Aluminium price surge hits US solar industry amid rising Gulf tensions

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Rising aluminium prices linked to the conflict in the Middle East are increasing costs for the US solar industry, adding fresh pressure on developers already dealing with higher silver prices, tariffs and policy uncertainty.

Commercial solar companies in the United States are reporting higher installation costs as disruptions linked to the Iran conflict affect aluminium supply chains and increase the cost of solar mounting systems. Aluminium is widely used in rails, clamps and brackets that support solar panels.

Damage to refining facilities in the Gulf region and shipping disruptions through the Strait of Hormuz - a route that handles more than 5 million tonnes of aluminium annually - have pushed aluminium prices sharply higher in recent months. London Metal Exchange aluminium prices have risen around 15 per cent since late February, while CME COMEX aluminium futures have gained more than 30 per cent.

Jim Wood, chief executive of SEG Solar, said solar racking prices across projects have already increased by around 20 per cent, adding that some projects with weaker returns could become financially unviable.

Aluminium costs are spreading across the solar supply chain

The United States imported more than 5 million tonnes of aluminium in 2025, according to US Geological Survey data. Canada supplied more than half of total imports, while the United Arab Emirates and Bahrain together accounted for around 12 per cent.

However, because aluminium prices are tied to global benchmark markets, supply concerns in the Gulf are also increasing costs for Canadian material entering the United States. Derek Schnee, senior commercial solar consultant at JK Renewables, said Canadian producers are adjusting prices in line with higher international aluminium rates because the North American market remains globally integrated.

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The aluminium rally is also arriving at a time when solar demand in the United States is expanding rapidly, partly driven by rising electricity demand from AI-related data centre construction. The US Energy Information Administration expects developers to add around 43.4 gigawatts of utility-scale solar capacity in 2026, representing growth of around 60 per cent from last year. Analysts say higher mounting equipment costs could reduce profitability across some of these projects.

The solar sector is simultaneously dealing with tariffs on imported panels and energy policies under the Trump administration that favour fossil fuels over renewable energy development.

Rising aluminium costs weigh on US solar outlook

Analysts say aluminium accounts for roughly 9 to 10 per cent of total solar project costs through mounting and structural systems.

Linda Zeng, senior power and renewables analyst at Fitch Solutions unit BMI, said aluminium remains a key material across solar infrastructure.

Ben Damiani, chief technology officer at Cherry Street Energy, said aluminium frames for a typical 500-watt solar module currently cost around USD 10 per panel, equivalent to about USD 0.02 per watt. Following the recent supply disruptions, costs could rise by around 50 per cent to nearly USD 15 per panel, or roughly USD 0.03 per watt.

Damiani estimated that across 500 gigawatts of planned solar capacity, the increase could translate into around USD 5 billion in additional costs. One gigawatt of electricity capacity is generally enough to power about 750,000 homes.

Industry executives expect the impact to become more visible later this year as higher aluminium costs gradually move through the supply chain. Schnee said commercial users, including utility-scale developers, office buildings, factories and data centres, are likely to face direct cost increases during the second half of 2026.

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