Kuwait Solar Energy Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Kuwait Solar Energy Market Trends and Insights

Ultra-High DNI & GHI Enable World-Class Solar Yields

Kuwait records 1,900-2,100 kWh/m²/year of global horizontal irradiance and near-cloudless skies for nine months each year, placing the country in the top decile for photovoltaic performance. IEA-PVPS findings show bifacial modules on single-axis trackers can lift energy yield by 35% and cut levelized cost by 16% in Kuwait’s high-albedo deserts.^{[3] International Energy Agency PVPS, “Bifacial Photovoltaic Systems,” iea-pvps.org} Phase III of the Shagaya complex is expected to realize capacity factors above 25% thanks to these conditions. Dust deposition of 216-339 t/km²/year can, however, slash output by up to 48% after 6 g/m² buildup, pushing operators toward robotic dry-cleaning and anti-soiling coatings. These mitigation measures raise O&M costs by roughly 15-20% compared with less arid sites.^{[4]Kuwait Institute for Scientific Research, “Grid Integration Studies,” kisr.edu.kw}

National 15% Renewables-by-2030 Target & Shagaya Program

The government’s 22,100 MW renewables target, equal to 15% of forecast demand, frames near-term growth. An RFP for 1,100 MW in Shagaya Phase III Zone 1 was issued in June 2025, with bids due in September 2025 and a 30-year PPA that strengthens bankability. Prequalification for an additional 500 MW Zone 2 followed in May 2025, underscoring a phased rollout. Negotiations underway to develop Phases 4-5 totaling 3,400 MW suggest Shagaya will exceed the interim 2 GW milestone. Compliance with IEC 62109-1:2021 and IEC 62446-1:2021 reduces lender risk and aligns Kuwait with international standards.

Record PV Price Declines Drive Sub-USD 25/MWh Tariffs

PV module costs fell below USD 0.10/W in 2024, paving the way for bids in the low-USD 20/MWh range in regional tenders that Kuwait aims to emulate. EY and DNV were hired to advise on the 1,100 MW tender, signaling rigorous due diligence requirements. Yet a subsidized retail tariff of 0.7 cents/kWh leaves utility PPAs 35-40 times pricier than household electricity, stalling rooftop adoption. This dual-price environment entrenches sovereign guarantees as the linchpin of the Kuwait solar energy market. Distributed segments, therefore, remain contingent on subsidy reform or net-metering incentives.

Peak-Summer Blackouts Force Fast-Track Capacity Additions

Peak demand in August 2023 nearly matched installed capacity, forcing a 500 MW import arrangement through the GCC Interconnection Authority. Solar production coincides with midday air-conditioning loads, offering a natural hedge against such stress. KISR modeling indicates that integrating 15% variable renewables requires battery storage sized for 70% peak shaving and 30% smoothing at a 3.5-hour window. Although storage is not mandated, the 30-year PPA allows hybrid solutions to evolve as penetration rises. The Shagaya Phase III timeline reflects this urgency, with COD targeted for 2027-2028.

Ultra-Low Retail Power Tariff Subsidies Distort Economics

Residential tariffs averaging 0.7 cents/kWh undercut even the cheapest solar PPA by roughly fortyfold, erasing payback for rooftop systems. Government subsidy outlays approach USD 5-7 billion per year, complicating fiscal sustainability. Multilateral lenders recommend phased tariff hikes toward 3 cents/kWh to unlock self-consumption models, but political consensus remains elusive. A 2024 building-energy study confirmed that net-zero-energy commercial designs are not viable under current prices. Consequently, the residential segment’s forecast 83.6% CAGR will depend on regulatory mandates such as the 2019 solar-ready code rather than market payback.

Fragmented Oversight Delays Tenders

Renewable governance is split between MEWRE, KAPP, and KISR, often adding 12-18 months to tender cycles compared with neighboring GCC markets. Shagaya Phase III illustrates the lag: conceived in 2022, prequalified in early 2024, and tendered only in June 2025. While KAPP now leads procurement, the absence of a unified renewables commission means grid codes, net-metering, and REC frameworks remain patchy. Developers thus navigate uncertain inverter ride-through and reactive-power rules, elevating project risk. Direct bilateral partnerships, such as the planned 3,400 MW Chinese-backed Shagaya Phases 4-5, could bypass competitive PPP channels and fragment oversight further.

Segment Analysis

By Technology: PV Dominates, CSP Sidelined

Solar photovoltaic commanded 100% of the Kuwait solar energy market in 2024, a lead set to persist with a 74.4% CAGR through 2030. The Kuwait solar energy market size for PV is projected to climb from 102 MW to 2,825 MW across the forecast horizon, while CSP remains absent from current procurement. Bifacial modules and single-axis trackers, now standard for desert sites, boost yields by 35% and cut costs by 16%.^{[5]International Energy Agency PVPS, “Bifacial Photovoltaic Systems,” iea-pvps.org} The 50 MW legacy CSP unit at Shagaya offered valuable operational data but highlighted water-intensive cooling drawbacks in an arid climate.

Developers shortlisted for the 1,100 MW tender, ACWA Power, Masdar, TotalEnergies, EDF Renewables, Jinko Power, and Trung Nam, collectively operate more than 30 GW of PV yet little CSP, underscoring technology preference. Huawei’s SUN2000 inverters already comply with the KUWAIT_MV800 grid code, ensuring faster commissioning for PV projects. Battery storage, favored over molten-salt thermal storage, aligns with KISR’s optimal 3.5-hour window and supports evening ramp requirements.

Note: Segment shares of all individual segments available upon report purchase

By Grid Type: Utility Anchors, Off-Grid Surges

On-grid systems held 81.1% share in 2024, reflecting sovereign-backed PPAs that underpin most capacity. Off-grid projects, however, are set to match utility-scale growth with an 80.9% CAGR, driven by oil-field electrification and telecom applications. Kuwait Oil Company’s plan to integrate 17 GW of renewables for enhanced oil recovery illustrates the off-grid potential.

Transmission remains a chokepoint: a new 400 kV line linking Shagaya to Al-Sulaibiya will be fully subscribed by the first 1,100 MW tranche, prompting urgent reinforcement needs. Off-grid solutions bypass these constraints; JCE Energy’s 2024 solar-powered chemical-injection units eliminated diesel and cut maintenance cycles from weekly to quarterly. Portable-cabin studies further show 24.1% reductions in cooling electricity use when PV is integrated.

By End-User: Utility Leads, Residential Awakens

Utility-scale capacity represented 88.5% of the Kuwait solar energy market in 2024, anchored by the Shagaya complex’s bankable PPA framework. Residential installations, though tiny today, are forecast to race ahead at 83.6% CAGR thanks to the 2019 solar-ready building code and emerging net-metering pilots. The Kuwait solar energy market size attributed to rooftop systems is thus expected to rise sharply, but will still trail utility-scale totals until tariff reform narrows cost gaps.

Commercial and industrial uptake lags due to the 0.7 cents/kWh tariff, yet leases such as the 2024 TotalEnergies–Al Masaood deal hint at third-party ownership pathways. KISR’s rooftop PV-plus-battery modeling shows achievable payback once tariffs climb above 3 cents/kWh, reinforcing the role of subsidy reform. Kuwait Oil Company’s 1 GW renewable-to-hydrogen initiative aligns with this trajectory by channeling solar toward industrial decarbonization rather than grid displacement.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Utility-scale deployment clusters in Jahra Governorate’s western desert, where Shagaya’s 2,000-plus kWh/m² irradiance and abundant land create optimal conditions. Dust levels of up to 339 t/km²/year necessitate robotic cleaning, raising O&M budgets by about 20%. A 400 kV overhead line awarded to Larsen & Toubro for KWD 1.45 million (USD 4.7 million) will evacuate power from the first 1,100 MW block, but further grid work is needed for subsequent phases.

Northern oil fields, Raudhatain, Sabriya, and Burgan, form an emerging off-grid cluster as diesel generators give way to solar-battery hybrids. JCE Energy’s solar chemical-injection units prove the technical viability of remote electrification. Yet weak transmission northward means surplus daytime energy cannot easily flow to load centers, underscoring the need for updated grid codes and stability studies.

Urban corridors, Kuwait City, Ahmadi, Hawalli, consume most electricity but offer limited space for ground-mount arrays. Rooftop PV trials have reduced cooling loads in portable structures by 24.1%, demonstrating feasible gains even in dense settings. The Ministry’s pledge to include distributed generation in future procurements hints at dedicated mechanisms for urban participation.