The energy sector is a large contributor to the economic and social development in countries belonging to the Gulf Cooperation Council (GCC). It is also vital to meeting the water and food needs in a region that is predominantly hot and arid. Over the past several decades, access to abundant and low-cost energy has dramatically improved living standards and industrialization, ultimately leading to some of the highest growth in energy demand in the world. At present, virtually all electricity is generated using abundant, low-cost fossil fuels – primarily natural gas and oil. Should current trends continue, electricity demand will continue to rise, prompting a parallel increase in demand for these fuels. This chapter presents an overview of supply and demand in the GCC energy system, which is important for understanding how renewable energy can be integrated and optimized. It begins by describing the GCC energy system and the factors that contribute to energy demand. Its focus then turns to energy transformation in the electricity and water sectors. An assessment of fossil and renewable resources follows after which the next section addresses barriers to coordination in the form of government subsidized fuel prices and electricity tariffs. A sampling of existing energy policies, future targets, and power sector reforms is then covered and the chapter concludes with a discussion of opportunities and challenges of renewable energy in the context of the GCC.