar-TAQA-ADNOC-Mubadala hydrogen hub targets 1 GW of electrolyzers by 2031 and one million tonnes of annual hydrogen output. Flexible electrolyzer operation absorbs midday solar oversupply, raising renewable capacity factors and trimming curtailment. Co-location with industrial off-takers in Khalifa Port and Taweelah bypasses the grid for part of the output, creating dual revenue streams that lift project returns. International developers such as TotalEnergies and ENGIE are exploring similar setups, indicating replicability. IRENA’s 2024 assessment shows hydrogen-coupled renewables can achieve 15-20% higher IRRs than grid-only plants.^{[2]IRENA Analysts, “Hydrogen-Coupled Renewables Economics,” International Renewable Energy Agency, irena.org} However, most capacity will come online after 2030, tempering its immediate contribution to the 2026-2031 CAGR.

Mandatory Rooftop PV Regulations Accelerating Distributed Generation

Dubai’s Shams Dubai mandate installed 300 MW of rooftop systems by mid-2025 and targets 1 GW by 2030. Abu Dhabi raised net-metering tariffs to 0.28 AED⁄kWh in January 2025, cutting commercial payback periods to under five years. The Northern Emirates are extending similar rules through Etihad Water & Electricity to relieve transmission strain. Distributed generation reduces line losses, DEWA reports 2%, versus 6–7% in Europe, and postpones substation upgrades. SirajPower’s zero-capex model has secured large retail and logistics clients, illustrating growing C&I appetite.

Commissioning of Barakah Nuclear Units Adding Baseload Capacity

Barakah Unit 4 entered commercial service in September 2024, completing the 5.6 GW fleet that now supplies roughly 25% of national electricity and avoids 22.4 million tonnes of CO₂ annually. Gas combined-cycle capacity factors have already fallen toward 45%, freeing fuel and enabling flexible peaking duty. With >90% availability, nuclear provides a steady anchor that eases variable-renewable integration. ENEC refinanced project debt in June 2023 at lower rates, improving economics for any future expansion. Barakah’s operational success is influencing nuclear feasibility studies underway in Saudi Arabia and Oman.

Grid Congestion in Northern Emirates Limiting Renewable Integration

Sharjah, Ajman, Ras Al Khaimah, and Umm Al Quwain import most of their power over 132- and 220-kV lines running at up to 95% utilization during summer peaks.^{[3]Bureau Reporter, “Northern Emirates Grid Bottlenecks Persist,” Gulf News, gulfnews.com} TRANSCO’s AED 40 billion upgrade will add 400-kV substations by 2028, yet roughly 800 MW of permitted solar remains stranded. Frequency deviations here reach ±0.3 Hz compared with ±0.1 Hz in Abu Dhabi, complicating inverter-based resource integration. Etihad Water & Electricity is promoting behind-the-meter storage, but clear net-metering rules are still in draft.

Gas Price Volatility Challenging Thermal Generation Cost Competitiveness

Regional LNG prices swung from USD 70⁄MMBtu in 2022 to USD 10–15⁄MMBtu in 2024, exposing gas generators to sharp margin compression. A 60%-efficient combined-cycle plant needs about 7 MMBtu per MWh, translating to USD 70–105 per MWh fuel cost versus sub-USD 15 solar tariffs. ADNOC’s below-market supply contracts begin expiring in 2028, increasing exposure to spot markets. Without long-term LNG deals, utilities face planning uncertainty, discouraging new gas capacity even for peaking roles.

Segment Analysis

By Power Source: Nuclear and Solar Redefine Baseload Economics

Thermal plants supplied 74.6% of electricity in 2025, yet solar and nuclear now dictate incremental investment decisions. Barakah’s 5.6 GW fleet delivers ≈40 TWh annually and anchors system reliability.^{[4]Editorial Team, “Barakah Unit 4 Enters Service,” World Nuclear News, world-nuclear-news.org} The UAE power market size attributable to renewables is forecast to rise sharply as new photovoltaic parks like the 2 GW Al Dhafra and the 5.2 GW Masdar 24⁄7 complex come online. Concentrated solar units with thermal storage already reach 35-40% capacity factors, displacing evening gas peakers. Coal is absent following the Hassyan fuel switch, and oil use has fallen below 2%. Wind, hydro, and biomass remain marginal. The UAE power market is therefore converging on a tri-pillar mix of nuclear, solar-plus-storage, and flexible gas turbines for residual balancing.

Capital is migrating accordingly. Module makers secure multi-gigawatt orders, and battery suppliers such as CATL have landed 19 GWh contracts. Gas assets built for 8,000-hour duty now run near 4,000 hours, eroding returns. Without carbon capture or hydrogen blending, investors see limited upside in new gas capacity. This dynamic will persist through 2031 as policy, tariffs, and technology advantages reinforce solar dominance within the UAE power market.

Note: Segment shares of all individual segments available upon report purchase

By End User: Commercial and Industrial Buyers Capture Behind-the-Meter Economics

Utilities accounted for 65.1% of demand in 2025, yet commercial and industrial customers are the growth engine. They are adding rooftop arrays that sidestep wheeling charges and lock in long-term savings, propelling an expected 10.3% CAGR for the segment. SirajPower’s fleet exceeds 200 MW and targets 500 MW by 2026 under zero-capex, long-tenor PPAs. The UAE power market size tied to distributed systems is scaling fast as retailers, logistics operators, and heavy industry respond to corporate net-zero mandates.

Utilities are repositioning as platform providers that procure capacity from IPPs while selling ancillary services. EWEC’s 400 MW⁄800 MWh storage tender illustrates a pivot to flexibility products. Residential uptake is smaller in absolute terms but rising because of zero-interest loans and shorter paybacks after January 2025 tariff tweaks. By 2031, behind-the-meter assets are expected to materially flatten evening peaks, moderating capacity-addition needs across the wider UAE power market.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Abu Dhabi and Dubai supplied roughly 70% of 2025 electricity, leveraging 18 GW of TAQA assets, the 5.6 GW Barakah complex, and 3.86 GW of Dubai solar. EWEC’s auctions have delivered world-low tariffs that continuously expand the UAE power market across both emirates. Dubai’s Mohammed bin Rashid Al Maktoum Solar Park will rise from 3.86 GW in 2025 to 7.26 GW by 2030, and Phase 7 will add a 1 GW six-hour battery, making it the first dispatchable solar hub in the region.

Northern Emirates grids remain capacity-constrained, importing up to 90% of peak load over lines operating near design limits. TRANSCO’s new 400 kV substations in Sharjah and Ras Al Khaimah will not enter service until 2028, so rooftop solar and behind-the-meter storage are the interim solutions. Fujairah’s east-coast plants act as swing suppliers to Oman through GCCIA links, highlighting the strategic value of interconnection.

Cross-border flows reached 1.2 TWh in 2024, and a 1,500 MW HVDC line to Oman scheduled for 2028 will further integrate regional markets. Until then, Abu Dhabi will balance national deficits using new storage plants and flexible gas units, reinforcing its role as the backbone of the UAE power market.