Gulf Cooperation Council (GCC) countries are increasingly relying on independent power producers (IPPs) to achieve their renewable energy goals.

Implementation by Countries

Dubai’s clean energy transition has recently taken a major step forward. The Emirate’s main utility, the Dubai Electricity and Water Authority (DEWA), revised the target capacity of its flagship solar project, the Mohammed Bin Rashid Al-Maktoum (MBR) Solar Park, by 45%.

Initially aiming for 5,000 MW by 2030, DEWA increased its target to 7,260 MW. Achieving this target would require an investment of AED50 billion (~$13.6 billion).

With an installed capacity of 3,660 MW, the MBR Solar Park is claimed to be the world’s largest single-site solar facility developed under the independent power producer model. To reach its new target, DEWA has invited international developers to submit expressions of interest for the solar park’s seventh phase, adding another 1,600 MW to the grid.

According to the International Renewable Energy Agency, public-private partnerships have been key to GCC countries’ ability to meet rising power demand while reducing emissions. Governments across the region now routinely leverage private capital and expertise to build large-scale infrastructure as part of a broader shift from state-led energy monopolies.

DEWA’s use of the IPP model has attracted more than AED43.6 billion (~$11.87 billion) in investment over the past decade in Dubai alone. This investment is part of a broader public-private partnership strategy designed to expand capacity and reduce public spending. One of the MBR Solar Park’s earlier phases attracted bids of $0.0299/kWh, then the lowest solar tariff globally.

Elsewhere in the region, Saudi Arabia has embraced the IPP model as part of its Vision 2030 agenda. The Rabigh 2 Solar IPP project, developed by AlJomaih Energy and Water and TotalEnergies, secured a competitive tariff of $1.78kWh for its 300 MW capacity. In June 2024, it was reported that a consortium including ACWA Power, Badeel, and Saudi Aramco’s power division signed agreements worth $3.28 billion to develop three more solar IPPs with a cumulative capacity of 5.5 GW.

In Oman, Petroleum Development Oman awarded contracts for three major renewable projects: the 100 MW North Solar IPP and two 100 MW wind farms, Riyah-1 and Riyah-2. These are a part of Oman’s Vision 2040 strategy, which aims for net-zero emissions by 2050.

In Kuwait, the Al-Zour North gas-fired power project was the country’s first IPP under its public-private partnership program.

Reasons for Growth

The growing preference for the IPP model is not without reason. According to the World Bank, IPPs help reduce execution timelines and ensure commercial discipline, as developers are incentivized to complete projects on time and within budget. This mode contrasts sharply with traditional government-led projects, which are often plagued by delays and cost overruns.

At a strategic level, IPPs are a response to rising energy demand across the region. As countries invest heavily in infrastructure, transportation, and desalination, their energy needs have soared. According to the International Energy Agency (IEA), electricity demand in the Middle East grew by nearly 4% in 2024, among the fastest growth rates worldwide.

At the same time, volatile oil revenues have made it harder for governments to finance projects upfront. The IPP model spreads financial risk, attracts foreign direct investment, and enables capital-intensive infrastructure development without burdening state budgets. A World Economic Forum briefing highlighted that this model is particularly well-suited for emerging markets experiencing high growth potential while facing limited fiscal flexibility.

The IPP model typically works as follows: governments sign long-term power purchase agreements (PPAs), ranging from 15 to 25 years, with private developers. These agreements guarantee a fixed price for electricity, giving investors the certainty needed to commit capital. According to IRENA, PPAs have played a critical role in accelerating clean energy deployment worldwide, particularly in markets undergoing liberalization.

However, this model has challenges. According to BloombergNEF, the move toward spot electricity markets and fuel price deregulation could introduce price volatility and undermine investor confidence. State-owned utilities in countries like Saudi Arabia face rising debt burdens, which may constrain their ability to honor long-term offtake guarantees.

By bringing in global best practices and operational efficiencies, IPPs are helping to future-proof infrastructure while also stimulating local economies. The International Finance Corporation has indicated that well-structured IPPs contribute to job creation, capacity building, and industrial diversification.

The IPP model is also being extended beyond electricity. For instance, DEWA’s Hassyan desalination plant, with a capacity of 180 million gallons per day and powered entirely by solar energy, is set to become the world’s largest solar-powered desalination facility.

The region is also beginning to embrace green hydrogen as a critical pillar of its decarbonization agenda. IRENA points out that countries such as the UAE and Saudi Arabia are leveraging their natural gas-based power infrastructure as a launchpad for blue hydrogen production, integrating carbon capture and storage technologies to curb emissions.

Across the GCC, governments are shifting from sole energy infrastructure providers to enablers of private-sector innovation. However, this shift from operator to orchestrator can only succeed if investors feel confident to commit capital—and that confidence, the World Bank warns, depends on clear rules and transparent processes.

Policy Requirements

Attracting private investment at this scale requires more than a robust pipeline of projects. The World Bank notes that investor confidence hinges on clear legal frameworks, good governance, and transparent procurement practices.

The GCC has taken decisive steps in this direction. According to PwC Middle East, recent reforms to commercial laws, such as allowing 100% foreign ownership in strategic sectors, have helped position Dubai as the leading global destination for foreign direct investment in clean energy.

Governments are also building institutional capacity to support these projects. DEWA tasked its Clean Energy and Water Planning Department with overseeing IPP implementation, managing long-term contracts, and ensuring sound regulatory and risk frameworks are in place.

Today, IPPs dominate the pipeline for new power generation across the GCC. Regional electricity costs, measured by the levelized cost of electricity, have plummeted over the past five years, driven by the competitive dynamics of IPP-led tenders.

According to McKinsey and Company,  well-designed IPP projects can act as catalysts for technology transfer, economic diversification, and long-term energy resilience.