The United Arab Emirates is racing to become the Middle East’s AI and digital infrastructure leader. But the data centers boom fueling this ambition is forcing policymakers to confront a pressing question: Can the UAE meet soaring power demands without compromising energy security and climate goals?
In an exclusive to Middle East Observer, the UAE’s Energy Ministry confirmed it has launched a comprehensive review into the power consumption of datacentres—a rapidly growing but energy-intensive sector.
“The team is tasked with reviewing energy impacts, economic returns, and classification standards of all data centres in the country,” the ministry told MEO.
Power-Hungry AI: A National Concern
Data Centres capacity in the UAE is expected to nearly double, from 495.7MW in 2025 to 917.7MW by 2030, with an annual growth rate of 13.1%. Much of this growth is driven by national ambitions in AI, cloud computing, and big data analytics.
“AI is driving investments at an unprecedented rate back to the energy sector,” said Magzhan Kenesbai, acting managing director of AIQ, a joint venture between ADNOC and G42’s Presight.
Yet, 40% of a datacentre’s power is typically consumed for cooling systems, a particularly acute issue in the UAE’s scorching climate.
Innovative Cooling in the Desert
Khazna Data Centres, a unit of G42, operates 25 facilities with 230MW of total capacity and is pioneering innovative cooling methods to curb energy use.
“In this region, the biggest challenge is overcoming extreme climate conditions,” said CEO Hassan Alnaqbi.
Khazna uses adiabatic-free chillers that consume 70% less energy than traditional systems. The company is also exploring waste-to-energy solutions and direct liquid cooling to improve efficiency and reduce emissions.
The Gas Equation
As data centre demand rises, so does pressure on the UAE’s natural gas supply. Domestic gas consumption is accelerating due to industrial expansion, population growth, and data centre construction.
ADNOC Gas, which supplies 60% of the nation’s gas, has raised its domestic demand growth forecast to 6% CAGR to 2030, up from 2% projected in its 2023 IPO.
“We are seeing a real effort by the UAE to increase domestic gas production, and some of that will surely go to power demand,” said Karen Young, senior research scholar at Columbia University.
ADNOC is boosting its gas processing capacity by 30% to 13bcf/d by 2029 as it works to become a net gas exporter by the end of the decade.
Regional Gas Ties Under Review
Currently, the UAE imports around 2bcf/d of gas via the Dolphin pipeline from Qatar. However, the long-term future of these flows is uncertain.
“Pipelines are built on trust,” said Ira Joseph of Columbia University. “You have to be able to trust your trading partner for a long time.”
The fate of a 2016 agreement to increase Dolphin’s capacity is unclear amid geopolitical sensitivities and the UAE’s drive for energy independence.
AI’s Energy Payback
AI technologies, while energy intensive, offer substantial efficiency gains across oil and gas operations.
AIQ has deployed tools across 30% of ADNOC’s reservoirs, improving production planning and reducing emissions. One application forecasts ADNOC’s GHG emissions five years ahead, aiding in its goal to reach net-zero Scope 1 and 2 emissions by 2045.
“AI reduces time and costs in field development planning and cuts CO₂ emissions indirectly,” said Kenesbai.
Energy Infrastructure Expands
In 2023, the UAE’s installed power capacity grew by 13%, reaching 43.5GW, with renewables making up 14%—up from 9.4% in 2022. The country is working toward 32% clean energy by 2030, split between renewables and nuclear.
The Energy Ministry is also weighing the tradeoffs between land use for data centres versus traditional industries.
“Do you want to use land for datacenters that will create two or three jobs, or build a plant that creates thousands?” said Sharif al-Olama, Undersecretary for Energy and Petroleum Affairs.
A Global Trend Hits Home
According to the IEA, global data centre electricity demand will more than double to 945TWh by 2030—exceeding Japan’s entire consumption today. In the Middle East, it’s expected to double to 3TWh annually.
“The UAE’s ambitions regarding AI will require an abundant and stable electricity supply,” said Nadim Abillama of the IEA. “Nuclear can provide that.”
To meet future demand, the UAE is reportedly exploring four additional nuclear reactors—a move that would solidify energy reliability for decades.
A Tightrope Walk: Emissions vs. Innovation
IEA estimates suggest that by 2035, emissions from data centres may grow 70% to 300 million tonnes—but this still represents under 1.5% of global energy emissions. Meanwhile, AI applications could cut 5% of global energy-related emissions.
The message is clear: AI presents both a challenge and a solution.
“We are living in a world where energy realism has to be applied,” said Kenesbai. “Datacentres, AI, and population growth are reshaping the global energy landscape.”
A High-Stakes Balancing Act
The UAE’s leadership in AI and data centres is helping to shape a new economic future—but it comes with significant energy tradeoffs. As the country works to expand gas, boost renewables, and invest in nuclear energy, the challenge will be to ensure that digital growth doesn’t come at the expense of energy security or climate commitments.
The decisions made today about gas, AI, and infrastructure may well define the UAE’s role in the global energy and technology map tomorrow.
