The escalating conflict in the Middle East is creating new tensions for the US solar industry. The rising international price of aluminum has already begun to increase the installation costs of commercial photovoltaic projects and could affect the profitability of new utility-scale plants in the coming months.
Aluminum is one of the most widely used materials in solar infrastructure; components such as rails, clamps, and supports depend directly on this metal for mounting photovoltaic panels. However, logistical disruptions in the Persian Gulf and reported damage to refining facilities have reduced the global availability of the material.
According to market data, benchmark aluminum prices on the London Metal Exchange have risen by nearly 15% since the end of February. Similarly, COMEX futures contracts have seen increases of over 30%, reflecting concerns about international supply.
The impact extends to solar mounting systems
Companies involved in developing solar projects have already begun to notice the increase in costs. Jim Wood, CEO of SEG Solar, explained that solar racking systems are showing increases of around 20% compared to previous months.
These types of structures represent a significant portion of the total expenditure on photovoltaic installations. Fitch Solutions analysts estimate that aluminum accounts for between 9% and 10% of the structural costs of a solar project.
Furthermore, the increase comes at a time of strong expansion of US solar capacity; the US Energy Information Administration projects the addition of 43.4 gigawatts of new utility-scale capacity by 2026, also driven by energy growth associated with data centers and artificial intelligence infrastructure.
Global dependence keeps putting pressure on prices
Although Canada remains the primary supplier of aluminum to the United States, the North American market is still tied to international prices. The United Arab Emirates and Bahrain also account for a significant portion of U.S. imports.
Derek Schnee, senior consultant at JK Renewables, noted that Canadian producers adjust their prices as global benchmarks for the metal rise. This prevents the U.S. market from being insulated from geopolitical tensions in the Middle East.
Analysts believe this situation could reduce the financial viability of some solar projects with tight margins, especially those developed under long-term contracts or pre-agreed pricing schemes.
The cost overrun could exceed $5 billion
The rising cost of aluminum would also have cumulative effects on the solar rollout planned for this decade. Ben Damiani, chief technology officer of Cherry Street Energy, estimated that the cost of aluminum per panel could increase from $10 to $15 due to current supply constraints.
Applied to 500 gigawatts of planned solar capacity, the economic impact could exceed an additional $5 billion for the industry.
Likewise, industry specialists anticipate that some of these costs will be passed on to commercial consumers during the second half of 2026. Among the most exposed sectors are utility-scale developers, data centers, corporate buildings, and industrial complexes with high energy demand.
Meanwhile, the US solar industry simultaneously faces other challenges such as tariffs on imported panels and energy policies geared towards strengthening fossil fuels.
Source: Reuters
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