The US solar industry is suffering from the price increase of aluminium due to the Mideast war.

The war in Iran has caused a shortage of aluminium, which is making racking systems more expensive. This adds to the financial pressures already being felt by an industry that has been struggling with high silver prices.

Aluminium is a vital component for solar racking components, such as rails and clamps used to mount solar panels.

The London Metal Exchange benchmark aluminium price has risen 15% since the end of February. CME's COMEX aluminum futures contract is up more than 30%.

"I'm seeing ?roughly a 20% increase in racking selling price across solar projects," said Jim Wood, CEO of SEG Solar Inc. "I would expect some ?marginal projects--particularly those with very tight returns--to fall off."

According to the U.S. Geological Survey, in 2025 the United States will import over 5 million tons of aluminum. Geological Survey. USGS data revealed that Canada supplied more than 50% of U.S. aluminum imports. The UAE and Bahrain contributed 12%.

Since most aluminum is priced in reference to global benchmarks, Gulf imports have also seen higher prices.

"The ?U.S. Canada and the U.S. operate in a "globally integrated market. Canadian producers will adjust prices to match increasing global rates", said Derek Schnee. Senior commercial solar consultant with JK Renewables.

Aluminum prices are also on the rise due to rapid solar growth in the U.S., and a growing demand for aluminum from hyperscalers. U.S. Energy Information Administration anticipates that developers will add 43.4 gigawatts of utility-scaled solar capacity by 2026. This is a 60% increase from last year. Analysts said that the mounting costs of equipment could make some projects less profitable.

The industry is currently also dealing with tariffs on imported solar panels and Trump Administration policies that prioritize fossil fuels above renewable energy.

COSTS WILL DRIVE DOWN

According to Linda Zeng of BMI, an?unit of Fitch Solutions, aluminium accounts for?9% - 10% of the total project cost through mounting and structural elements.

In 2025, the aluminium frame will cost $10 per 500-watt module. Aluminium is usually $0.02 per Watt, or $10 for a panel. However, this would rise by 50%, to $0.03 per Watt, or $15, after the supply constraints, said Ben Damiani.

He added, "So for 500 gigawatts this would be $5 billion in additional cost."

A gigawatt of electricity can power approximately 750,000 homes

Experts say that even small increases in cost per watt can be significant when applied to large volumes of solar?capacity.

Schnee, of JK Renewables, said that he expected to see the cost increase passed on to end users, such as office buildings, factories, data centers, and utility scale developers.

(source: Reuters)