Electricity consumption in the Middle East and North Africa (MENA) has surged significantly over recent decades and is poised to continue its upward trajectory, according to a newly released IEA report.
The report highlights that while historically reliant on oil, the region is shifting towards natural gas, renewables, and nuclear energy to cater to this rising demand, diminishing oil’s role in power generation.
Key Drivers of Rising Electricity Demand
The report, titled The Future of Electricity in the Middle East and North Africa, reveals that electricity demand in MENA tripled between 2000 and 2024, driven by population growth and increasing incomes. The IEA projects consumption could rise by an additional 50% by 2035, equivalent to the current demand of Germany and Spain combined.
Key contributors to this trend include increased need for cooling and desalination due to harsh climatic conditions, as well as the growth of urbanization, industrial activities, transport electrification, and digital infrastructure expansion.
Changing Energy Landscape
Policy directions suggest that natural gas will support half of the projected electricity demand increase
Presently, natural gas and oil dominate MENA’s electricity generation portfolio, comprising over 90% of the total. However, with many nations, including Saudi Arabia and Iraq, implementing policies to curtail oil’s role, its contribution is anticipated to drop to just 5% by 2035.
Policy directions suggest that natural gas will support half of the projected electricity demand increase. Alongside this, solar power capacity is expected to rise tenfold, boosting renewable energy’s share to around 25%, while nuclear energy capacity is set to triple.
Infrastructure and Efficiency Investments
IEA Executive Director Fatih Birol notes, “Demand for electricity is surging across the Middle East and North Africa, driven by the rapidly rising need for air conditioning and water desalination in a heat- and water-stressed region with growing populations and economies.”
He further stated that power generation capacity is projected to expand by over 300 gigawatts in the next decade. Improving the efficiency of air conditioners, for instance, could significantly mitigate peak electricity demand, offering savings comparable to Iraq’s overall power capacity today.
Investment in Transmission and Distribution
Investment in the power sector, which reached $44 billion in 2024, is expected to increase by an additional 50%
The report emphasizes the importance of modernizing grids and expanding interconnections to bolster electricity security across MENA.
Investment in the power sector, which reached $44 billion in 2024, is expected to increase by an additional 50% by 2035, with a substantial portion earmarked for addressing transmission and distribution inefficiencies that are double the global average.
Dr. Birol remarks that transitioning from oil will substantially transform the energy mix, impacting global energy dynamics and emissions.
Potential Implications of Slower Diversification
The IEA warns that a slower-than-anticipated shift away from traditional fossil fuels could lead to a 25% increase in demand for oil and gas in power generation by 2035.
This scenario might reduce oil and gas export revenues by $80 billion and raise import expenses by $20 billion, underscoring the critical nature of strategic energy transition planning to secure future economic and environmental stability in the region.
Countries' policy plans point to rising electricity generation from natural gas, renewables and nuclear to meet rapid growth in consumption, with oil's role in the power sector set to shrink.
Electricity consumption in the Middle East and North Africa has soared in recent decades and is set to keep rising sharply, with a range of sources expected to meet the growing demand as countries seek to diversify their power supplies, according to a new IEA report out now.
Global energy system
The Future of Electricity in the Middle East and North Africa provides detailed country-by-country analysis of the electricity sectors across a region that has long been a cornerstone of the global energy system. The report finds that electricity demand in the Middle East and North Africa tripled between 2000 and 2024 as populations and incomes rose.
Based on the policy settings, the region’s electricity consumption is projected to rise by another 50% by 2035 – adding the equivalent of the current demand of Germany and Spain combined.
Driving up electricity consumption
With a climate characterized by extreme heat and water scarcity in most parts of the region, the largest portion of the projected increase in electricity demand over the next decade – around 40% – is set to come from cooling and desalination.
Other important factors driving up electricity consumption in the region include urbanization, industrialization, the electrification of transport and the expansion of digital infrastructure such as data centers.
Electricity demand growth to 2035
Now, natural gas and oil overwhelmingly dominate the region’s electricity mix, accounting for over 90% of total generation, the report finds. However, many countries – including Saudi Arabia and Iraq – are pursuing policies to reduce the role oil plays in their power systems, freeing it up for higher value uses or export.
As a result, based on the policy settings, natural gas is set to meet half of electricity demand growth to 2035 in the Middle East and North Africa. This would help reduce oil-fired output to just 5% of total generation, down from 20% now.
Meanwhile, solar PV capacity in the region is on course to increase tenfold by 2035, pushing the share of renewables in the region’s electricity generation to around 25%. And nuclear power is poised to expand strongly, with capacity set to triple.
Need for air conditioning and water desalination
“Demand for electricity is surging across the Middle East and North Africa, driven by the rapidly rising need for air conditioning and water desalination in a heat- and water-stressed region with growing populations and economies. The region has already seen the third-largest growth in electricity consumption globally since the start of the century, after China and India."
"To meet this demand, power capacity over the next 10 years is set to expand by over 300 gigawatts, the equivalent of three times Saudi Arabia’s current total generation capacity,” said IEA Executive Director Fatih Birol.
Transmission and distribution losses
“Based on the policy plans of governments across the Middle East and North Africa, the region is set to steadily shift away from using oil for electricity generation over the next decade, with natural gas, solar and nuclear all expanding,” Dr Birol said. “This is set to change the power mix considerably, with implications for global energy balances and emissions.”
Power sector investment in the region reached $44 billion in 2024 and is projected to rise by another 50% by 2035. Nearly 40% of this spending is set to go towards grids, helping the region to address transmission and distribution losses that are currently double the global average.
Average efficiency rating of air conditioners
The report finds that grid modernization, as well as expanding regional interconnections, will be critical to underpin electricity security in Middle Eastern and North African economies.
A balanced approach to integrating renewables is also crucial, combining energy storage, demand-side flexibility, and sufficient dispatchable natural gas-fired capacity to manage variable solar or wind supply.
Energy efficiency will also play an important role in the region’s electricity demand trends. The average efficiency rating of air conditioners in the region is currently less than half the average level in Japan, according to the report.
peak electricity demand growth
Improving air conditioner efficiency alone could reduce peak electricity demand growth by an amount equivalent to Iraq’s total power capacity today.
The report considers what would happen if electricity systems in the region were to diversify less quickly than envisaged under the targets countries have set. In such a scenario, oil and gas demand for electricity generation would rise by over a quarter by 2035. This would result in a reduction of oil and gas export revenues of $80 billion, and a $20 billion increase in import bills.
