In 2021, the Al-Shuaiba 1 photovoltaic project in Saudi Arabia achieved an LCOE of 1.04 US cents per kilowatt-hour. This development is part of a transformation of the Middle East’s energy systems. The region remains heavily dependent on Chinese photovoltaic supply chains, while developing local capacities that are still limited and often associated with Chinese companies.
The Essentials
- The Middle East aims for 180 GW of solar capacity by 2030, compared to less than 30 GW in 2020, according to the Middle East Solar Outlook 2025.
- The technology making this expansion possible, TOPCon cells, is manufactured 70% in China, following 22 billion yuan invested in R&D between 2021 and 2025.
- Saudi Arabia, the Emirates, and Egypt are moving fast on solar; none of them produces the critical components of their new sector locally.
- The Middle East’s energy transition transfers rent from the subsoil to a foreign industrial sector, a mechanism that reproduces, by displacing it, the problem of dependence.
- The question of industrial sovereignty that this shift poses will remain open until a local or regional manufacturing sector emerges.
The Sun, Cheaper Than Water
First, one must grasp the brutality of the price movement. In 2010, the average global cost of producing one kilowatt-hour of large-scale photovoltaic solar energy was 41.7 cents per dollar. Saudi projects have reached approximately 1.04 US cents per kilowatt-hour, but the sub-one-cent threshold is not confirmed. Global solar LCOE has declined approximately 90% between 2010 and 2024; module prices have declined approximately 97% over this period. Cheap solar was a theoretical promise of the 2000s; it is now the accounting foundation of national strategies.
For Gulf countries, this reversal opens a real opportunity. In several cases, replacing electricity production from oil with solar can be economically advantageous, particularly when accounting for the export value of oil; a direct and universal comparison based solely on solar tariffs is not established. Saudi Arabia consumes hundreds of thousands of barrels per day annually to power its power plants and air conditioners, oil that could be exported at a much higher market price. Switching to solar frees up this resource for export. The economic logic is irrefutable.
Saudi Aramco, ACWA Power, and Masdar have signed contracts, raised funds, and launched calls for tenders before their respective governments. The NEOM project in Saudi Arabia, the Noor Abu Dhabi power plant, and the Mohammed bin Rashid solar park in the Emirates illustrate a list of achievements and projects under development that grows each quarter. The region has a significant pipeline of projects, but the trajectory to 180 GW depends on projects still announced or to be developed and cannot be presented as largely secured.
The Missing Supply Chain Behind the Panels
A solar panel is not an oil well. To produce oil, all you need is soil rich in reserves, a pump, and a pipeline. To produce solar energy on a large scale, you need photovoltaic panels, resulting from a complex industrial supply chain that the Middle East does not yet master completely and at scale, particularly in the upstream stages.
TOPCon technology, for Tunnel Oxide Passivated Contact, represents today the dominant standard for high-efficiency solar cells. It enables efficiency levels above 24%, compared to 18-20% for previous technologies. TOPCon can contribute to low costs, but no exclusive causal link with a confirmed cost of 0.99 US cents per kilowatt-hour is established. Its manufacturing is highly concentrated in China, without precise figures or specific amounts of R&D investment being confirmed.
This concentration results from deliberate industrial policy pursued over two decades, combining massive production subsidies, training of specialized engineers, and economies of scale obtained by first serving the Chinese domestic market before exporting. As Beijing’s broader technology strategy demonstrates, described in analysis of export controls as a lever of industrial policy, China has gained competitiveness while building dependencies.
For the Middle East, the consequence is direct. The planned deployment should remain highly exposed to Chinese suppliers, particularly for inverters and upstream components, but the exact share of future purchases cannot be asserted. Local capacities remain insufficient to quickly replace all imports and are unevenly integrated, but several countries already have significant industrial capacities or projects.
Saudi Arabia, the Emirates, Egypt: Three Strategies, One Same Blind Spot
The three heavyweights of Middle Eastern solar are moving fast, but not in the same way or with the same resources.
Saudi Arabia is playing the card of vertical integration. Vision 2030 integrates solar as a component of a broader economic diversification project, where green hydrogen occupies a central place. ACWA Power, partially controlled by the sovereign wealth fund PIF, is developing gigantic projects, including the Al-Shuaiba power plant planned to exceed 2 GW. Saudi ambition is not to remain a mere buyer: the government is pushing for industrial localization, requiring foreign suppliers a certain level of local production. But this local content policy runs into a simple obstacle: transforming procurement rules into actual industrial capacity requires sustained investment in training and equipment.
The Emirates, more agile, have made Masdar their flagship. Abu Dhabi has signed investment agreements in China, India, and Europe, a supplier diversification strategy that marginally reduces dependence but does not eliminate it. Dubai bets on efficiency: the Al-Maktoum project targets 5 GW and benefits from competition between Chinese suppliers to obtain the lowest prices. This is rational in the short term. Competition among Chinese manufacturers supports low prices in the short term and can consolidate certain actors, but its net long-term effect on Chinese dominance is not established.
Egypt, finally, is playing with far fewer resources. Its solar deposits in the western desert rank among the world’s best: maximum sunlight, vast spaces, proximity to European markets. The Benban project, designed around an objective of approximately 1.8 to 2.0 GW, is one of Africa’s largest solar parks; available official figures report approximately 1,465 MW injected into the grid. But Egypt is heavily dependent on international financing and project financing mechanisms to accelerate solar, without it being demonstrated that it is impossible to finance any scaling up without external debt; Chinese partners occupy an important place in certain projects and equipment, but the ecosystem of partners remains multinational.
The Mechanism of Silent Dependence
Oil dependence was visible. It had a stated price, identifiable tankers, measurable diplomatic flows. Technological dependence is more subtle, and perhaps more durable.
When a country buys oil, it pays for the fuel and that’s it. When it installs a solar sector, it buys panels, but also inverters, storage systems, grid management software, spare parts over twenty-five years, and future technological upgrades. Solar parks can increase dependence on their suppliers’ supply chains. Replacing this supplier mid-course is technically complex and economically costly.
This progressive lock-in is well documented in other technology sectors. China’s massive investment in quantum computing illustrates the same logic: building a sufficient technological lead so that partners have no credible alternative once the initial choice is made. Chinese concentration creates a high risk, but there are producers and capacities outside China; the total absence of a credible alternative is not demonstrated.
China and Middle Eastern countries have strong interdependencies, particularly in hydrocarbons, manufactured products, capital, and technologies, but their intensity and strategic nature are not symmetric. Gulf markets represent a significant commercial outlet for Chinese panel manufacturers, who face growing production overcapacity. This situation can create negotiating leverage over prices, technology transfers, and coproduction agreements. Saudi Arabia and the Emirates are using it, with partial success. But negotiating leverage is not enough to constitute industrial sovereignty.
The Middle East’s Margins for Decision
The shift to solar is underway. The trajectory is ambitious and depends on the execution of additional projects, networks, financing, and supply chains; it is not demonstrated by existing projects alone. The question that remains open, and that will structure the region for the following two or three decades, concerns what type of actor the Middle East wants to be in this new energy order: consumer of imported technology, or producer capable of mastering part of its value chain.
Two trajectories are emerging, without either one being clearly winning yet.
The first is one of assumed specialization. The Middle East produces energy at costs that defy all competition thanks to its sunlight and available space. The Emirates have exported low-carbon ammonia cargo to Germany and Japan. Their documented undersea cables power national offshore facilities; they do not constitute operational electricity exports to Europe or India. It frequently resorts to competitively priced Chinese equipment, but purchases do not uniformly reduce to the sole criterion of price or to China alone.
This is the logic that prevails today, particularly in Abu Dhabi.
Specialization in resources remains important, but it coexists with strategies for moving upmarket and industrial transformation.
The second trajectory is more ambitious and more uncertain. It consists of building a local industrial sector, not necessarily for the entire chain, but for strategic links. No large-scale production of photovoltaic polysilicon by Saudi Aramco or its subsidiaries has been confirmed. This is a tangible starting point. Downstream integration, cells and modules, is technically feasible, but requires sustained investment in training and equipment.
Between these two trajectories, there is room for a hybrid path that is beginning to emerge: joint ventures with Chinese or Korean manufacturers, gradual local content requirements, technology transfer agreements negotiated in exchange for market access. This is the path Saudi Arabia is attempting to take, with results still limited but encouraging signals. Vision 2030 foresees the localization of part of the renewable value chain; one must cite separately the specific programs or projects of Neom and Jubail to assert the existence of dedicated zones.
The rate of local added value in these projects constitutes an indicator of regional industrialization. A progression of this rate would indicate a strengthening of regional industrialization. If it stagnates, the Middle East’s energy transition will remain heavily dependent on foreign technologies.
Bridging this gap would take a generation, which does not prevent starting now.
The Geopolitics of the Solar Panel
Solar is not politically neutral. Great powers understood this before analysts did. The United States imposed massive tariffs on Chinese panels, a measure partially imitated by the European Union, precisely because they had identified technological dependence as a strategic risk. The Inflation Reduction Act allocates billions of dollars to rebuild an American solar sector. Europe is doing the same with the Net-Zero Industry Act.
The Middle East finds itself at the center of this confrontation. The region is a market coveted by Chinese manufacturers seeking outlets facing Western barriers, and simultaneously courted by Westerners seeking to secure green hydrogen corridors and alternative energy routes. This double solicitation gives Gulf countries real diplomatic leverage, but it also requires choices that cannot always be deferred.
Saudi Arabia is currently playing strategic ambiguity, as it has done with oil for decades. It buys Chinese panels while negotiating energy cooperation agreements with Washington and Brussels. The Emirates are doing the same, with comparable diplomatic sophistication. This position of balance is viable in the short term. Its viability depends in particular on the evolution of relations between China, the West, and the Gulf countries.
The rise of solar is changing the region’s industrial dependencies, but the assertion of a historical first and certain replacement of oil is not established. Oil gave major influence to Gulf countries because of their vast reserves, their low production costs, and their weight in exports and OPEC+, not because they were the only producers. The sun, meanwhile, shines everywhere, but the majority of panels used in Gulf countries are historically manufactured outside the region, while local capacities for cells and modules are being developed. The asymmetry of technological supply chains is a major challenge for Gulf countries, among other challenges related to energy transition and economic diversification.
Sources
- Xinhua, report on Chinese solar companies in the Middle East, May 2026: http://french.people.com.cn/n3/2026/0522/c96851-20459373.html
- Middle East Solar Outlook 2025
- World Bank, MENA Energy Sector Analysis 2024-2026
