Iran war effect: boost for solar panels, US buyers turn to electric cars, but EU car sales may drop

European industry faces a difficult year, but for some companies there may be an exception: these are mainly suppliers and installers of solar systems.

This is indicated by reports of increased demand from the German and British markets and the rising share price of Chinese manufacturers.

According to analysts, the “solar boom” from the period after the Russian invasion of Ukraine could be repeated.

The current oil crisis is also reviving interest in electric cars and heat pumps.

“Every time, we have seen how sudden fluctuations in fuel prices and an unreliable power grid accelerated the roll-out of small solar systems,” said Lara Hayim, a BloombergNEF solar-energy analyst.

In Slovakia, after the energy shock caused by the war in Ukraine, interest in home solar power plants grew so much that people had to wait for months to be connected. Solar sources made even more sense for companies that must secure their electricity at unregulated prices.

On the other hand, interest may be dampened by a sharp rise in semiconductor prices, which will be reflected in the price of solar systems.

History is repeating itself

Interest in solar panels in Europe is growing due to concerns about expensive electricity, whose price, with a delay, follows the price of gas.

Companies in Germany and the UK already reported that after the outbreak of the war, interest increased in home solar power plants, chargers, electric cars and heat pumps. Increased demand for electric cars was also recorded in the US.

Interest has increased by tens of percent: The German energy group E.ON said demand for home solar installations had doubled. The Berlin-based systems supplier Enpal recorded roughly a 30-percent increase in interest in panels as well as heat pumps.

However, a German installation company explained that part of this was the result of a seasonal effect: “Spring months are traditionally strong, so it is difficult to separate the impact of the war from the usual cycle,” chief executive Peter Knuth told the pv-magazine website.

China will profit the most: In 2025, the country consolidated its position as a global energy hegemon. It currently controls roughly 80 percent of global manufacturing capacity for solar panels and their key components. It is similarly dominant in the field of batteries for electric cars, where a single company, CATL, holds about one-third of the world market.

Hedge-fund manager Yuan Yuwei of Trinity Synergy Investments told Reuters that China’s renewable-energy market would benefit from state support and higher export demand.

How key Chinese stock indices are performing:

• While the main Chinese index, the Shanghai Composite, fell in March, the CSI New Energy index, which includes leading manufacturers of solar and wind power, battery makers and clean-energy component suppliers, gained 2 percent.
• Shares in Longi Green Energy, a giant in the solar sector, rose by roughly 19 percent.
• Chinese electric-car maker BYD and likewise the world’s largest producer of electric-car batteries, CATL, gained 20 percent in March.

Why this is happening: Increases in gas prices are always reflected in electricity prices with a certain delay, because during peak demand electricity is generated in gas-fired power plants to balance consumption.

Forward electricity prices for the second to fourth quarter on the Frankfurt exchange have already jumped by 30 to 40 percent since the start of the war with Iran.