Middle East & Africa Solar Thermal Collectors Market Outlook, 2031

Market Drivers

• Industrial Decarbonisation and CSP Leadership: The region’s industrial sector, particularly oil and gas, mining, and food processing, requires vast amounts of thermal energy that solar thermal can decarbonise. Saudi Arabia’s Vision 2030 targets 2.7 GW of CSP, and the Ma’aden I project will use GlassPoint’s direct solar-to-heat technology to provide 65% of the steam required at the Ras Al Khair refinery, reducing carbon emissions by 600,000 tons annually. The UAE’s Mohammed bin Rashid Al Maktoum Solar Park’s fourth phase combines 600 MW of parabolic trough, 100 MW of central tower, and 250 MW of PV, achieving a record-low LCOE of USD 7.3 cents/kWh for the CSP component. This utility-scale leadership is complemented by growing interest in industrial process heat, with South Africa’s SANEDI hosting a Solar Process Heat Training Week in August 2025 to build local capacity.
• Supportive Government Policies and Building Codes: National diversification strategies are creating a policy framework that favours solar thermal deployment. The UAE’s Dubai Green Building Regulations require new buildings to incorporate on-site renewable energy, with solar thermal specifically recognised for compliance with hot water performance standards. South Africa’s SANS 10400-XA building standard mandates that at least 50% of annual average hot water heating requirements be provided by means other than electrical resistance heating, explicitly including solar heating. Egypt’s government has implemented tax incentives, including a reduced VAT rate for renewable energy projects, and local banks offer solar energy loans with up to 100% financing and repayment periods of up to seven years.

Market Challenges

• Competition from PV2Heat and Low-Cost Natural Gas: The rapid adoption of PV2Heat systems, which route surplus solar PV electricity to a resistance element inside a hot water tank, poses a direct competitive threat to solar thermal collectors in South Africa. The market for these systems quadrupled from 2,418 units in 2018 to 9,952 in 2023, driven purely by grid unreliability rather than deliberate policy support. Across the Middle East, low-cost natural gas continues to distort the competitive landscape, making it difficult for solar thermal to compete on pure economics without policy intervention. Egypt, despite its abundant solar resource, faces a similar challenge, with fossil fuel subsidies undermining the economic case for solar thermal investment.
• Grid Infrastructure and Financing Constraints: The region faces significant challenges from grid connection bottlenecks and financing constraints. In South Africa, while nearly 9 GW of PV capacity was in operation at the end of 2024, the solar thermal sector has only 2 GW, and the lack of grid capacity in key regions is a major hurdle. The National Solar Water Heater Programme in South Africa has been marred by irregularities and wasteful expenditure, with R324.8 million spent on storage costs, undermining confidence in government-led initiatives. Across the region, high interest rates and currency volatility increase the cost of capital for solar thermal projects, particularly for smaller-scale installations in emerging markets.

Market Trends

• Hybrid CSP and PV Deployment: The region is witnessing a transformative trend toward hybrid CSP and PV deployment, with the Mohammed bin Rashid Al Maktoum Solar Park’s fourth phase serving as a global benchmark. This 950 MW facility combines 700 MW of CSP (600 MW parabolic trough, 100 MW central tower) with 250 MW of PV, achieving a record-low LCOE of USD 7.3 cents/kWh for the CSP component. The 15-hour thermal energy storage capacity enables dispatchable generation during peak evening demand periods, a critical advantage over intermittent PV. In Saudi Arabia, the NEOM project couples a 300 MW CSP plant to a 50,000 t-per-year hydrogen facility, using tower heat to raise electrolyzer efficiency.
• Industrial Process Heat and Solar Desalination: The region is seeing growing interest in solar thermal for industrial process heat and desalination. Saudi Arabia’s KACARE, in partnership with the Saudi Water Authority, completed a national project using concentrated solar power and forward osmosis technology, achieving a zero-carbon desalination system with a 20% reduction in wastewater production. In South Africa, SANEDI hosted a Solar Process Heat Training Week in August 2025, with 37 participants from engineering, commercial renewable installation, and EPC contracting, to build local capacity for solar heat for industrial processes (SHIP). GlassPoint’s Ma’aden I project will provide 65% of the steam required at the Ras Al Khair refinery, demonstrating the commercial viability of solar thermal for industrial applications.