Breaking News: Iran Launches Large-Scale Retaliation, Energy Artery Attacked! Solar Power Faces Uncertainty

Early on the morning of March 19th local time, Iran launched the 63rd round of Operation True Commitment-4, carrying out a large-scale missile retaliatory strike against oil facilities in the region and confirming that the Qatar LNG hub had been hit and damaged. Iran clearly stated that if the attacks continue, it will expand the scope of the strikes until all enemy energy infrastructure is completely destroyed.

Previously, Iran's largest gas field, South Pars, and some petrochemical facilities in Al-Asaluyeh had been attacked by the United States and Israel. This marks the first time that Iran's upstream oil and gas facilities have been targeted. Iran subsequently announced that energy facilities in Saudi Arabia, the United Arab Emirates, and Qatar have been designated as legitimate targets.

The Strait of Hormuz, a vital global energy transport route, is currently closed. This waterway handles 20% of global liquefied natural gas trade and more than 90% of crude oil exports from major oil-producing countries such as Saudi Arabia, Iraq, the UAE, and Kuwait.

What impact and uncertainties will this conflict, which has spread from the sea to the land, bring to the photovoltaic industry?

Oil Prices Surge Above $100, Solar Power's Economic Advantage Stands Out

The first sparks of conflict have hit energy prices.

Influenced by the situation in Iran, international oil prices jumped at the open, with Brent crude briefly surpassing the $100 mark per barrel. Natural gas prices surged in tandem, with European natural gas futures rising by over 50% at one point.

High fossil fuel prices are significantly increasing the return on investment for solar power plants.

Professor Paasha Mahdavi, an energy expert at the University of California, Santa Barbara, stated that the conflict could lead more countries to shift to Renewable Energy to escape the volatility and unpredictability of the fossil fuel market.

Historical experience provides evidence. After the outbreak of the Russia-Ukraine conflict in 2022, Russia cut off natural gas supplies, and Europe's newly installed solar capacity jumped from approximately 40GW to over 60GW that year.

A BNEF research report points out that if the situation in Iran remains volatile, "it could drive customers to shift towards technologies such as solar power and batteries."

Logistical Bottlenecks and Rising Auxiliary Material Costs

However, in the short term, the conflict presents more challenges than benefits to Chinese solar power companies.

The Strait of Hormuz is not only a vital passage for oil tankers but also a crucial node connecting the Middle East with global markets. Saudi Arabia, the UAE, and Oman, among others, host a significant portion of China's photovoltaic (PV) production capacity, and their export of products and import of equipment heavily rely on this waterway.

With the strait closed, shipping costs have increased by 30%-50%, and ships detouring around the Cape of Good Hope have added 10-14 days to their journeys. This creates immediate delivery pressure for companies with silicon material and wafer production capacity in Saudi Arabia and Oman.

Furthermore, the conflict is impacting prices across the PV industry chain. PV glass is most significantly affected by fluctuations in natural gas prices. Natural gas accounts for approximately 20% of the production cost of PV glass; a 10%-20% increase in international natural gas prices will directly push up glass prices, indirectly increasing module costs.

Silver prices have fluctuated slightly due to risk aversion, but thanks to domestic self-sufficiency rates exceeding 90% and advancements in silver-saving technologies, the impact can be fully offset.

According to Mysteel data, the current ex-factory price of mainstream TOPCon modules is stable at 0.87-0.9 yuan/watt, while second- and third-tier manufacturers' quotations are concentrated in the 0.83-0.85 yuan/watt range, and the average transaction price has stabilized above 0.8 yuan/watt.

Driven by both policy and cost factors, module prices have received strong support in the short term. The upcoming cancellation of the export VAT rebate policy for photovoltaic products on April 1st, coupled with the rebound in silver prices, will further exacerbate cost pressures on the module side.

Middle East Photovoltaic Ambitions Encounter Uncertainty

In recent years, the Middle East has become a hot investment destination for Chinese photovoltaic (PV) companies expanding overseas.

According to incomplete statistics, in the past two years, more than 20 Chinese PV companies have invested in and built production capacity in the Middle East and Africa, with a total investment exceeding 20 billion yuan. Leading domestic PV companies such as Jinko Solar, JA Solar, GCL System Integration Technology, Trina Solar, TCL Zhonghuan Semiconductor, and Junda Solar have successively announced plans to build PV production capacity in Middle Eastern countries, covering silicon materials, wafers, cells, modules, and auxiliary materials.

Gulf countries such as Saudi Arabia and the UAE, leveraging their abundant energy resources and sovereign capital, are vigorously promoting the development of their domestic PV manufacturing. Saudi companies such as ACWA Power and Alfanar, in collaboration with Chinese technology partners, are building projects with a capacity of tens of thousands of tons of polysilicon and modules, with some production lines already in trial production by the end of 2025.

However, if the conflict spreads to the Persian Gulf or the heart of the Arabian Peninsula, it could not only cause factory shutdowns and personnel evacuations but also undermine foreign investment confidence and delay the process of localization in the Middle East's PV industry. It is worth noting that in late January, newly established silicon material companies in the Middle East began trial supplies to customers in China and Southeast Asia. If the conflict continues, this emerging supply source may face disruption.

Iran's Dilemma: Gunfire on One Side, Solar Power on the Other

Iran's role in this conflict is quite complex. It is both the instigator of the war and a country with ambitious renewable energy goals.

Shortly before the outbreak of the conflict, officials from Iran's Renewable Energy and Energy Efficiency Organization (SATBA) stated that they had issued construction permits for nearly 100 GW of solar power capacity, aiming to attract private investment and alleviate the country's deepening power imbalance.

Iran's goal is to achieve 30 GW of renewable energy installed capacity by 2028. In February of this year, Iran also signed an agreement to support the local production of Solar Inverters, pledging to purchase domestically manufactured inverters.

However, the war may shatter all of this. The world's largest natural gas field, South Pars in Iran, has been attacked, and the country faces the threat of systematic destruction of its energy infrastructure. Faced with survival, energy transition has become secondary.

Impact and Opportunity

Overall, the impact of Middle East geopolitical risks on the global photovoltaic (PV) industry chain exhibits distinct structural and phased characteristics.

In the short term, rising auxiliary material costs, logistical disruptions, and regional order delays have put some pressure on the industry chain. However, the overall impact is manageable and has not shaken China's dominant global position in the PV industry.

In the long term, this conflict may affect the global PV landscape in two dimensions:

First, Europe is accelerating its reduction of reliance on fossil fuels. The experience of the Russia-Ukraine conflict is repeating itself—high energy prices will force European countries to accelerate the deployment of PV and energy storage, transforming PV from an optional energy source into a strategic necessity for ensuring energy security.

Second, the localization process of PV in the Middle East is hampered. The spread of conflict may delay plans by countries like Saudi Arabia and the UAE to build local PV manufacturing, dampening foreign investment confidence and leading to more cautious project investment decisions.

In this energy shift triggered by conflict, the PV industry is experiencing a complex interplay of short-term pain and long-term opportunities. For Chinese companies, finding a balance between risk and opportunity will be a key challenge for the foreseeable future.