Until recently, large-scale energy storage was barely a consideration in the Middle East, where fossil fuels have long dominated power generation. With renewable energy projects expanding across the region, energy storage has started gaining traction.

Unlike Europe, North America, and Asia, where renewable energy and storage technologies are well-established, the Middle East remains in the early stages of development. Currently, only a few companies have invested in battery energy storage systems (BESS). However, this is expected to change significantly as the renewables sector in the region continues to grow.

The region’s installed renewable energy capacity reached 32 GW in 2023 and is expected to approach 40 GW by year-end. By 2030, it is projected to grow to 180 GW, reflecting a compounded annual growth rate of 30%, according to the Middle East Solar Industry Association.

Five out of the region’s twelve countries have announced net-zero targets, with the UAE and Oman aiming for 2050 and Saudi Arabia, Bahrain, and Kuwait targeting 2060. The UAE has also pledged to reduce emissions by 19% from 2019 levels by 2030 and committed $30 billion to climate-focused investments unveiled at COP28.

However, the growing scale of renewables in MENA’s energy mix has exposed grid operators to the challenges of the “duck curve,” a pattern where solar generation peaks during the day but demand surges in the evening. Without sufficient storage, this imbalance leads to wasted energy and puts pressure on traditional power projects to meet peak demand.

To flatten the duck curve and reduce curtailment, utilities have found it necessary to introduce flexibility into the grid by deploying BESS to store surplus electricity for later use. Besides providing storage, BESS enables capacity firming, energy arbitrage, frequency regulation, and other ancillary services that improve grid resilience and efficiency.

Saudi Arabia already has an operational capacity of 2.1 GW solar PV, and 5.3 GW is under development, with commissioning expected this year, according to Blackridge Research and Consulting. Last month, the country prequalified 33 companies for the first group of BESS projects with a total energy storage capacity of 8 gigawatt-hours (GWh).

Flagship projects like NEOM’s Green Hydrogen project are also driving these ambitions. NEOM is implementing a 536 MW/600 MWh BESS facility to achieve 100% renewable energy dependency. Other high-profile projects include ACWA Power’s 1,300 GWh BESS for the Red Sea Project and EDF’s 160 MW/760 MWh BESS for Amaala.

As the main off-takers, government-owned entities are also driving the adoption of BESS across the region. In Saudi Arabia, the Saudi Electricity Company (SEC) recently awarded a 7.8 GWh BESS contract to Al Gihaz using Sungrow technology, with commissioning slated for 2025. SEC is also planning a 12.5 GWh tender across five sites by the end of 2024.

The Saudi Power Procurement Company aims to deploy 10 GW/40 GWh of standalone BESS capacity by 2030 through annual tenders of 2 GW/8 GWh starting in 2024. In the UAE, the Emirates Water and Electricity Company (EWEC) issued a request for proposals for a 400 MW/400 MWh standalone BESS project in mid-2024.

Oman is also boosting energy storage with plans to add BESS to the 500 MW Ibri III Solar IPP, which is now in the early procurement stage. In 2025, Petroleum Development Oman is expected to launch the 100 MW North Solar Storage PV plant, featuring the country’s first lithium-ion battery system to ensure energy transmission beyond daylight hours with a 100 MW peak capacity.

In Egypt, AMEA Power recently signed power purchase agreements to develop the nation’s first utility-scale BESS project, a 300 MWh system. The BESS project is an addition to the 500 MW Abydos solar PV project under construction.

Meanwhile, UAE’s EWEC has recommended deploying 300 MW/300 MWh of BESS capacity within the next three years.

While the demand for energy storage is growing, the technology has existed in other forms for years. Known for its scalability and reliability, pumped hydro storage (PHS) remains the dominant technology, representing 55% of the region’s capacity. Morocco leads the region with two flagship projects: a 350 MW/2,800 MWh facility in Agadir and a 465 MW/3,720 MWh plant in Afourer.

In the UAE, DEWA is building a 250 MW pumped hydro storage project in Hatta, set to be the first in the GCC by 2024.

France-based energy company EDF has announced plans to explore the development of a 5 GW pumped hydro storage facility in Ras Al Khaimah, UAE. The proposed facility is designed to store energy for up to 12 hours.

The MENA region is also home to a number of Concentrated Solar Power (CSP) plants that offer cost-effective, utility-scale thermal storage. Dubai’s Noor Energy 1, a 950 MW hybrid CSP and PV plant, is the world’s largest single-site hybrid solar project. Morocco’s 200 MW Noor II Ouarzazate CSP includes seven hours of thermal energy storage.

While PHS and CSP will continue to play a major role in MENA’s energy transition, their limitations are driving the region toward more modular and scalable battery technologies. Batteries offer greater flexibility and are better aligned with the region’s goal to rapidly scale renewable energy.

The choice of energy storage technology in MENA often depends on various factors, such as site location, grid requirements, regulatory frameworks, and cost considerations. Currently, most operational projects in the region focus on 10-hour storage, reflecting a global trend where this segment accounts for 90% of installed capacity.

Technologies like NaS, Li-Ion, and flow batteries show that they are ideal for short- to medium-term applications, balancing cost and performance. Projects like Jordan’s 23 MW Al Badiya Solar-Plus-Storage plant showcase how Li-Ion technology is reshaping energy storage across MENA.

However, Li-Ion batteries face challenges in MENA’s extreme climate conditions, where high temperatures can reduce efficiency. This has sparked interest in alternative battery technologies, such as vanadium flow batteries. Though still in pilot stages, like the 0.13 MW/0.50 MWh project at Morocco’s Nour plant, flow batteries promise longer storage durations and lower degradation, making them a viable option for specific applications.

The rise of data centers driven by AI and cloud computing is also accelerating the demand for long-duration energy storage (LDES) in MENA, according to a BCG report. LDES technologies are cost-competitive for longer durations and can decouple energy and capacity. This makes them ideal for intraday, multi-day, and seasonal grid-scale storage. As the region’s power mix becomes more reliant on intermittent renewable energy, LDES is expected to play a crucial role in meeting the growing demand for energy storage lasting 6-8+ hours.

Despite the clear need for energy storage, there are concerns over whether investors are willing to back BESS in this emerging market. High costs and reduced efficiency in hot climates challenge Li-Ion batteries, driving the search for better alternatives.

To promote energy storage growth in MENA, industry analysts advocate for policy changes to remove financial, regulatory, and market barriers. The current single-buyer model, which focuses on generation investment, fails to incentivize energy storage.

Additionally, renewable energy auctions often overlook the revenue potential of BESS. Experts suggest defining energy storage as a distinct asset class, implementing regulatory frameworks with clear targets, and adjusting net-metering schemes.

A report by Arab Petroleum Investments Corporation recommends establishing a MENA Energy Storage Alliance, supported by public-private partnerships, and offering financial incentives like tax benefits and green financing to attract private sector investments. Time-of-use tariffs and renewable-plus-storage auctions can optimize energy storage’s economic and operational benefits while prioritizing utility-scale applications for seamless renewable energy integration.