Solar Seen as Energy Security Asset Amid Iran Conflict
Countries scrambling for fossil fuel supplies might have dominated headlines over the past month, but solar energy is finding its own place in the sun as a core energy security asset amid the supply disruptions wrought by the Iran war, according to industry sources and OPIS research.
The Strait of Hormuz, a key oil and gas trade artery, has been in occlusion since end-February following the start of the Iran war. While the immediate responses from countries dependent on its exports have been to secure replacement fossil fuels to ensure energy continuity, the crisis has also been accelerating policy support for renewable energy deployment across the globe.
I. Policy Support for Renewables
China
China remains structurally exposed to geopolitical disruptions in fossil fuel supply chains. With foreign crude oil dependence expected to remain at approximately 70% through 2030 and a significant share of imports transiting the Strait of Hormuz, the U.S.-Iran conflict has intensified concerns over potential supply disruptions and reinforced the urgency of accelerating renewable energy deployment.
In the near term, rising conventional energy costs linked to the conflict have improved the relative competitiveness of solar power on a levelized cost basis, contributing to accelerated generation project approvals and procurement activity, sources said.
According to OPIS data, state-owned enterprises in China have announced solar module procurement tender results totaling around 67.5 GW in March, more than double the 29.9 GW procured a year ago.
From a longer-term policy perspective, the conflict has reinforced national-level momentum toward renewable expansion. At the China Development Forum 2026 on March 22, Han Wenxiu, deputy director of the Central Financial and Economic Affairs Commission Office, highlighted the vulnerability of traditional energy supply chains and emphasized the need to accelerate construction of a modern energy system with a growing share of domestically sourced wind and solar energy.
Similarly, in a government work report delivered at the Fourth Session of the 14th National People’s Congress in March, Premier Li Qiang emphasized accelerating green and low-carbon industries and formally incorporated “green fuels” and “future energy” into national strategic objectives for the first time.
According to the National Energy Administration, China’s total renewable energy capacity reached approximately 1,840 GW by the end of 2025, including about 1,200 GW of solar installations—accounting for 65.2% of new energy capacity. This underscores solar power’s central role in supporting China’s energy transition.
South Korea
South Korea has also accelerated policy commitments to renewables, reflecting its high dependence on imported fossil fuels. Official data indicate that approximately 70% of South Korea’s crude oil imports originate from the Middle East, with more than 95% of shipments transiting the Strait of Hormuz.
In response to the geopolitical shock, the Ministry of Climate, Energy and Environment introduced its “Energy Transition Promotion Plan” on April 6, stating that existing energy security strategies were no longer sufficient under evolving geopolitical risks.
The government has announced plans to bring forward its target of achieving 100 GW of renewable capacity by 2030, with solar energy identified as a central component of this transition due to its rapid deployability. Policy measures include mandatory rooftop solar installations on new industrial park facilities, expansion of agrivoltaic and floating solar projects, and the development of community-based “sunshine income villages” designed to distribute renewable generation revenues to local populations.
In a broadcast earlier this month, President Lee Jae-myung has framed the Middle East crisis as “an opportunity to accelerate South Korea’s transition toward becoming a renewable energy powerhouse”, emphasizing that energy system transformation represents a matter of national strategic importance.
Southeast Asia
In Southeast Asia, the Iran conflict has exposed the region’s structural vulnerabilities related to heavy dependence on imported fossil fuels. The region relies on the Middle East for more than half of its oil imports, prompting governments to implement short-term measures including fuel subsidies, tax relief and emergency supply planning to stabilize domestic energy markets.
But renewable energy adoption has nonetheless featured prominently on the agendas of authorities in the region.
The Energy Market Authority, the energy regulator in Asia’s oil trading hub of Singapore, said in early-March it “will be ramping up efforts to deploy solar across more viable surfaces” to reach its solar deployment target of 3 gigawatt-peak (GWp) by 2030. “Our ongoing efforts to diversify our energy sources including through renewable energy… have now become even more salient,” the country’s foreign minister Dr Vivian Balakrishnan said in a separate speech on March 13.
Thailand announced on March 19 solar rooftop tax deductions for households in effect till end of 2028 alongside other energy-saving measures.
The Department of Energy in the Philippines said in April that expanding renewable energy is one of its key strategies to foster energy independence amid the Mideast disruptions.
Malaysia’s Energy Commission also said earlier this month that it would continue to expand its regulatory frameworks to support renewable energy deployment.
U.K.
In the U.K., the geopolitical conflict has translated into accelerated policy implementation aimed at strengthening long-term energy independence. On March 24, the government announced new regulations under the Future Homes Standard requiring solar panels and low-carbon heating systems to be installed as standard in nearly all new residential homes in England. The government said that the measures were introduced in response to the Middle East conflict to support households and businesses facing rising energy costs while accelerating the deployment of domestically produced clean energy.
Energy Secretary Ed Miliband emphasized the strategic dimension of the policy, stating that the Iran conflict had reinforced the urgency of accelerating clean power deployment to reduce exposure to fossil fuel price volatility. The policy shift signals a broader repositioning of solar energy from a climate-focused solution toward a core component of national energy security strategy.
II. Market Reaction: Consumer and Price Dynamics
Across Europe, the U.S.–Iran conflict has triggered heightened energy security concerns, accompanied by sharp increases in oil and gas prices. Industry participants note that rather than being viewed primarily as a climate or environmental measure, solar power is increasingly regarded as a strategic tool to enhance energy security and support economic resilience.
Public sentiment toward renewable energy has strengthened noticeably. German renewable energy equipment provider Enpal reported that enquiries related to solar panels and heat pumps increased by approximately 30% following the outbreak of the conflict. Meanwhile, Greg Jackson, chief executive officer of British energy supplier Octopus Energy, said that between March 1 and March 22, the company recorded sales increases of 54% for solar panels, 51% for heat pump installations and 20% for electric vehicle charging installations compared with the same period in February.
At the international level, the shift in market sentiment has been reinforced by institutional guidance. At a Middle East energy crisis press briefing in Brussels on March 6, the head of the International Energy Agency or IEA stated that accelerating renewable deployment would be one of the most effective responses to the crisis, noting that renewable energy represents an indigenous energy source capable of strengthening national energy resilience.
III. System Reliability: Grid and Dispatch Challenges
Southeast Asia
There are however substantial challenges to Southeast Asian countries rapidly switching to solar energy, primarily due to legacy power grid systems owned by state-owned enterprises more focused on continuity than renewable energy adoption.
Several Asian countries have turned to coal as a short-term fix, given its wide availability in the region and its role as a fallback when oil and LNG supplies are disrupted. The Philippines has been increasing coal-fired generation while cutting LNG production, Vietnam has been negotiating coal supply and Thailand has raised coal production. This suggests that when fuel costs spike, the first response is often not more solar, but more coal.
But while the immediate response has not triggered rapid solar expansion, the Iran conflict has added fresh impetus to initiatives already in the works.
Indonesia has one of the region’s most ambitious supply-side strategies, targeting 70% of planned 71 GW capacity additions from renewable sources, including approximately 17 GW of solar capacity by 2034. Vietnam has outlined plans for rooftop solar adoption across 50% of residential and commercial buildings by 2030, while Malaysia has continued expanding utility-scale solar through its Large-Scale Solar 6 program, which includes mandatory battery storage integration.
Regional coordination efforts are also advancing. Asean has adopted a 2026–2040 energy cooperation plan targeting renewable electricity to account for 45% of installed capacity by 2030. However, the IEA has noted that investment remains off track, with the region accounting for only around 2% of global clean energy spending. As such, the case for solar may be strengthening, but the capital and infrastructure needed to deliver it have yet to keep up.
South Korea
South Korea’s operational response has emphasized dispatchable generation and grid reliability. Market participants noted that approximately 90% of South Korea’s solar capacity is connected to the distribution network rather than the transmission grid, increasing the risk of curtailment when local generation exceeds demand.
To address these challenges, the government has committed to expanding distribution-level energy storage systems to improve renewable absorption capacity. However, the pace and scale of planned storage investment remain key uncertainties influencing the feasibility of achieving accelerated renewable deployment targets.
IV. Industrial Consequences: Manufacturing and Supply Chain Effects
China
Despite the strong policy momentum supporting renewable deployment, China’s solar manufacturing sector continues to face structural imbalances. Sources disclose that over the past two years, persistent low prices in the solar supply chain have generated cumulative industry losses exceeding 100 billion yuan ($14.5 billion), with upstream segments—particularly polysilicon—remaining heavily oversupplied at roughly three times current end-market demand.
During the Fourth Session of the 14th National People’s Congress, Tongwei Solar’s chairman, Liu Hanyuan, proposed incorporating solar manufacturing into the energy sector’s regulatory framework, emphasizing its strategic relevance to national energy security amid global uncertainties linked to the U.S.-Iran conflict.
Key recommendations included aligning manufacturing capacity with national grid development, strengthening demand-oriented regulation and price monitoring, establishing a unified national data platform, and considering polysilicon for inclusion in strategic reserve mechanisms.
Although some stakeholders argue that polysilicon faces structural oversupply rather than supply risk, limiting the applicability of reserve-style management, others view the proposals as a sign of growing policy attention to integrating solar manufacturing into national energy governance, which could support capacity rationalization and improve long-term industry coordination.
Global Solar Supply Chain
The geopolitical shock has also introduced new risks across the global solar supply chain. Rising module prices and transportation costs have created near-term uncertainty for project developers, particularly in emerging markets reliant on imported equipment.
China exports more than 80% of the world’s solar products, making global solar deployment highly sensitive to cost movements originating in the Chinese manufacturing sector. OPIS assessed FOB China Tunnel Oxide Passivated Contact (TOPCon) mainstream modules at $0.120 per watt peak in March, up more than 36% from $0.088/wp compared to the December 2025 average.
Solar manufacturing projects being developed outside of China have encountered emerging challenges linked to the conflict, particularly in the Middle East, which has become a key destination for solar investment in recent years. Since 2023, industry sources and company disclosures indicate that at least 15 solar manufacturing projects spanning the full supply chain have been announced or initiated across the region.
With only a limited number of projects currently operational, sources noted that those under construction or in the planning phase may face extended timelines, potentially affecting investor confidence and capital allocation decisions.
The conflict has highlighted strategic vulnerabilities in regions lacking domestic solar manufacturing capacity. At the Boao Forum for Asia Annual Conference in China in late-March, former Slovenian President Danilo Türk said in an interview with local media that modernizing manufacturing capabilities will be critical to shaping Europe’s future industrial profile, while continued international cooperation remains essential.
He noted that China has become a global leader in solar production and deployment, while Europe retains strong technological strengths, emphasizing that deeper and localized manufacturing integration between the two will be key to maintaining the stability of the global green supply chain in the next phase of renewable industry development.
Overall, market participants continue to regard solar power as a long-term structural solution to geopolitical energy risks. However, in the near term, rising input costs, logistical disruptions, financing uncertainties, and limited localized solar manufacturing capacity in certain regions may moderate the pace of new installations until supply chains stabilize and policy clarity improves.