Why Small Businesses in the Middle East Want Renewable Energy but Fail to Buy It

Micro, small, and medium enterprises are the backbone of the private sector across the Middle East and North Africa, yet they remain conspicuously absent from the region’s renewable energy transition. A new study published in Discover Sustainability by Meryem Mourchid and Elhadj Ezzahid of Mohammed V University in Rabat offers one of the most detailed explanations yet for this paradox, and its central finding is striking: wanting clean energy is not the same as being able to buy it. Using nationally representative survey data from Egypt, Jordan, and Morocco, the researchers show that the barrier to solar panels and other renewable technologies in the region is not a lack of interest among business owners but a lack of financial, technical, and structural feasibility once the decision to invest has been made.

The evidence base for the study is the Transition to Clean Energy Enterprise Survey, a large-scale data collection effort covering the 2023 to 2024 period and produced by the Economic Research Forum. Unlike most studies of green technology adoption, which rely on small convenience samples of firms already interested in sustainability, this survey is nationally representative in each of the three countries. That matters because MSMEs dominate the MENA private sector in sheer numbers, and their collective energy choices could determine whether the region’s decarbonization targets are achievable. The authors modeled renewable energy technology engagement as a two-stage process: first, a firm considers adopting the technology, and second, it actually adopts it. Splitting the decision this way allowed the researchers to detect where firms drop out of the pipeline.

To explain the first stage, the study builds on the Technology Acceptance Model, a framework from information systems research that explains technology uptake through perceived usefulness and behavioral intention. The authors extended this classic model with a construct called facilitating conditions, which captures whether a firm has access to the resources, infrastructure, and institutional support needed to make a technology work in practice. They estimated country-specific structural equation models, a statistical technique that simultaneously tests how well measured survey items represent underlying constructs and how those constructs relate to one another. The results were consistent across all three countries: facilitating conditions were more strongly associated with behavioral intention than perceived usefulness was. In other words, MENA entrepreneurs form their intentions to adopt renewable energy less on the basis of expected cost savings or environmental benefits and more on the basis of whether they believe the surrounding ecosystem can support the technology.

The second stage of the analysis is where the study delivers its most consequential finding. The researchers estimated sequential logistic regression models, which predict the probability of each stage conditional on the previous one. Intention and facilitating conditions both predicted whether a firm considered renewable energy technology in the first place. But when the outcome was effective adoption, the picture changed dramatically. Effective adoption was associated with facilitating conditions, firm size, ownership of business premises, and access to targeted subsidies. Behavioral intention, the psychological variable that most adoption models treat as the decisive driver, was not associated with effective adoption at all.

This dissociation between intention and action is what economists and psychologists call the intention–behavior gap, and the study documents it with unusual clarity in a developing-region context. The implication is that implementation depends on feasibility rather than motivation. A small manufacturer in Casablanca may fully intend to install rooftop solar panels, but if it rents its premises, lacks collateral for a loan, cannot find qualified installers, and faces no subsidy targeted at firms of its size, the intention never converts into an investment. The structural equation results reinforce this reading: because facilitating conditions shape intention more than perceived usefulness does, entrepreneurs appear to internalize feasibility constraints even at the intention stage, sensing that a technology the ecosystem cannot support is not worth pursuing.

The firm-level variables associated with effective adoption deserve close attention because they point directly to policy levers. Firm size matters, suggesting that larger small enterprises have the balance sheets, cash flow stability, and negotiating power to absorb the upfront capital costs of renewable installations. Premises ownership matters, which is intuitive once the economics of rooftop solar are considered: a business that owns its building captures the full stream of energy savings over the life of the system, whereas a tenant faces the classic split-incentive problem, investing in an asset whose returns accrue to the landlord. Targeted subsidies matter, indicating that public financial support designed for specific firm categories can tip marginal investment decisions, while generic awareness campaigns apparently cannot.

The methodological rigor of the study strengthens confidence in these conclusions. The authors ran a battery of diagnostics that are often skipped in survey-based adoption research. Harman’s single-factor test was used to check for common method variance, the artifact that arises when all constructs are measured from the same respondents in a single instrument. Sensitivity analyses tested whether the adoption results were robust to alternative model specifications and threshold choices. Measurement invariance tests verified that the survey constructs carried the same meaning in Egypt, Jordan, and Morocco, a prerequisite for meaningful cross-country comparison, and cross-country equality tests examined whether the structural paths differed systematically between the three economies. The adoption models were also estimated conditional on consideration, with a formal diagnostic guiding the selection of thresholds, ensuring that the sequential structure was statistically coherent rather than assumed.

For the MENA region, where governments have invested heavily in utility-scale solar and wind projects while small businesses have largely watched from the sidelines, the study reframes the policy problem. Awareness campaigns and information provision, the default instruments of many clean energy programs, address intention, and the evidence suggests intention is not the binding constraint. Programs that expand facilitating conditions, such as concessional financing tailored to MSMEs, technical assistance for system design and installation, and support for landlord–tenant arrangements that resolve the split-incentive problem, address the stage where firms actually drop out. The finding that targeted subsidies outperform generic support suggests that precision matters: a subsidy designed for a ten-person workshop in Amman is more effective than a broad national incentive that the workshop cannot navigate.

The research also carries a broader lesson for technology adoption studies worldwide. Models inherited from consumer software research, where the cost of trying a new application is negligible, translate poorly to capital-intensive energy investments in resource-constrained environments. When adoption requires physical infrastructure, credit access, and long payback periods, the psychological pathway from usefulness to intention to behavior breaks down, and structural variables take over. The MENA findings suggest that researchers and policymakers should treat intention as a necessary but far from sufficient condition, and should measure the feasibility ecosystem with the same seriousness they devote to attitudes. As the region’s MSMEs represent an enormous untapped reservoir of distributed clean energy capacity, converting their abundant goodwill into installed panels and turbines may be one of the highest-leverage climate opportunities of the coming decade.

Subject of Research: Renewable energy adoption by MSMEs in the MENA region

Article Title: Behavioral and economic drivers of renewable energy adoption by MSMEs in the MENA region

Article References: Mourchid, M., & Ezzahid, E. (2026). Behavioral and economic drivers of renewable energy adoption by MSMEs in the MENA region. Discover Sustainability. https://doi.org/10.1007/s43621-026-04793-3

Image Credits: AI Generated

DOI: 10.1007/s43621-026-04793-3

Keywords: renewable energy, MSMEs, MENA region, technology acceptance model, clean energy transition, energy policy, Egypt, Jordan, Morocco, intention-behavior gap, Behavioral, economic