Gulf pours billions into water security to boost AI and industry ambitions

Gulf states are investing heavily in desalination and water infrastructure to underpin ambitious industrial and artificial intelligence plans, with the Middle East spending $53.4 billion on desalination capacity between 2006 and 2024 and a further $26 billion expected through 2028. The UAE’s AI sector alone could require roughly 61 billion litres of water annually by 2030 as data centre and industrial demand surges, while major projects such as the 1 gigawatt Stargate UAE supercomputing and data centre project—expected to cost more than $30 billion—are under development in Abu Dhabi.

“We rely on desalination [plants] that have proven in the last 50 years to be a very reliable source for potable water,” said Abdulaziz Alobaidli, director general for regulatory affairs at Abu Dhabi’s Department of Energy.

Scaling capacity to match AI and industrial growth

Governments and private firms are preparing to scale water supply to support rapid expansion in computing and manufacturing. AI-related investments in the UAE for 2024–2025 exceeded Dh543 billion ($147.9 billion), with global firms including Microsoft and KKR announcing major commitments to the country. Data centres—power-dense facilities that require active cooling—are water-intensive: a typical facility can use about 300,000 gallons a day, while very large centres may consume up to 5 million gallons daily, figures that underscore the urgency of augmenting desalination and reuse capacity.

Regional players and technology vendors are also pursuing efficiency gains. Companies including Khazna, DataVolt and Alfanar have deployed liquid-cooling solutions that can cut data centre water use by up to 90 per cent, offering a route to reconcile growth with limited freshwater availability.

• $53.4 billion: desalination capex in the Middle East from 2006–2024.
• $26 billion: additional expected desalination spending to 2028; capacity projected to reach 41 million cubic metres per day.
• 61 billion litres: estimated annual water demand for the UAE AI sector by 2030.
• Dh543 billion ($147.9 billion): AI-related investments in the UAE for 2024–2025.

Officials stress that securing the source and protecting marine environments are central to long-term supply resilience. “The first line of defence is protecting the source and the source for us is the sea, the ocean. How to protect it from pollution? How to protect the ecosystem in it … and make it resilient … to threats,” Mr Alobaidli said, noting Abu Dhabi’s access to both the Arabian Gulf and the Gulf of Oman as a resiliency factor. Abu Dhabi is currently building a desalination plant in Shuweihat and commissioned another project in the second quarter of this year; officials say an additional plant could be built if demand requires it.

Analysts warn that the region remains highly exposed to water stress. Mannat Jaspal, director and fellow of climate and energy at the Observer Research Foundation Middle East, said Gulf reliance on desalinated water ranges from around 40 per cent in the UAE to roughly 90 per cent in Kuwait and Oman, and that investments in desalination, wastewater reuse and efficiency are expected to rise from $5.28 billion in 2023 to $8.43 billion by 2030.

Population growth amplifies the challenge: Saudi Arabia’s population reached about 37 million at the end of last year and the UAE’s reached roughly 11.5 million, with projections pointing to further increases by mid-century. As the Gulf pursues high-tech economic shifts, desalination and water-management investments will be decisive in determining whether AI and industrial ambitions can be sustained without deepening environmental risks.