Saudi Arabia Leverages Ultra-Low Power Costs to Drive AI Infrastructure Ambitions
Kingdom positions itself as global AI data-centre hub by harnessing cheap electricity and sovereign investment
Saudi Arabia is mounting a strong challenge to global tech powers by pitching itself as a prime location for artificial-intelligence infrastructure, underpinned by ultra-low-cost electricity derived from its oil and gas resources.
At the Future Investment Initiative in Riyadh, officials affirmed plans to build data-centre capacity measured in gigawatts, including a $5 billion project at NEOM backed by state-owned entities and supported by U.S. and Chinese technology firms.
The cost of electricity in the kingdom—between approximately two and five cents per kilowatt-hour—allows operators of AI-intensive data centres to achieve operating-cost advantages of 20 to 40 per cent over U.S. and European rivals, according to industry analysts.
One expert noted the kingdom’s energy arbitrage gives it ‘‘one real comparative advantage when it comes to AI: cheap electricity.’’
Saudi Arabia has already begun awarding contracts for large-scale data-centre campuses, including a 1.5-gigawatt net-zero AI facility in NEOM’s Oxagon zone, and the AI startup Humain—launched under the Public Investment Fund—has initiated data-centre construction in Riyadh and Dammam for early 2026 operation.
These moves dovetail with the kingdom’s Vision 2030 diversification agenda, which aims to sidestep the long-term decline in fossil-fuel demand by transitioning into digital-and-AI infrastructure.
However, experts caution the plan faces substantive challenges: grid-capacity upgrades, cooling in extreme desert climates, and the availability of skilled manpower remain significant impediments.
Meanwhile, hosting large-scale data-centre capacity in a regime backed by sovereign funds and state-owned energy companies raises questions around regulatory certainty and technology transfer.
The kingdom’s appeal is grounded in its energy, capital and scale—but delivering on that promise will require execution across multiple sectors.
In carpeting its oil-rich advantage into digital dominance, Saudi Arabia is signaling a broader pivot: exporting data-centres instead of crude.
Whether the world’s next AI super-hub will rise in the desert remains to be seen—yet the ambition is now unmistakable.
At the Future Investment Initiative in Riyadh, officials affirmed plans to build data-centre capacity measured in gigawatts, including a $5 billion project at NEOM backed by state-owned entities and supported by U.S. and Chinese technology firms.
The cost of electricity in the kingdom—between approximately two and five cents per kilowatt-hour—allows operators of AI-intensive data centres to achieve operating-cost advantages of 20 to 40 per cent over U.S. and European rivals, according to industry analysts.
One expert noted the kingdom’s energy arbitrage gives it ‘‘one real comparative advantage when it comes to AI: cheap electricity.’’
Saudi Arabia has already begun awarding contracts for large-scale data-centre campuses, including a 1.5-gigawatt net-zero AI facility in NEOM’s Oxagon zone, and the AI startup Humain—launched under the Public Investment Fund—has initiated data-centre construction in Riyadh and Dammam for early 2026 operation.
These moves dovetail with the kingdom’s Vision 2030 diversification agenda, which aims to sidestep the long-term decline in fossil-fuel demand by transitioning into digital-and-AI infrastructure.
However, experts caution the plan faces substantive challenges: grid-capacity upgrades, cooling in extreme desert climates, and the availability of skilled manpower remain significant impediments.
Meanwhile, hosting large-scale data-centre capacity in a regime backed by sovereign funds and state-owned energy companies raises questions around regulatory certainty and technology transfer.
The kingdom’s appeal is grounded in its energy, capital and scale—but delivering on that promise will require execution across multiple sectors.
In carpeting its oil-rich advantage into digital dominance, Saudi Arabia is signaling a broader pivot: exporting data-centres instead of crude.
Whether the world’s next AI super-hub will rise in the desert remains to be seen—yet the ambition is now unmistakable.
