Oil, oil, lots of oil….

The Arab Gulf states, mainly associated with their vast fossil fuel resources, are countries that are developing at a dizzying pace – and that, as you know, means a growing appetite for electricity. The seven Arab Gulf countries – Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates – accounted for 38% of the world’s oil production in 2022, and estimated oil reserves in the countries as of 2021 were about 49% of the world’s oil reserves. [1] This is impressive, considering that these reserves are accumulated in a relatively small area, which on the scale of the Earth looks like a jewel in an elegant brooch – small, but invaluable. No wonder, then, that these countries are like a great shining beacon on the world’s energy map – powered, for the time being, mainly by fossil fuels.

As for the United Arab Emirates (UAE), according to 2023 data, the country produces 4.16 million barrels per day, equivalent to a 4% share of global production. This places the UAE as the 8th largest oil producer in the world. [2] According to estimates, the UAE’s oil reserves are 111 billion barrels. [3] Sounds pretty good, doesn’t it? Especially when you realize that one barrel of oil is about 159 liters, which is as much as you can fit in a home hot tub!

Gas, oil, solar, nuclear – how the UAE’s energy mix is shaped

It is said that the UAE stands for oil, but is this really the case? Indeed, fossil fuels are the pillar of the UAE’s functioning national energy mix. Until 2009, the UAE’s energy mix was homogeneous – 100% of the energy generated came from fossil fuels, specifically gas. In 2009 the UAE began its energy transition journey by introducing solar-generated energy into its national power system (NPS), and as we all know, the sun is never in short supply in this region. A big jump in the share of solar-generated energy in the mix came in 2019, when the share of RES in the UAE’s energy production reached 2.64% (compared to 0.88% in 2018). The national mix was enriched with energy from the Barakah nuclear power plant in April 2021. [4]

According to the 2023 data, the largest share of the UAE’s energy production belongs to gas – it amounted to more than 72%. However, it should be emphasized that the country is at the stage of diversifying and developing other sources of energy, because, as they say, you can’t put everything on one gas cylinder forever! The share of individual sources of energy generation in its production in 2023 in the UAE was as follows:

The Barakah nuclear power plant, which I wrote about in a previous article, played an important role in the production of zero-carbon energy. It should be stressed that these figures do not include the energy produced at the fourth Barakah reactor, which came online in September 2024.

Worth noting is the record-breaking project implemented by the UAE in terms of scale. The country boasts the largest single-site solar power plant in the world – Al Dhafra, located in the desert, 35 kilometers from Abu Dhabi. The plant covers an area of more than 20 square kilometers, and nearly 4 million solar panels were used in its construction. The power plant has a capacity of 2 GW and is capable of powering about 200,000 homes. The project was inaugurated in November 2023. [5]

UAE energy market

Historically, the energy markets in the Arab Gulf countries have been characterized by vertical integration, state-owned enterprises and monopoly in electricity generation, transmission and distribution. The Arab Gulf states are in the early stages of energy sector reform.

In the case of the UAE, the market is based on a single buyer structure with unbundling of electricity transmission and distribution. For example, “(…)in the Emirate of Abu Dhabi, Emirates Water & Electricity Company (EWEC) is the single buyer that purchases all electricity. Abu Dhabi Transmission & Dispatch Co is the company responsible for transmission (…)” while TAQA Distribution is responsible for the distribution of electricity. All of the aforementioned entities are state-owned. Nevertheless, it must be said that the UAE’s energy sector is one of the most advanced among the Arab Gulf countries, given the development of competitive energy market structures. [6]

Interconnections

The UAE is connected to other neighboring countries through interconnectors. The Gulf Cooperation Council (GCC) countries are connected via a 400 kV interconnection overseen by the Gulf Cooperation Council Interconnection Authority (GCCIA). Saudi Arabia, Kuwait, the UAE and Qatar, among others, are part of this interconnection. The purpose of establishing the connection was, among other things, to enhance energy security. GCCIA was established in 2001. In 2009, the link between Bahrain, Saudi Arabia, Qatar and Kuwait began operations. The connection to the UAE was launched on April 20, 2011. [7]

Toward zero-carbon energy

The UAE is on a dynamic path toward zero-carbon sources, so desirable in today’s world. Plans for the energy transition are very ambitious, with the goal of achieving the Paris Agreement. The goal for 2050 is thus to achieve carbon neutrality. Plans to achieve such a task are laid out in the UAE Energy Strategy 2050 (UAE Energy Strategy 2050). [8] According to the aforementioned document, the UAE plans to create an energy mix combining renewable energy sources, nuclear power and clean energy sources to meet the UAE’s economic requirements and environmental goals, as follows:

• 44% clean energy sources,
• 38% gas,
• 12% clean coal,
• 6% nuclear energy.

In 2023, the plan was updated with several new milestones:

• creating 50,000 green jobs by 2030,
• tripling RES capacity to 14 GW by 2030,
• increasing the share of clean energy sources in the total mix to 30% by 2031,
• achieving carbon neutrality by 2050. [9]

The ambitious plans that the UAE has set for itself are admirable and challenging, requiring appropriate logistical and technological measures as well as significant financial resources. Meeting the deadlines set out in the Strategy will not be easy, but as the examples of projects implemented by the UAE to date show, they are achievable.

All in all, the UAE’s national electricity mix is not just about technology, but also a testament to the ambitions of this rapidly developing region. But if you think that’s all it is, then…. don’t let electricity fool you! In next article, we’ll take a look into the future and look at the planned investments that are expected to make the UAE not only shine on the world map, but become a leader in energy innovation. It will be about green energy, gigantic projects and bold visions – it just doesn’t fit in one barrel!

[1] https://www.eia.gov/energyexplained/oil-and-petroleum-products/where-our-oil-comes-from.php

[2] https://www.eia.gov/tools/faqs/faq.php?id=709&t=6

[3] https://www.eia.gov/todayinenergy/detail.php?id=61365

[4] https://ourworldindata.org/energy/country/united-arab-emirates

[5] https://u.ae/en/information-and-services/environment-and-energy/water-and-energy/types-of-energy-sources/solar-energy

[6] RahmatallahPoudineh, Anupama Sen, Bassam Fattouh, Electricity Markets in the Resource-Rich Countries of the MENA: Adapting for the Transition Era, published in 2020 by International Association for Energy Economics: http://www.iaee.org/eeep/article/353

[7] https://gccia.com.sa/about-us/aboutus/

[8] https://u.ae/en/about-the-uae/strategies-initiatives-and-awards/strategies-plans-and-visions/environment-and-energy/-/media/MoEI-recent-docs/Updated-UAE-Energy-Strategy-2050-Eng.ashx

[9] https://www.uae-embassy.org/discover-uae/climate-and-energy/uae-energy-diversification