By Kapil Narula
Several Gulf Cooperation Council (GCC) countries are planning for computing capacity they have yet to build. Their plans include Saudi Vision 2030, the United Arab Emirates (UAE) National Artificial Intelligence (AI) Strategy 2031, Qatar’s National Vision 2030, and Oman’s Vision 2040. Much of this capacity will come from hyperscalers, the global cloud giants such as Amazon Web Services (AWS), Microsoft, and Google that operate data centers at vast scale. Digital sovereignty depends on this computing capacity, which in turn requires reliable electricity and, often, water for cooling.
The ongoing conflict in the Gulf region exposes data centers to significant physical security threats to critical digital infrastructure, energy and cooling water supply disruptions, and rising electricity costs. It also reinforces the need for operational resilience amid continued threats.
The announced data-center expansion is outpacing the completion of facilities and their entry into operation. The Middle East’s data-center pipeline, with 2.6 gigawatts (GW) in development, is partly paused in the aftermath of the ongoing conflict in the region. Operational capacity across the region has reached 1.6 GW, with a further 13.8 GW in the planning stages. Beyond delays in delivering new data-center capacity, powering these facilities with clean electricity presents a further challenge.
Computing as National Infrastructure
Hosting data centers and AI models domestically is a strategic goal, not just a cost decision. E-government, digital payments, cloud services, and AI all run on computing infrastructure, and GCC rules increasingly require that this infrastructure sit inside the country. Bahrain, Saudi Arabia, and Qatar have cloud-first policies for government, while UAE federal bodies are moving onto the regulator’s sovereign Federal Cloud. Data-localization rules add to this as, for example, Saudi Arabia’s data protection law regulates personal data transfers abroad, while the UAE requires health data to be stored onshore, and Oman’s 2024 cloud regulations ban moving sensitive data out of the country without approval.
Together, these create structural, policy-driven demand. Meeting this demand is also an economic diversification strategy that can channel hydrocarbon revenues into digital capital. The digital economy already makes up 16% of Saudi GDP, giving this strategy a substantial base on which to build. The scale of planned infrastructure investment reflects ambitions to expand that base.
In May 2025, HUMAIN, Saudi Arabia’s Public Investment Fund (PIF)-backed AI company, was targeting 1.9 GW of capacity by 2030 and 6.6 GW by 2034. As of the end of August 2026, AWS’s first Saudi cloud region was on track to open in December 2026, but recent hostilities between Saudi Arabia and the Houthis may delay these plans. Partnerships with international technology companies offer another route to developing this infrastructure. AWS and HUMAIN also plan to make up to 50 megawatts (MW) of capacity available in the country’s first AI Zone by 2028. As core economic infrastructure, on par with electricity grids and telecommunications networks, data centers will draw heavily on the region’s power and water. Whether they are green, though, will determine if these ambitions are bankable and resilient.
Binding Constraints
The International Energy Agency’s base case projects that electricity use by data centers in countries in the Middle East will double from 1.5 terawatt-hours (TWh) in 2024 to 3.0 TWh by 2030. This is a conservative estimate based on regional infrastructure plans, and meeting this demand will require additional electricity generation infrastructure.
With the Gulf’s year-round hot climate, demand for cooling increases. With an average power usage effectiveness of 1.92, compared with a global average of 1.41, almost half of data-center energy is used to support computing operations, mainly through cooling, but also through lighting and losses in power distribution. Moreover, water is a binding constraint, as estimates show Abu Dhabi and Dubai will face “very high” water-stress risk for data centers by 2030.
Although the use of recycled water is growing, Khazna Data Centers, one of the companies developing the UAE’s AI infrastructure, reportedly sourced about 80% of its cooling water from drinking-water supplies in 2025. In a region where potable water largely comes from energy-intensive desalination, using it for evaporative cooling adds pressure to both water supplies and energy systems. Furthermore, under a high-emissions scenario, Verisk Maplecroft’s Climate Hazard Index estimates that 27% of the world’s top 100 data hubs, mostly in Asia and the Middle East, will face high or very high climate-hazard risk by 2050. Together, these constraints mean that in the Gulf, how a data center is powered, cooled, and sited will determine whether it is an asset or a liability.
The Gulf’s Green Advantage
The Gulf’s green advantage lies in its ability to generate solar power at globally competitive costs. Saudi Arabia’s 600 MW Shuaibah solar project set a world-record low tariff of $10.40/MWh in 2021. Similarly, Abu Dhabi is building a 5.2 GW solar PV plant alongside a 19-gigawatt-hour battery energy storage system to supply 1 GW of round-the-clock renewable power, which could meet green data centers’ demand for a continuous, reliable supply of clean electricity.
Capital is not a constraint for data-center infrastructure, as sovereign funds and hyperscalers are investing rapidly in the region. Microsoft has committed $15.2 billion in the UAE through 2029, and investment in Stargate UAE is estimated at $8 billion to $10 billion. In Saudi Arabia, Google Cloud and PIF are building a $10 billion AI hub, and AWS is investing over $5.3 billion in its Saudi cloud infrastructure.
The Gulf’s unique geographic location, positioned between Europe, Africa, and South Asia, also creates export opportunities. New subsea connections are helping translate this geographic advantage into greater digital connectivity. The 45,000 km 2Africa cable, which links 33 countries, has recently been connected at e&’s SmartHub data center in the UAE. The Singapore-India-Gulf cable and the 1,400 km Al Khaleej subsea cable linking the UAE, Bahrain, Oman, and Qatar will also strengthen the Gulf’s role as a central node in global data networks.
Beyond cables, the Gulf is building legal frameworks that let foreign governments trust it with their data. Bahrain’s 2018 Cloud Law created a framework for foreign states to keep data in Bahraini data centers under their own laws, and Saudi Arabia’s draft Global AI Hub Law would allow the hosting of other states’ “data embassies.”
Buyers’ demand for clean infrastructure is another driver. Google’s Carbon Free Energy 2030 Commitment, which aims to match its electricity use with carbon-free power every hour, everywhere it operates, remains intact. Regulators are following the corporate buyers’ voluntary commitments of procuring clean electricity for data centers by introducing mandatory disclosure for data centers. The European Union has proposed to rate its data centers on energy and water efficiency from August 2027. This creates an opportunity for Gulf data centers which pair round-the-clock renewables with water-light cooling to sell trusted, verifiably green infrastructure across the three continents.
Barriers to Deployment
Oil and gas supplied over 90% of GCC electricity in 2024, and by late 2025 only about 18% of the region’s 165 GW renewables target for 2030 was operating or under construction. Unless electricity grids become cleaner at a faster rate, the gap between plans for green data centers and the clean power available will continue to grow.
Geopolitics and the risk of conflict further complicate the issue. In March 2026, drone strikes hit AWS facilities in the UAE and Bahrain. In response to these strikes, the UAE is likely to divide its planned 5 GW AI campus in Abu Dhabi, which spans 10 square miles, into a network of data centers across the country to reduce physical risks. Spreading infrastructure capacity in this manner adds redundancy and increases resilience, but it also increases costs. Hence, the distributed architecture can be used to complement, rather than replace, large hyperscale clusters.
The current conflict also poses growing risks to subsea fiber-optic cables, which underpin the region’s digital connectivity and cloud infrastructure. Iran has explicitly threatened Gulf subsea cables and U.S.-linked data centers in the event of renewed military escalation. This raises the possibility of prolonged disruptions to data flows and cloud services, making digital infrastructure resilience and redundancy strategic priorities.
Cheap power is a double-edged advantage. The Saudi government has promised to subsidize the predominantly fossil-generated electricity that will power HUMAIN’s data centers. When grid power is cheap, operators have little reason to pay for dedicated firm power from renewables, which may be higher priced. Further, in the UAE, market rules do not permit corporate or virtual power purchase agreements, leaving data centers with rooftop solar, which Dubai caps at about 2 MW per plot, or the option to purchase green certificates.
Development Priorities
While the Gulf has the solar resources and the capital, market rules to accelerate development of green data centers could be strengthened. Energy ministries and electricity regulators should let data-center operators sign corporate and virtual power purchase agreements for new renewable capacity. Regulators should also replace subsidized or one-size-fits-all pricing with cost-reflective tariffs for large loads. This way hyperscalers pay the true cost of the grid capacity they use and have a clear commercial reason to fund additional solar, wind, and storage. A promising example of this is Abu Dhabi, which has plans for a dedicated, cost-reflective data-center tariff.
Utilities, digital regulators, and economic-zone authorities control the land, grid connections, and permits. They should use that leverage by allocating plots and connection capacity only to projects that commit to a minimum clean-power share, efficiency targets, and public disclosure of energy and water use. Large campuses should be sited near planned renewable-energy-based transmission corridors. In areas experiencing high water stress, closed-loop cooling systems and the use of liquid or non-potable water should be the default.
National digital and infrastructure authorities, grid planners, and utilities in the GCC should jointly adopt a common “Green and Resilient Data Center” framework for assessment of environmental impacts and risk of data centers along with a minimum proposed standard. A common framework and a rating scheme would let investors and customers compare facilities across borders. This, in turn, would also allow stronger performance to be reflected in project valuations.
The Gulf can lead on green data centers, but doing so will require more than capital, renewable resources, and a favorable location. Governments that treat green data centers as national infrastructure can turn them into a lasting digital advantage. Hydrocarbons built the Gulf’s first fortune; whether data centers build its next depends on what powers them.
Kapil Narula is a clean energy and climate policy specialist and a consultant to the United Nations. He has more than two decades of experience across South Asia, Europe, and the Middle East. His work combines engineering, economics, and policy to help organizations put their net-zero commitments into practice. He has led studies on national energy transition roadmaps and co-authored the Breakthrough Agenda Reports with the International Energy Agency.
Section: (rihla-initiative) Photo: Wikimedia Commons
