Renewable energy in the UAE

The United Arab Emirates (“UAE”) has continued its momentum in developing the renewables sector since the publication of this guide in 2020. While the significance of oil and gas in the UAE's growth story since the 1960s and 1970s remains undeniable, with around 30% of the country's GDP directly tied to these resources (as of July 2022), the UAE is now working to balance its traditional strengths with the growth of renewables, aiming for mutual enhancement rather than conflict. By way of example, in November 2022 the Abu Dhabi National Oil Company (“ADNOC”) announced its intention over the next five years to accelerate its target increase in crude output capacity and to spend $150 billion to increase oil and gas production (an uplift of its spending targets from $127 billion). 

This pursuit of balance is reflected in the UAE policies. Despite being a prominent global oil producer and an OPEC member, the UAE took a remarkable step in committing to achieve net-zero carbon emissions by 2050, making it the first country in the Middle East and North Africa to do so. Not only has the establishment of a renewables pathway begun, but the shift on the ground in respect of projects has also started.  

The UAE Energy Strategy 2050 (“Energy Strategy 2050”), introduced in 2017 and further updated in July 2023, outlines a roadmap. Its first phase, running to 2030, aims to triple the capacity of renewable energy, increase the installed clean energy capacity from 14.2 GW to 19.8 GW, and increase the share of clean energy in the total energy mix to 30%. As a result of the UAE having both UAE-wide (Federal) and individual Emirate legislations and policies, there are also a variety of Emirate-level policies in respect of renewable energy. For example, Abu Dhabi intends to generate half of its power requirements from clean energy sources by 2030. Further, in July 2023, the Emirate unveiled its Climate Change Strategy 2023-2027 which aims to implement 81 initiatives and 12 key projects to reduce Abu Dhabi’s 2027 emissions by 22% compared to 2016 levels. 

Mr. Majid Jafar, UAE businessman and CEO of UAE-based Crescent Petroleum, has spoken about the fact that if carbon emissions policies are to be lasting, they must be tailored to each country. Discussing the Energy Strategy 2050, Mr. Jafar commented that this looks to combine continued use of natural gas with cleaner sources (e.g. solar power and nuclear energy) to “maintain energy resilience while reducing carbon emissions…current events demonstrate that energy policies need to deliver affordable and reliable energy supplies to withstand supply shocks and other challenges. We have witnessed how lower winds in Europe impacted wind generation and how conflict created oil and gas supply and price shocks. The world must account for such challenges while delivering reductions in carbon emissions because an energy transition without energy security will not succeed”. 

Looking forward, the UAE will host COP28 in Dubai from November to December 2023. This event has sparked controversy due to the appointment of Sultan Al Jaber as the president of COP28, a role he concurrently holds as the CEO of ADNOC. Nonetheless, this development underscores active engagement and the growing awareness among influential figures in the oil and gas industry regarding the importance of renewable energy.  

Initiatives, and to a degree also regulation, have opened up a variety of opportunities for both public and private investment. Significant projects have been kickstarted in this sector, perhaps in direct correlation with the influence and impact that Federal and Emirate incentives are having on the development of the industry. In order to fully capitalise on this and unlock its potential, it will be instrumental that regulatory frameworks are sufficiently developed and at a quick-enough pace. 

Abu Dhabi and Dubai remain the two most significant Emirates in respect of economic standing, and as such are the key focal points of the below. Both at the federal and Emirate levels, the regulation of renewable energy tends to be integrated into the broader energy regulatory framework, rather than being specifically focused on renewables. This integration often involves the same governing entities overseeing both conventional and renewable energy sectors. These governing include the Ministry of Energy and Infrastructure (“MOEI”), the Dubai Electricity and Water Authority (“DEWA”), and the Abu Dhabi Department of Energy (“DoE”). 

In respect of federal-level legislation specific to renewable energy, in September 2022 the MOEI issued a Federal Law to regulate the linkage of distributed renewable energy production units to the electrical grid. This aims at enabling the production of electricity from renewable sources and overcoming the lack of regulations hindering the development of the UAE’s distributed generation market.  

The development of a specific, comprehensive regulatory framework for ‘green’ issues is an area that the UAE may need to progress in the future. It has been suggested that the lack of a regulatory or institutional framework which provides confidence to foreign investors has impeded Middle Eastern companies in being able to lead on green finance.  

There have also been Emirate-level policies put in place that complement, and in some cases seek to surpass, the aims of the Energy Strategy 2050. By way of example, the Dubai Clean Energy Strategy looks to make Dubai “a global centre of clean energy and green economy” through its five pillars: (1) infrastructure, (2) legislation, (3) funding, (4) building capacities and skills, and (5) an environmentally friendly energy mix. This fifth pillar targets 25% solar energy by 2030, with Dubai aiming to derive 75% of its energy from clean sources by 2050. This is supported by the funding pillar which includes, among other things, the establishment of the Dubai Green Fund worth AED 100 billion (over $ 27 billion) which is to contribute easy loans for investors in the clean energy sector at reduced interest rates.  

This has been accompanied by a degree of Emirate-level regulation, such as the Shams Dubai system. This was established in 2014 by a Dubai Executive Council Resolution to encourage the use of solar panels in both commercial and residential properties by allowing DEWA customers to connect to the DEWA grid and offset excess generation from future energy bills.  

In Abu Dhabi, the Regulatory Policy for Clean Energy Certificates was launched in August 2021. This looks to establish a market for trading renewable and nuclear energy attributes in the Emirate, backed by a reliable accreditation system. The DoE based the Clean Energy Certificates scheme on the internationally recognised attribute tracking system for renewable energy certificates developed by the International Renewable Energy Certificate Standard Foundation (the “I-RECS Foundation”). The DoE has been appointed as the accredited International Renewable Energy Certificate (“I-REC”) local issuer to formally issue I-RECs in the Emirate whilst the I-RECS Foundation provides a central registry platform, which, includes all trading transactions, verifies claims and ensures no double counting.  

There has been development beyond Dubai and Abu Dhabi too; for example, Ras Al-Khaimah has also put in place its Energy Efficiency and Renewables Strategy 2040, aiming for renewables to contribute 20% of its energy by 2040 (increasing to 44% by 2050), meanwhile Umm Al Quwain’s Sustainable Blue Economy Strategy incorporates “a net-zero emissions target” into its aims to triple the Emirate’s GDP by 2031. 

These renewable energy initiatives complement broader sustainability efforts to combat climate change. In Dubai, the Al Sa’fat Green Building System was introduced in 2020 (and was further updated in 2023), while in Abu Dhabi, the Estidama green building rating system (also known as the Pearl Building Rating System) focuses on sustainable building design and construction (with an operational document currently undergoing development). A recent practical application of these sustainability measures is the Future Sustainability Forum scheduled for October 2023 in Dubai, aiming to mobilize sustainable finance and innovation. 

The UAE’s typically sunny weather conditions are very conducive to the use of solar technology.  

Dubai's Energy Strategy 2050's infrastructure pillar includes the Mohammed Bin Rashid Al Maktoum Solar Park, announced in 2012 and set for completion in 2030. This is the largest single-site Independent Power Producer solar park in the world that combines CSP and PV technology, and in its fourth stage will have the largest solar tower in the world. With a planned capacity of 5,000 MW by 2030, it aims to reduce annual carbon emissions by over 6.5 million tonnes. The project also boasts a remarkable 15-hour thermal storage capacity, ensuring prolonged energy availability. Its total investment reaches AED 50 billion (approx. $ 13.5 billion). In June 2023, DEWA launched the 900 MW fifth phase of the solar park. Further, in August 2023 DEWA selected the Abu Dhabi Future Energy Company (known as “Masdar”), owned by ADNOC, Mubadala Investment Company, and the Abu Dhabi National Energy Company), to build and operate phase 6 of the solar park. This phase alone is to total 1,800 MW and cost up to AED 5.51 billion (approx. $ 1.5 billion). 

In Abu Dhabi, in July 2023 the Emirates Water and Electricity Company received bids for the tendering of the development of the 1,500 MW Al Ajban solar project. This project ensures that Abu Dhabi holds three of the largest single-site solar power plants in the world. Once operational, the project intends to generate enough electricity to power an estimated 160,00 homes across the UAE and reduce Abu Dhabi’s carbon emissions by up to 2.4 million tonnes per year. This sits alongside Noor Abu Dhabi which, with a capacity of 1.2 GW and over 3.3 million solar panels, sets itself out to be the largest standalone operational solar plant in the world, and Shams 1 which has been in operation for a decade and remains one of the largest CSP facilities in the world.  

The UAE is also making strides beyond the use of solar power, sometimes in ground-breaking fashion.  

In the Hatta region of Dubai, DEWA is constructing a hydroelectric power station on the Hatta Dam, incorporating stored water technology. This is the first of its kind within the Gulf Cooperation Council. Completion of this project is intended for Q4 2024, with the power station estimated to have a production capacity of 250 MW and a storage capacity of 1,500 MW-hours. Investments total AED 1.421 billion (approx. $ 386,796 million). 

The UAE also continues to look at new renewable technology, announcing in July 2023 that Masdar has signed an agreement to explore the production of the first commercial scale e-polypropylene production project in the world, made from green hydrogen and CO2.