What else can energy storage do in the Middle East?

The conflict in the Middle East has increasingly strained global energy relations.

As of March 4th local time, the military strikes launched by the United States and Israel against Iran had entered their fifth day. With the continued tension in Iran, the conflict has spread to several Middle Eastern countries.

It has been reported that on the evening of March 3rd local time, a large fire broke out and thick smoke rose near the US Consulate in Dubai, UAE. Dubai authorities stated on March 3rd that a small fire occurred near the US Consulate in Dubai due to a drone attack.

Previously, affected by the regional conflict, the world's only seven-star hotel, the Burj Al Arab, was hit by drone debris in an airstrike, causing a fire on the exterior of the building. Currently, several Middle Eastern countries are on high alert.

Faced with such a volatile geopolitical environment, a serious and urgent question confronts all companies venturing overseas: is Energy Storage in the Middle East still viable?

1. The "Soaring" Growth of Energy Storage in the Middle East
If you only look at the data, you will see a booming market that is completely opposite to the smoke of war.

According to data from the CESA Energy Storage Application Branch, from January to September 2025, Chinese energy storage companies secured 40.06 GWh of cooperation and orders in the Middle East market, accounting for 18.66% of total overseas orders during the same period, making it one of the fastest-growing markets globally. Industry statistics also show that in 2025, the Middle East saw a total of 41.7 GWh of new overseas orders/cooperation, a year-on-year increase of 83.7%, accounting for 12% of the global market share and firmly holding its position as the fourth largest growth engine.

From last year to this year, several energy storage companies have secured large orders and cooperation in the Middle East.

On October 24, 2025, the world's first large-scale all-weather Solar Energy Storage project, jointly developed by Masdar and Emirates Water and Electricity Company, officially broke ground in Abu Dhabi.

The project has a total investment of over 22 billion dirhams (approximately US$6 billion) and will construct a 5.2 GW Solar Photovoltaic power plant, equipped with a 19 GWBattery Energy storage system. This is currently the world's largest solar and energy storage combined project in the utility sector, capable of providing 1 gigawatt of baseload power 24/7 upon completion.

Chinese suppliers are leading the core equipment supply, with CATL selected as the preferred supplier for its energy storage system, providing 19 GWh of battery energy storage solutions. This is one of CATL's important large-scale energy storage projects in overseas markets and a significant breakthrough for its energy storage business in the Middle East.

In January of this year, it was reported that Sungrow Power Supply Co., Ltd. will build the first Battery Energy Storage System (BESS) manufacturing plant in the Middle East and Africa in the TEDA Egyptian zone of Sokhna, Egypt, within the Suez Canal Economic Zone (SCZONE). The plant will cover 50,000 square meters, with a target annual production capacity of 10 gigawatt-hours, and is expected to begin operation in April 2027.

On February 3, Chuneng New Energy signed a strategic cooperation agreement on energy storage with Al Rajhi Electrical and GREENGRID in Dammam, Saudi Arabia. According to the agreement, over the next three years, Chuneng will supply Al Rajhi Electrical with a total of 5.5 GWh of energy storage products for localized production and project construction in the Middle East market.

As Al Rajhi Electrical's first strategic partner in the energy storage field, Chuneng New Energy will provide Al Rajhi Electrical with advanced energy storage products and comprehensive technical support for its local factory construction in Saudi Arabia.

Currently, the Middle East region, represented by the UAE and Saudi Arabia, is experiencing a fierce "energy storage race."

According to information from the Embassy of the People's Republic of China in Saudi Arabia, Saudi Arabia plans to achieve a 48 GWh energy storage capacity target by 2030; according to the "Middle East Energy Policy Dividend: UAE Energy Storage Market Access Guide," the UAE's benchmark energy storage capacity by 2030 is as high as 6 GWh.

According to relevant statistics, in the first half of 2025, orders for energy storage exports from the Middle East accounted for as much as 23.4%, ranking among the top in the global market.

From this data, the Middle East is currently the main battlefield where Chinese energy storage companies are most likely to achieve a "game-changing" impact and establish standards.

2. The Instability and the Advantages and Disadvantages of Energy Storage

However, the start of 2026 saw the risk of war cast a shadow over this "good business." What do airspace closures and port attacks mean? They mean indefinitely extended equipment delivery cycles, soaring after-sales service costs, and uncertain project returns.

So, is it still worthwhile to invest in energy storage in the Middle East?

First, conflict will make the power grid more vulnerable. Whether it's governments rebuilding the grid or businesses and households seeking self-preservation, it will create massive demand for energy storage. Previously, the Iraqi Ministry of Electricity predicted a 44% electricity demand shortfall in the summer of 2025, a gap that will only widen under the shadow of war.

Second, from a long-term perspective, the competitive landscape in the Middle East will be optimized. Panic will deter many speculators and small manufacturers with insufficient strength. What will remain are leading companies with strong capital, high-quality products, and powerful supply chain integration capabilities. This will lead to market competition shifting from price wars back to product value itself.

At the same time, prolonged instability will also reshape profit margins, making the risk premium in the Middle East extremely high. Companies that successfully deliver and maintain their systems will reap profits far exceeding those in peaceful markets.

Of course, risks and opportunities coexist.

First and foremost is the nightmare of delivery. The Red Sea crisis, port shutdowns, and airspace closures cause soaring logistics costs and unpredictable delivery times, severely impacting energy storage companies expanding overseas. For large-scale projects aiming for timely grid connection, this is undoubtedly fatal.

Furthermore, despite the high protection levels of energy storage systems, the risk of physical damage is real in regions prone to prolonged instability. Insurance institutions are extremely stringent in insuring assets in conflict zones, increasing the difficulty of project financing.

Additionally, post-construction maintenance will face significant challenges. Energy storage is not a one-off transaction; its 15-20 year lifespan requires continuous maintenance. In the Middle East, where conflict is ever-present, sending engineers to the site for maintenance is not only a cost issue but also a matter of personal safety. This means that achieving the same 15-year long-term service in the Middle East may require several times the cost compared to Europe or Southeast Asia.

3. 2026, Where is Middle Eastern Energy Storage Heading?

Standing at the starting point of 2026, the Middle East energy storage market is poised for profound structural changes.

Behind the current conflict, capital and projects will accelerate their concentration in relatively safe regions. Countries with relatively stable politics and well-developed infrastructure, such as Abu Dhabi in the UAE and Saudi Arabia, will continue to be the preferred destinations for capital and large-scale projects. While high-risk regions like Iraq, Yemen, and Iran have huge potential demand, investment in these areas remains cautious.

Before 2025, Middle Eastern energy storage primarily serves peak shaving for large power grids and renewable energy grid integration. However, in 2026, with the volatile situation, decentralized microgrids and independent commercial and industrial energy storage are likely to experience explosive growth. For example, providing independent "photovoltaic-storage" microgrid systems for embassies, multinational corporation branches, high-end hotels, hospitals, and data centers may become the most explosive market segment in 2026.

Simultaneously, the conflict-ridden environment is forcing technological upgrades. Enterprises will no longer only demand energy density and cycle life for energy storage systems, but also extreme protection capabilities, simplified operation and maintenance design, and intelligent energy management.

For the Middle East, the demand for energy storage will certainly remain strong in the future. However, for energy storage companies going global, the issues to consider are not just business.