The Gulf Is Preparing for a World Beyond Oil - Why India Should Pay Attention

For decades, the Gulf's influence over the global economy has rested on its enormous oil reserves. Its position as a major supplier of energy has shaped international trade, diplomacy and strategic relationships, including India's dependence on the region for crude oil. That relationship is now beginning to change. The UAE and Saudi Arabia are investing heavily in renewable energy, not only within their own borders but in projects across the world. Their ambitions extend beyond replacing fossil fuels with cleaner alternatives. They are building a presence in international electricity markets and developing capabilities that could become increasingly valuable as the global energy system evolves.

The two countries are preparing for a future in which oil may no longer command the same strategic importance. Rather than allowing their influence to diminish, they are seeking new ways to maintain it. India, whose economic ties with the Gulf have historically revolved around energy imports, has good reason to follow these developments closely.

How the Gulf is investing beyond its borders

Masdar, the UAE's renewable-energy company, and Saudi Arabia's ACWA Power offer a useful illustration of how this strategy is taking shape. Both have invested in renewable-energy projects across Europe, Africa, Central Asia and several island nations, although their approaches differ considerably.

In the United Kingdom, Masdar has acquired stakes in large offshore wind projects, including London Array and Dudgeon. ACWA Power, meanwhile, has developed a $533 million solar and battery-storage project in Uzbekistan and invested in concentrated solar power infrastructure in South Africa. These investments are commercially driven, targeting markets where demand for electricity, renewable-energy policies and long-term power purchase agreements offer opportunities for financial returns.

The UAE has also taken a different approach in smaller developing economies. Through government-backed development funds, it has financed solar projects in Pacific and Caribbean island nations, with Masdar responsible for implementing many of them. Countries such as Nauru, Kiribati, the Bahamas and Saint Vincent and the Grenadines have received installations intended to reduce their dependence on imported diesel. Some of these projects have capacities of less than one megawatt, but their benefits can be substantial for small economies where electricity generation is expensive and access to reliable power remains a challenge.

These investments also have a diplomatic dimension. Financing infrastructure that addresses an immediate development need can help the UAE establish goodwill and strengthen its relationships with recipient governments. The projects provide tangible benefits to those countries, while also giving the UAE an opportunity to expand its international engagement. Although it is difficult to measure the diplomatic value of an individual project, the connection between development assistance and foreign policy is well established.

The economics of energy diplomacy

An examination of selected international renewable-energy projects undertaken by Masdar and ACWA Power between 2013 and 2026 points to two broad investment approaches. The first uses government grants and concessional financing to support infrastructure in developing countries. The second involves commercial investments in larger projects, often through equity participation and long-term electricity supply agreements.

The commercial projects give Gulf companies access to established electricity markets and opportunities to earn returns over extended periods. Development assistance, meanwhile, allows governments to build relationships in countries where conventional commercial investment may be less attractive. In both cases, renewable energy is creating opportunities for the Gulf to deepen its economic involvement abroad.

This is different from the role the region has traditionally played in international energy markets. Oil and gas exports involve long-standing commercial relationships, but renewable-energy projects often require investors to participate directly in developing, financing and operating infrastructure in the receiving country. A power plant governed by a 20- or 25-year purchase agreement creates an enduring relationship between investors, electricity utilities and governments. As Gulf companies expand internationally, they are acquiring assets, expertise and commercial relationships that could remain valuable well into the future.

None of this suggests that the UAE or Saudi Arabia is preparing to abandon conventional energy. Both continue to invest in oil and gas production, which remain central to their economies. Their renewable-energy investments are better understood as an attempt to broaden their interests across the energy sector. They can continue benefiting from hydrocarbons while establishing themselves in markets that are likely to grow as electricity demand increases and energy systems become more diversified.

What India stands to gain

India has a considerable stake in how this strategy develops. Its relationship with the Gulf remains rooted in crude oil, natural gas, trade and the Indian diaspora. Renewable energy offers another area for cooperation, particularly as India seeks to expand its electricity generation capacity, develop energy storage and transmission infrastructure, and strengthen domestic manufacturing.

Gulf energy companies bring more than capital to these sectors. Masdar and ACWA Power have experience developing large renewable-energy projects in different countries, securing international financing and working within varied regulatory environments. India could benefit from closer cooperation in project development, energy storage and infrastructure financing. Indian engineering companies, equipment manufacturers and technology providers could also participate in projects being developed by Gulf investors in other markets.

There has already been some movement in this direction. India and Saudi Arabia signed an agreement in 2023 covering cooperation in renewable energy, electricity, hydrogen, energy storage and grid interconnection. The possibility of connecting the electricity networks of the two countries was discussed again in October 2026. Such a project would involve considerable technical and financial challenges, and there is still a substantial distance between discussions and implementation. Nevertheless, it indicates how far the energy relationship has expanded beyond conventional fuel trade.

India should approach these partnerships with a clear view of its own economic interests. Foreign investment will be important in meeting the country's energy and infrastructure requirements, but the terms on which that investment takes place deserve equal attention. Partnerships that encourage domestic manufacturing, technology development and participation by Indian companies would offer greater long-term benefits than arrangements limited to financing individual projects.

There is also considerable competition for Gulf investment. Renewable-energy developers from the region are active across Europe, Central Asia, Africa and other emerging markets. India's large electricity market and growing industrial capabilities make it an attractive destination, but these advantages alone will not guarantee investment. A stable policy environment, commercially viable projects and opportunities for long-term collaboration will be equally important.

For much of the past half-century, India's energy engagement with the Gulf has been shaped by its requirements for imported oil and gas. That relationship will continue, but it is unlikely to remain the only significant component of energy cooperation. The Gulf's growing role in international renewable-energy investment creates an opportunity for India to develop a broader partnership, extending from energy supplies to the infrastructure, technologies and industries that will support future demand.

The Gulf countries have begun to diversify the foundations of their influence in global energy markets. India needs to consider how its own economic and industrial priorities can fit into that changing landscape.

About Fatiha Fawad:

Fatihah Fawad is a student at Nord Anglia International School, Abu Dhabi, with an interest in energy economics, international investment and geopolitics. Her recent research paper, ‘Investment Dynamics in the Gulf: Frameworks for International Energy Investments’, examines how the UAE and Saudi Arabia are using renewable-energy investments to expand their commercial interests and international influence.