China's photovoltaic industry is "stuck" in the Strait of Hormuz

The Iran-Iraq conflict has been going on for more than a month, but the fighting still hasn’t stopped. The Strait of Hormuz has not yet fully returned to normal navigation conditions. This waterway that grips the world’s energy “throat” is stirring not only oil prices, but also the photovoltaic (PV) industry chain.

Trade sources say that the most direct risks currently facing the PV industry are concentrated on delivery execution—route diversions, booking restrictions, and conflict-related surcharges—which all increase the risk of shipment delays in the near term.

In early March, Active Energy Group, which focuses on energy and digital infrastructure, said that its delivery timeline for its first project in the United Arab Emirates will be delayed compared with the original plan. The company cited a range of comprehensive reasons, including regional disruptions caused by the recent situation in the Middle East and slowed approval processes, which have affected the project commissioning schedule.

And this crisis is also affecting Chinese PV companies that have been deeply developing in the Middle East. They are bearing multiple pressures, including delays in projects under construction, disrupted export channels, rising raw-material costs, and tighter financing conditions.

A source from a Chinese PV module manufacturer said, “We’ve heard that some routes to the Middle East have been suspended. At the same time, due to regional tensions, shipping insurance premiums have risen by 3 to 5 times, and the situation is not optimistic.”

Another manufacturer downstream in China’s PV industry also said that shipments planned for the Middle East in the near term face higher uncertainty. The company has strengthened communication with regional customers and discussed contingency plans.

At the same time, Iran is the world’s second-largest methanol producer. In the short month since the outbreak of the conflict, Iran’s domestic methanol market has also been affected. Spot prices have surged 46%, and costs across the chemical industry chain are under broad pressure. Meanwhile, supply of Iran’s soda ash has been disrupted, and oil and gas prices have risen as well, which is also pushing up the manufacturing cost of PV glass.

How much impact has this crisis really caused for the PV industry in the Middle East? And how will Chinese PV companies that have heavily bet on this market withstand and respond to the challenges?

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Middle East PV industry hits the “emergency brake”

An interesting fact is that Middle Eastern countries—with the world’s richest oil resources—are pursuing energy substitution.

The Middle East region is dotted with deserts, with abundant sunshine and vast land. To break free from dependence on a single-oil-economy path, over the past few years governments across the region have been actively driving energy transitions. Electricity demand has kept rising, and the green hydrogen industry has been getting off the ground rapidly. Currently, the Middle East is already the world’s fastest-growing PV market.

And global PV development cannot do without China’s industrial chain.

According to data from the Middle East Solar Industry Association and Dii Desert Energy (a platform focusing on research and cooperation in the energy industry of the Middle East and North Africa), PV market new installations in the Middle East and North Africa in mid-2024 grew year on year by about 25%, higher than the global average. Entering 2025, as large projects in Saudi Arabia, the UAE, and other places concentrate and connect to the grid, the region’s total installed capacity is surging by over 40% year on year. That also places it in an accelerated expansion cycle, making it a key incremental driver for China’s PV exports.

In the Middle East PV module market, Chinese manufacturers hold an absolute dominant position. JinkoEnergy, Trina Solar, JA Solar Technology, and Longi Green Energy form the core supply lineup. According to global shipment data from organizations such as InfoLink Consulting, these companies have long ranked among the industry’s top-tier and are deeply involved in multiple multi-gigawatt-scale projects in the Middle East.

Among them, JinkoEnergy ranks first. JinkoEnergy’s Chairman, Li Xiande, introduced: “The company entered the Middle East market in 2011. So far, it has covered nearly half of the countries in the Middle East, and holds about half of the market share in the region.”

Iran announced a blockade of the Strait of Hormuz, a critical energy bottleneck carrying one-fifth of the world’s crude oil transport. The ripple effects of this crisis go far beyond the oil and gas markets. From module transport to supply-chain coordination, from project financing to shifts in energy policy, the rapidly advancing Middle East PV industry chain is also taking on significant pressure from this turmoil.

A schematic diagram of vessel distribution in the Persian Gulf and surrounding waters shows that global energy transportation is highly concentrated in the narrow Strait of Hormuz; image source: the internet

The most direct impact is on the logistics side. According to data from Lloyd’s List Ship Information Services in the UK, between March 1 and March 13, 2026, only 77 vessels passed through the Strait of Hormuz, whereas in the same period last year there should have been 1,229 vessels. Navigation volume plunged by 93.7%. What’s more noteworthy is that, according to publicly available information, most of these 77 vessels belong to so-called “shadow fleets” that evade Western sanctions. And by March 14, even these “shadow fleets” stopped operating, with the numbers ultimately reaching zero.

In early March, Mediterranean Shipping Company (MSC Mediterranean Shipping Company) announced that it had suspended acceptance of cargo bookings from around the world to the Middle East until further notice. It said it would continue monitoring the situation and, once safety conditions improve, would work with relevant departments to resume operations.

The core equipment needed for PV projects under construction in the Middle East—modules, inverters, tracking mounting structures, and so on—overwhelmingly relies on sea freight to be shipped from China or Southeast Asia manufacturing bases to local ports. If the navigation routes are nearly blocked, it means cargo can only wait at the entrance to the Persian Gulf, or be forced to detour around the Cape of Good Hope. According to an analysis by The Economist, detouring around the Cape of Good Hope will increase the voyage length by about 40%.

An industry insider familiar with multi-crystalline silicon projects that are set to be commissioned in the Middle East said that some factories in the Middle East had planned to enter a critical stage in March, involving trial-order deliveries and collecting customer feedback. This would provide a basis for subsequent production adjustments and price negotiations. But now, the timetable is expected to be affected by logistics constraints.

In addition, fluctuations in energy prices are being transmitted through the industrial chain into the costs of PV auxiliary materials. While PV seems unrelated to oil, in fact it is deeply embedded in the petrochemical industry chain. For example, aluminum ingot refining for EVA (ethylene-vinyl acetate copolymer) encapsulation film and backsheet materials, as well as aluminum frames, is energy-intensive production.

A senior practitioner in the energy sector said that the Strait of Hormuz carries about 20%—30% of the world’s seaborne oil shipments and about 20% of liquefied natural gas trade. Once transportation is restricted, shipping and insurance costs will rise, perturbing global energy supply and driving volatility in oil and gas prices. Such volatility then further transmits to upstream PV, mainly reflected in two categories of auxiliary materials: (1) PV glass, whose production highly depends on natural gas and electricity, and upstream soda ash is also sensitive to energy prices; (2) encapsulant film materials—EVA and POE (polyolefin elastomer, more durable than EVA), which come from the petrochemical system and are directly tied to oil prices—so higher crude oil will directly push up the costs of related materials.

However, regarding pricing, some industry insiders say, at present, component prices have not been directly affected temporarily, because Middle East buyers typically sign contracts one to two years before delivery. The long-term nature of these contracts means that discussions of forward market prices are basically not affected by near-term spot-market fluctuations. Buyers can postpone procurement decisions until transportation conditions stabilize.

Ripple effects on multiple Chinese overseas-bound companies

As the Middle East grows into one of the world’s fastest-growing core PV markets, it is also gradually evolving into a key battleground for China’s PV companies to “go global.”

According to industry statistics, in 2025, the value of PV solar cell modules exported from China to the Middle East reached $2.997 billion, accounting for 10.63% of the total export value.

PIF, through new joint ventures (involving three Chinese companies—Vision Energy, TCL Zhonghuan, and JinkoEnergy), strengthens the localization of renewable energy in Saudi Arabia; source: PIF official website

Several major Chinese PV giants have already deeply deployed or are planning to deploy: TCL Zhonghuan announced in 2024 plans for a 20GW project in Saudi Arabia. In the same year, JinkoEnergy planned 10GW of cells and 10GW of modules. Vision Energy, Trina Solar, China Glass, and AMPC, among others, are also accelerating the implementation of localized deployments. Therefore, as geopolitical conditions continue to be disrupted, those investment plans and promotion efforts that were originally relatively certain may start to face new variables.

In addition, a batch of ultra-large projects is also passing through this “risk node.”

According to publicly available industry information and organization-based compilation, in 2025–2026, large PV projects under construction and in operation in the Middle East are mainly concentrated in Saudi Arabia and the UAE.

Saudi Arabia is where pressure is highest. The fourth round of PV project clusters led by Saudi Arabia’s sovereign fund PIF (Public Investment Fund), also known as “PIF4,” includes three power plants: Haden (2GW), Muwayh (2GW), and Al Khushaybi (1.5GW). With a total scale of 5.5GW, they are planned for centralized commissioning around 2027. This is one of the largest ongoing projects in Saudi Arabia’s energy transition.

In PIF4, multiple Chinese companies have participated at different levels. For example, China Energy Engineering Group has entered the EPC general contracting stage for some projects, and companies such as JinkoEnergy provide core equipment like modules. While construction of the projects themselves has not stopped, the underlying cost structure has become an important focus as well: How will equipment be transported there in the future? Can delivery timelines still be maintained? How should insurance be priced? A series of key questions remain uncertain.

Masdar has released a list of preferred contractors and suppliers for the world’s first ultra-large 24/7 PV + storage project, including JinkoEnergy, JA Solar, Contemporary Amperex Technology (CATL), etc.; image source: Masdar official

The UAE situation is more complex. For example, the RTC PV-storage project led by Masdar, a future-energy company in Abu Dhabi, announced in January 2025, combines 5.2GW of PV with 19GWh of energy storage. This is not an ordinary power plant, but a highly integrated energy system: PV generation, battery energy storage, and grid dispatch must all be synchronized and properly in place to achieve power supply stability close to “all-weather.”

This means that any delay in any link is not merely a matter of “a few days late,” but will involve affecting the dispatching rhythm of the entire system. More critically, in this project, the depth of Chinese companies’ involvement—from modules to the energy-storage system—is very high. For instance, JinkoEnergy and JA Solar supply PV modules, CATL provides the entire energy-storage system, and China Energy Engineering Corporation participates in engineering construction. Any turbulence in the supply chain will transmit directly along this chain.

ACWA Power, Badeel, and SAPCO will invest about $8.3 billion to develop renewable energy projects with a total capacity of 15GW in Saudi Arabia; source: PIF official website

Moreover, the expansion of projects led by PIF has not stopped. After PIF4, in July 2025, the Badeel, ACWA Power, and SAPCO consortium signed power purchase agreements with a total scale of 15GW, covering five PV projects—Bisha (3GW), Humaij (3GW), Khulis (2GW), Afif 1&2 (together 4GW)—as well as two wind-power projects, Starah (2GW) and Shaqra (1GW), with total investment of about $8.3 billion.

Public information shows that several Chinese companies have already participated. In October 2025, China Energy Engineering Group and China Energy Engineering Corporation announced signing related EPC contracts, respectively. The projects are expected to be gradually commissioned from 2027 to 2028. And as the Middle East situation remains tense, uncertainty about project advancement is also increasing.

China PV’s response logic for going global

As geopolitical tensions continue to disrupt the region, the growth curve of Middle East PV is showing subtle changes, and some strategies among Chinese overseas-bound firms are also adjusting.

Some companies are becoming more cautious, viewing the Middle East as a “high-potential but high-volatility” region. An exclusive response from a representative of GCL Group said that Middle East fossil energy is abundant, and seeking a transition to new energy is urgent. However, due to uncertainty in geopolitics and instability caused by the fighting in the Middle East, investment in the Middle East still remains at the intention stage. At present, they are more inclined to focus on zero-carbon high-tech materials industries such as perovskite in the United States.

Meanwhile, other leading companies choose to further strengthen global deployment. At the Boao Forum for Asia 2026 Annual Conference held recently, Gao Haining, Vice Chairman of Trina Solar, responded by emphasizing Trina Solar’s global layout. “The value of PV is not only to supplement traditional energy. In some regions, it can help local areas move directly toward a more advanced energy structure. For example, in the Maldives, Trina Solar has built ‘PV + energy storage + diesel generator’ combined stand-alone microgrids for 27 islands. In Indonesia, similar projects are also being continuously advanced,” Gao Haining said.

From a more macro perspective, this geopolitical conflict is also triggering reflections at the policy level. Liu Zhenmin, China’s Special Envoy for Climate Change Affairs, said that tensions in the Strait of Hormuz have especially significant impacts on Asian countries that are highly dependent on energy imports. He believes there are two points that deserve serious review: first, from the standpoint of regional security, relying on China’s long-term cooperation foundation with ASEAN and others to maintain the peace and stability of key shipping lanes and avoid repeating past mistakes; second, from the standpoint of energy structure, the risks of excessive dependence on oil and gas resources in a single region have already been fully exposed, and energy security should be improved through diversified supply systems.

At a deeper level, under this crisis, China’s PV globalization path is also being reshaped. The dimension of competition is becoming clearer: determining the winner is not only about price and capacity; more importantly, it is about who can better survive the cycle in an environment of uncertainty and who has the ability to build a more stable and sustainable global energy layout.

Source of this article: Tencent Technology

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