The GCC’s green pivot hasn’t been undermined by the war, S&P says

The regional conflict likely pushed back the timelines of some renewables projects, but it ultimately reinforced the strategic case for renewables, S&P Global says. The sequencing of projects and how capital gets deployed could shift, depending on how long the conflict runs, the agency says. However, projects are still moving ahead in spite of the geopolitics.

Even in a prolonged-conflict scenario, GCC governments are expected to keep renewables as a central feature of their long-term plans. Renewable energy can act as a tool for energy security and economic diversification, while allowing governments to meet local energy consumption and freeing up more barrels for export, particularly as oil and gas prices remain elevated. “This is particularly relevant in markets such as Saudi Arabia, where solar, wind, and storage costs are among the lowest globally outside China,” S&P says.

The strain is mostly logistical: Delays in moving equipment through Hormuz are beginning to push project schedules, but most projects are protected by schedule-extension and force majeure clauses in their power purchase agreements, which preserve project economics over the medium term. Solar in the GCC is also relatively insulated from commodity-price swings: Sites are highly automated and spare parts are increasingly sourced locally, as Chinese manufacturers set up production facilities inside the region.

The next phase

Big tech is emerging as the decisive driver of demand. Power-hungry data centers and AI infrastructure are pulling for large-scale, reliable clean energy, and corporate buyers accounted for roughly half of global contracted volumes last year. As these offtakers scale up, integrated solar-plus-storage systems are becoming the default model for around-the-clock supply.

The real bottleneck is the grid: Demand in the Gulf doesn’t dip when the sun sets, and cooling loads keep consumption elevated well into the evening, creating a structural mismatch with intermittent solar output. That’s why battery storage is shifting from a “nice-to-have” towards becoming core infrastructure.