Aluminium price spike from Middle East war fans costs for US solar industry

Published Wed, May 27, 2026 · 09:29 PM

COMMERCIAL US solar customers are seeing installation costs spike as the war in Iran chokes supply of aluminium and makes racking systems more expensive, compounding financial pressures on an industry already grappling with elevated silver prices.

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

Damage to Gulf refining facilities and disruptions to shipping via the Strait of Hormuz, a conduit for over five million tonnes of aluminium annually, have pushed benchmark aluminium prices on the London Metal Exchange up 15 per cent since late February; CME’s Comex aluminium futures contract has gained more than 30 per cent.

“I’m seeing roughly a 20 per cent increase in racking selling price across solar projects,” said Jim Wood, CEO of SEG Solar. “I would expect some marginal projects – particularly those with very tight returns – to fall off.”

The US imported over five million tonnes of aluminium in 2025, according to the US Geological Survey (USGS). Canada supplied over 50 per cent, while the United Arab Emirates and Bahrain accounted for 12 per cent of imports, USGS data showed.

However, since most aluminium is priced in reference to the global benchmarks, Gulf supply risks have translated into higher costs for Canadian imports.

Derek Schnee, senior commercial solar consultant at JK Renewables, said that because the US and Canada “operate in a globally integrated market, Canadian producers will adjust their prices” to match rising global rates.

The aluminum price rally also comes against a backdrop of rapid US solar growth, with demand from the artificial intelligence hyperscaler buildout also rising.

The US Energy Information Administration expects developers to add 43.4 gigawatts (GW) of utility-scale solar capacity in 2026, a 60 per cent jump from last year. The mounting equipment expenses could ultimately make some of these projects less profitable, analysts said.

The sector is also navigating tariffs on imported panels currently and Trump administration policies prioritising fossil fuels over renewables.

Linda Zeng, senior power & renewables analyst, BMI, a unit of Fitch Solutions, said that aluminium accounts for about 9 to 10 per cent of total project costs through mounting and structural components.

Ben Damiani, chief technology officer at Cherry Street Energy, cited the example of a 500-watt module, where the aluminium frame “accounts for US$10 per module in 2025 pricing”.

“Aluminium usually accounts for about US$0.02 per watt, or US$10 per panel, but would increase by 50 per cent to about US$0.03 per watt, or US$15 after the supply constraint,” he said.

“So, for 500 GW, this would represent US$5 billion of increased cost,” he added. About 750,000 homes can be powered by 1 GW.

Experts said that even small per-watt increases in costs can become significant when applied across large volumes of planned solar capacity.

JK Renewables’ Schnee expects this to “have a direct cost to the consumer” in the third and fourth quarters of 2026, with higher costs being passed through to commercial end-users, including utility scale developers, office buildings, data centres and factories. REUTERS