The Middle East and North Africa (MENA) region is at a pivotal moment in its energy journey. The region has long been a cornerstone of the global energy system. In 2024, it supplied over 30% of the world’s oil and nearly 20% of its natural gas. At the same time, it is emerging as a major centre of electricity demand growth, driven by a rapidly expanding population, urbanisation, rising living standards, and accelerating climate pressures.

Between 2000 and 2024, electricity demand tripled – increasing by more than 1 000 terawatt-hours (TWh). This made the MENA region the third-largest contributor to global electricity demand growth after China and India. Looking ahead, demand is projected to rise by another 50% by 2035, adding the equivalent of the current demand of Germany and Spain combined – with significant implications for global energy markets.  

The region’s climate, characterised by extreme heat and water scarcity, means that reliable and resilient electricity systems are vital to sustaining everyday life. Average temperatures in MENA are rising at more than twice the global rate, and summer temperatures regularly exceed 40 °C. Today, cooling makes up nearly half of peak electricity demand in the region and one-quarter of annual electricity demand – an amount larger than the total electricity use in all but 15 countries globally. While air conditioner ownership is high in Gulf Cooperation Council countries, it is relatively low in all other MENA countries. To 2035, cooling is set to be the largest driver of electricity demand growth in the region.

The MENA region also faces extreme water stress, with an imbalance between freshwater demand and renewable water supply four times the global average. Seven of the eight most water-stressed nations globally are in the region. To meet demand, MENA produced 12 billion cubic metres (bcm) of desalinated water in 2024, equivalent to the annual flow of the Euphrates River. Production is set to triple by 2035. While most desalination today relies on oil and gas, the last major investment in thermal desalination took place in 2018. Future growth is set to be met entirely by electricity-powered, high-efficiency reverse osmosis technologies.

Between now and 2035, cooling and desalination together are on course to account for close to 40% of projected growth in electricity demand in the MENA region, several times the global average. Other key drivers of increasing demand include industrial growth, the electrification of transport and the expansion of cities. New digital infrastructure, including data centres, and growing interest in producing hydrogen for export are also projected to be sources of rising electricity demand. 

Natural gas and oil overwhelmingly dominate the electricity mix in the MENA region, accounting for over 90% of total generation. In 2024, natural gas provided 70% of MENA’s electricity, serving as the primary fuel for power generation in Algeria, Bahrain, Egypt, Iran, Oman, Tunisia, United Arab Emirates (UAE) and Qatar. Meanwhile, oil supplied 20%, requiring 1.8 million barrels per day – equivalent to the current production of Mexico. Oil-fired power plants accounted for an even higher share of generation in major oil exporting countries such as Iraq, Saudi Arabia and Kuwait.

This heavy reliance on oil and gas is reinforced by high levels of subsidies in many countries, which keep domestic energy prices low and encourage continued consumption. Even net importers – including Egypt, Lebanon, Morocco, Tunisia and Yemen – depend heavily on oil and gas, and subsidise their use, underscoring the region’s deep-rooted dependence on hydrocarbons for electricity supply. Coal accounts for less than 5% of MENA’s electricity generation, though it plays a more important role in Morocco.

Based on today’s policy settings, natural gas is set to meet half of the region’s electricity demand growth to 2035, remaining by far the largest source of electricity as countries leverage abundant reserves and established infrastructure. Over the next decade, gas-fired capacity is on course to rise by over 110 gigawatts (GW), adding to the 350 GW in operation in 2024. Expanding gas use, alongside other sources, would support efforts by countries in the region – particularly Iraq, Lebanon and Saudi Arabia – to cut oil use for electricity. In turn, the share of oil in MENA’s electricity mix is set to shrink to just 5% by 2035.

Solar PV is also growing rapidly in the MENA region, driven by falling costs, abundant resources, alignment of supply availability with cooling needs, and strategic efforts to free up oil and gas for higher value uses or export. Solar PV capacity is set to increase tenfold to 2035, growing by 200 GW. This would drive the share of renewables in generation to one-quarter, up from 6% in 2024. The expansion of solar PV would also improve resilience in post-conflict areas by bypassing reliance on weakened grids, including across Lebanon, Syria and Yemen. 

Nuclear power generation is poised to expand as countries seek reliable, affordable, low-emissions energy sources to enhance energy security and grid stability. Currently, five reactors are operational in the region, including four in the United Arab Emirates that have been commissioned in the past five years. Construction is underway on five additional reactors – four in Egypt, and one in Iran – while Saudi Arabia is advancing plans for its first nuclear units and the UAE is exploring further expansion. Nuclear capacity in the region is projected to triple by 2035 to reach 19 GW, a notable shift in the regional energy landscape. 

As electricity demand rises and MENA’s power mix diversifies, ensuring electricity security will remain essential. Integrating more solar PV and wind requires robust and flexible power systems, modern grids, regional interconnections, and advanced management. Storage solutions, including batteries, and demand-side flexibility will be key to balancing variability, while gas-fired power will continue to support system adequacy. With ageing thermal assets, strategic decisions on their future will shape reliability. A balanced approach – combining grid upgrades, storage and thermal power – will be critical for electricity security. 

Energy efficiency is a critical lever for managing electricity demand growth, particularly in buildings. Currently, the average efficiency rating of an air conditioner in the MENA region is less than half that of the average unit in Japan, for example. Improving air conditioner efficiency could reduce peak demand growth by 35 GW by 2035 – equivalent to the total power generation capacity of Iraq today. Some countries in the region, including Jordan, Saudi Arabia and the UAE, are strengthening appliance performance standards and introducing targeted financial incentives – to help curb demand growth and also to improve electricity security. 

Investment in the region’s power sector is increasing. In 2024, it reached USD 44 billion and by 2035, it is projected to grow by 50%. Renewables and nuclear are set to capture a larger share of investment over this period, aligning MENA more closely with the global average. Investment in gas-fired power capacity remains significant in the region, and it is set to account for 20% of global investment in gas-fired capacity to 2035. Addressing high grid losses, expanding regional interconnections, and modernisation mean grid investment is projected to account for close to 40% of total power sector investment over the next decade. 

If diversification strategies fall short and oil and gas continue to dominate the region’s electricity mix, demand for both fuels would rise by over 25% by 2035. In this case, over 80% of additional oil demand would be concentrated in five countries: Iran, Iraq, Kuwait, Lebanon and Saudi Arabia. And more than 60% of extra natural gas demand would be in Egypt, Saudi Arabia and the UAE. This would have both macroeconomic and environmental consequences. It would reduce oil and gas export revenues by USD 80 billion in 2035 and raise import bills by USD 20 billion, and carbon dioxide emissions would also continue to rise.  

Building on growing international momentum – catalysed in part by the UAE’s leadership at COP28 in 2023 – eight MENA countries have set net zero targets (Bahrain, Lebanon, Kuwait, Morocco, Oman, Saudi Arabia, Tunisia and the UAE) and 14 have joined the Global Methane Pledge, an effort to reduce global methane emissions by at least 30% from 2020 levels by 2030. Full delivery of countries’ announced national pledges would transform electricity systems. Faster demand growth would be more than offset by the accelerated uptake of renewables and nuclear, with slower growth for natural gas – halving the carbon intensity of the region’s electricity by 2035. Achieving these goals would requires a tripling of power sector investment to build a more diverse, resilient and sustainable system.

The stakes for the MENA region are high. For oil and gas producers, diversifying their power mixes can free up hydrocarbons for export and strengthen their fiscal stability. Meanwhile, by scaling up solar PV, nuclear power and energy efficiency, importers can boost their energy security and reduce their exposure to global price volatility. Diversifying power systems can drive industrial growth and job creation, but this will require more investment in solar PV, nuclear, grids and regional interconnections. Streamlined regulations and innovation in new energy technologies will be essential to attract private investment and deliver widespread benefits. Decisions this decade will shape the region’s energy future and climate resilience.