Qatar Bets on Cheap Energy to Catch Up in Gulf AI Race
GeokHub
Contributing Writer
DUBAI — Dec 17 (GeokHub) Qatar is turning to its abundant, low-cost energy and vast financial resources to accelerate its push into artificial intelligence, seeking to close the gap with regional rivals Saudi Arabia and the United Arab Emirates, which have already established a lead in the Gulf’s fast-growing AI sector.
The strategy reflects a broader regional effort to diversify economies away from oil and gas, as governments compete to attract global technology firms building the infrastructure behind next-generation AI systems.
Summary
- Qatar aims to narrow the AI gap with Saudi Arabia and the UAE
- Cheap electricity and sovereign wealth funding seen as key advantages
- New AI venture backed by $526bn wealth fund and Brookfield partnership
- Analysts warn data rules, chip access and talent remain major hurdles
Qatar Launches Ambitious AI Push
Central to Qatar’s push is the launch of Qai, a new AI-focused initiative backed by the country’s $526 billion sovereign wealth fund and supported by a $20 billion joint venture with Brookfield.
The move marks Qatar’s most ambitious step yet into an industry reshaping global technology, geopolitics and economic competitiveness. It follows massive AI-related investments already underway in Saudi Arabia, as well as Abu Dhabi and Dubai in the UAE.
Cheap Energy Attracts Cloud Giants
Qatar’s biggest advantage lies in its low-cost electricity, a critical factor for data centres powering AI models that require enormous amounts of computing energy.
Analysts say cheap power is a strong draw for hyperscalers — major cloud companies such as Google, Microsoft and Meta — which are racing to expand AI capacity worldwide.
However, they caution that infrastructure alone will not guarantee success.
Structural Challenges Beyond Capital
Experts say Gulf countries face deeper challenges, including the need to replicate Western-style data governance, secure access to advanced AI chips constrained by U.S. export controls, and attract elite global talent in an increasingly competitive market.
“These factors, rather than capital alone, will determine whether the region can translate financial firepower into meaningful influence in the AI ecosystem,” said Stephen Beard, global head of data centres at Knight Frank.
He added that regulatory clarity, particularly around data privacy, remains one of the biggest barriers to large-scale AI deployment globally.
Long-Term Commitment Required
While Qatar has released limited details about Qai, analysts say its timing reflects surging global demand for AI infrastructure, as companies bet on the technology to drive efficiency and reduce costs.
“There’s room for multiple players in this phase of the AI buildout,” said Mohammed Soliman, a senior fellow at the Middle East Institute, noting that energy-rich countries willing to finance new infrastructure are attractive partners for U.S. hyperscalers.
Still, capturing sustained demand will require years of consistent investment and policy alignment, analysts warn.
According to Wedbush analyst Dan Ives, up to $800 billion could be spent on AI data centre construction in the Middle East over the next two years alone.
Electricity Costs Remain Key Differentiator
Qatar’s low electricity prices could help offset the high cooling costs associated with operating data centres in a desert climate.
Data from Emirates NBD shows that average Power Usage Effectiveness (PUE) in the Middle East — a measure of data centre energy efficiency — stands at 1.79, compared with a global average of 1.56, highlighting both the challenge and opportunity facing the region.*
