Economic Research Forum (ERF)

Artificial intelligence and the renewable energy transition in MENA

5189
Artificial intelligence has the potential to bridge the gap between abundant natural resources and the pressing need for reliable, sustainable power in the Middle East and North Africa. This column outlines the constraints and proposes policies that can address the challenges of variability of renewable resources and stress on power grids, and support the transformation of ‘sunlight’ to ‘smart power’.

In a nutshell

For the MENA region, the integration of artificial intelligence into renewable energy touches directly on questions of economic diversification, energy security and geopolitical positioning.

Countries that successfully deploy AI-driven energy systems could reduce their vulnerability to oil price volatility, attract foreign investment into clean technology and assert themselves as leaders in the global green economy.

The path from ‘solar to smart’ is neither automatic nor guaranteed: it requires deliberate investment, policy foresight and a commitment to building institutions that can balance innovation with accountability.

Across the Middle East and North Africa (MENA), the expansion of solar photovoltaics and wind power has become a strategic priority in energy policy. Yet a fundamental challenge remains: how to manage the variability of renewable generation reliably.

In recent years, artificial intelligence (AI) has emerged as a promising enabler that can enhance forecasting, optimise storage and support smarter grid operations. The pressing policy question is whether the MENA region is prepared to transform ‘sunlight’ into ‘smart power’. This column reviews global and regional evidence, outlines the constraints and proposes actionable pathways for policy-makers in the region.

Evidence and trends

A recent study shows that AI-based forecasting methods can reduce prediction errors in solar and wind output by up to 30%, thereby improving grid balancing (Zhao et al, 2024).
Similarly, a systematic review of more than 400 research papers finds that AI in renewable energy is most often applied to demand prediction, predictive maintenance, hybrid systems and storage integration (Ejiyi et al, 2025).

In the MENA region, the AI-in-energy market was valued at about US$54.48 million in 2024, with projections of a 22.24% compound annual growth rate (CAGR) through to 2033 (Grand View Research, 2024).

One applied case is the SAI-WEFS (sustainable AI-driven wind energy forecasting syste,), tested in a regional wind farm. This uses hybrid machine learning to provide multi-horizon wind speed and power forecasts while evaluating trade-offs in carbon emissions per computational hour (Algarni et al, 2025).

These examples suggest that AI can directly address two core challenges in MENA’s energy transition: variability of renewable resources; and stress on power grids.

Constraints and critical challenges

  • Data scarcity and quality: many MENA utilities lack the dense sensor networks and high-frequency logging needed for robust AI models. Poor data leads to degraded or biased performance.
  • Energy and carbon footprint of AI: training large-scale models and running continuous inference consume significant electricity. By 2027, AI operations could account for 0.5% of global electricity demand (Wikipedia, 2025).
  • Transparency and trust: many AI models are ‘black boxes’. Without explainability, operators and regulators may resist adoption. Research emphasises the importance of transparency, fairness and accountability in AI for energy (Arrieta et al, 2020).
  • Regulatory and institutional gaps: in most MENA countries, grid codes, liability frameworks and cybersecurity standards are not yet adapted to AI-enabled systems.
  • Inequality in capacity: wealthier Gulf states are advancing faster, raising the risk of an ‘AI energy divide’ within the region.

Policy pathways

To move from solar to smart, MENA policy-makers should consider:

  • Pilot projects: launching AI-enabled solar, wind and storage initiatives in high-resource countries such as Morocco, Saudi Arabia and the United Arab Emirates.
  • Investment in data infrastructure: deploying IoT (internet of things) sensors, weather stations and open-access energy data platforms.
  • Green AI strategies: encouraging energy-efficient model architectures and renewable-powered data centers to reduce the carbon footprint of AI.
  • Regulatory reform: developing standards for explainability, accountability, safety and interoperability in AI for energy.
  • Regional cooperation: creating joint AI-energy labs, share datasets and models and promote cross-border learning.
  • Procurement incentives: adjusting tendering processes to favour projects with AI-enabled performance guarantees.

Conclusion

When applied thoughtfully, AI has the potential to redefine the trajectory of MENA’s renewable energy transition. It is not merely a technical tool but a strategic enabler that bridges the gap between abundant natural resources and the region’s pressing need for reliable, sustainable power. By enhancing forecasting accuracy, optimising storage and dispatch and enabling predictive maintenance, AI can transform intermittency from a liability into an asset.

Yet the stakes are higher than technical efficiency alone. For MENA, the integration of AI into renewable energy touches directly on questions of economic diversification, energy security and geopolitical positioning. Countries that successfully deploy AI-driven energy systems could reduce their vulnerability to oil price volatility, attract foreign investment into clean technology and assert themselves as leaders in the global green economy.

Conversely, failure to act could entrench dependence on fossil fuels, deepen inequalities between richer and poorer states in the region, and leave MENA behind in a rapidly evolving technological race.

Crucially, AI also presents an opportunity to strengthen governance and cooperation. Regional collaboration in data sharing, joint research and regulatory harmonisation could not only accelerate the learning curve but also build trust across borders in a region often marked by fragmentation. Such initiatives would help to ensure that the benefits of AI are broadly distributed and that the transition does not exacerbate existing divides.

Ultimately, the path from ‘solar to smart’ is neither automatic nor guaranteed. It requires deliberate investment, policy foresight and a commitment to building institutions that can balance innovation with accountability.

If these conditions are met, MENA’s renewable energy transition could serve as a model of how technology and policy, when aligned, can reshape both national resilience and regional leadership in the global energy landscape.

Further reading

Algarni, A, et al (2025) ‘Sustainable AI-driven wind energy forecasting system: advancing zero-carbon cities and environmental computation’,  Artificial Intelligence Review 58: 191, Springer.

Arrieta, AB, et al (2020) ‘Explainable Artificial Intelligence (XAI): Concepts, taxonomies, opportunities and challenges toward responsible AI’, arXiv.

Ejiyi, CJ, et al (2025) ‘Comprehensive review of artificial intelligence applications in renewable energy systems: current implementations and emerging trends’, Journal of Big Data 12: 169, SpringerOpen.

Grand View Research (2024) ‘Middle East AI in Energy Market (2025-2033)’, Grandviewresearch.com.

Wikipedia (2025) ‘Environmental impact of artificial intelligence’, Wikipedia. Zhao, X, et al (2024) ‘Artificial intelligence-based forecasting in renewable energy systems’, ScienceDirect.

Tags: , , , ,

  • Kamran Yeganegi
    Kamran Yeganegi
    Assistant Professor, Department of Industrial Engineering, Islamic Azad University

Most read

Beyond job creation: how can Egypt’s gender gap in work be closed?

More than 2 million jobs are needed each year to absorb new entrants into Egypt’s labour market and raise the country’s employment rate. The job challenge is even more acute for women, whose labour force participation remains low despite recent gains in education. This column reports on the second Development Dialogue, an ERF–World Bank Group joint initiative, which brought together students, scholars, policy-makers and private sector leaders at the American University in Cairo to consider how the country’s gender gap in work can be closed.

Digitalisation, global value chains and regional integration in MENA & SSA

Participation in global value chains is vital for countries pursuing structural transformation and inclusive economic development. This column summarises new evidence on how much production processes have been globalised in Africa and the Middle East relative to other regions; whether this process has taken place with partners within or outside the region; and whether it has taken place more in manufacturing or services.

How trade policy can reduce MENA’s cereal import vulnerability

Heavy dependence on imported cereals, combined with climate change, water scarcity and geopolitical uncertainty, continues to threaten food resilience across MENA. This column explains how an inclusive trade policy can play a key role in making the region’s food security less vulnerable to shocks.

The political economy of algorithms in the Middle East

The Middle East is entering a new political-economic era – one in which algorithms, data and artificial intelligence may become as strategically important as oil once was. Across the region, governments are investing heavily in digital infrastructure, smart governance and AI-driven economic transformation. This column outlines how AI and algorithmic governance are reshaping power, inequality and state capacity in the region.

The risks of a two-speed AI economy in MENA

Much of the debate about artificial intelligence in the Middle East and North Africa focuses on how many jobs it will replace. As this column explains, the more important challenge is that the new technology is likely to create a two-speed labour market, where countries with the capacity to invest in digital infrastructure and skills move rapidly ahead while others struggle to keep pace. Unless governments combine credible national reforms with targeted regional cooperation, AI could widen, not reduce, the economic divides across MENA.

From mega-investment to mega-productivity: closing MENA’s conversion gap

Across the Middle East and North Africa, governments are investing heavily in infrastructure, technology, diversification and new industries. Yet capital accumulation alone does not guarantee productivity growth. As this column argues, the region’s deeper challenge is its ‘investment-to-productivity conversion gap’: ensuring that large-scale investment translates consistently into stronger firms, technological diffusion, skills and better jobs. A different metric of success is required: not how much capital is deployed, but how much productive capability that capital leaves behind.

Sanctions and conflict: why corruption changes the equation

Why do sanctions produce such different political outcomes across the countries that have been targeted? This column reports research examining the role of pre-existing corruption in shaping the relationship between sanctions and subsequent conflict or political instability. The evidence indicates that trade sanctions are associated with higher conflict-related deaths where pre-existing corruption is high.

Why energy efficiency still struggles to attract finance in Egypt

Egypt has reduced energy subsidies and gradually adjusted domestic energy prices toward cost-recovery levels, improving the economic case for energy efficiency investments – but financing has not kept pace. Drawing on structured interviews with banks, developers and public officials, this column traces why energy efficiency projects in the country still struggle to attract capital, and sets out how a ‘financing ladder’ used elsewhere – from revolving funds to risk guarantees to green bonds – could close the gap.

The weak bread chain: cereal supply risks in six MENA economies

The Middle East and North Africa is one of the most food-import-dependent regions of the world, particularly for staple cereals such as barley, maize and wheat, and particularly in six countries – Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia. As this column reports, diversifying import sources has become an essential strategy for strengthening food security and improving resilience to geopolitical and climate-related disruptions.