Key trade route for solar modules affected by Red Sea shipping crisis
PORTS & SHIPPING

Key trade route for solar modules affected by Red Sea shipping crisis

Solar module prices have risen by up to 20% due to trade disruptions in the Red Sea, which carries 12% of the world's seaborne trade. The recent spike in freight costs is a result of heightened hostilities from Houthi militia targeting vessels passing through the Red Sea since mid-November.

As a result, many merchant fleets are avoiding this key trade route, and ships are forced to go around Africa's Cape of Good Hope, adding 9,600 km to their voyage. This has amplified the cost of fuel and the time required to transport solar modules, with an additional two weeks of transit time added due to the rerouting.

"The logistics premium pertaining to the Houthi attacks on Red Sea shipping is $0.01 to $0.02 per watt. For context, the global benchmark price for crystalline modules is $0.10 per watt. So, we are looking at an extra 10% to 20% surge in module price," said Pavel Molchanov, an investment bank Raymond James, analyst.

Manufacturers in China make most of the world's solar photovoltaic modules, with Europe importing 84% of its installed solar photovoltaic modules in the last five years. As a result, Europe is heavily reliant on China for its solar modules. However, according to REC Silicon, a Norway-based polysilicon manufacturer, the Red Sea crisis has affected scheduling and freight costs in European routes. The company makes solar-grade polysilicon, a key ingredient for manufacturing solar panels in various markets. Solar tracker firm NEXTracker has also warned that some shipments are being rerouted due to the conflict, which impacts deliveries and costs.

Last year, the European Parliament voted to increase the share of renewable energy to 42.5% by 2030, driving demand for solar modules. However, the increase in the cost of modules is not affecting the capital expenditure of building a solar project just yet. As a percentage of the all-in, fully installed system cost, the jump in prices of solar modules represents only about 1% to 2%.

The Chinese supplier said that slimmer margins have manufacturers concerned, especially if customers compel them to cover freight to project sites. The margins had already depleted due to historically low prices. Because the cost of modules has fallen significantly, the additional cost is being absorbed without any issues. Two weeks of additional transit time must be built into the supply chain and inventories.

Suppliers said they hope that this is a short-term situation that will be resolved. If not, they will have to explore the long-term viability of alternative routes and a comparative increase in shipping prices.

Solar module prices have risen by up to 20% due to trade disruptions in the Red Sea, which carries 12% of the world's seaborne trade. The recent spike in freight costs is a result of heightened hostilities from Houthi militia targeting vessels passing through the Red Sea since mid-November. As a result, many merchant fleets are avoiding this key trade route, and ships are forced to go around Africa's Cape of Good Hope, adding 9,600 km to their voyage. This has amplified the cost of fuel and the time required to transport solar modules, with an additional two weeks of transit time added due to the rerouting. The logistics premium pertaining to the Houthi attacks on Red Sea shipping is $0.01 to $0.02 per watt. For context, the global benchmark price for crystalline modules is $0.10 per watt. So, we are looking at an extra 10% to 20% surge in module price, said Pavel Molchanov, an investment bank Raymond James, analyst. Manufacturers in China make most of the world's solar photovoltaic modules, with Europe importing 84% of its installed solar photovoltaic modules in the last five years. As a result, Europe is heavily reliant on China for its solar modules. However, according to REC Silicon, a Norway-based polysilicon manufacturer, the Red Sea crisis has affected scheduling and freight costs in European routes. The company makes solar-grade polysilicon, a key ingredient for manufacturing solar panels in various markets. Solar tracker firm NEXTracker has also warned that some shipments are being rerouted due to the conflict, which impacts deliveries and costs. Last year, the European Parliament voted to increase the share of renewable energy to 42.5% by 2030, driving demand for solar modules. However, the increase in the cost of modules is not affecting the capital expenditure of building a solar project just yet. As a percentage of the all-in, fully installed system cost, the jump in prices of solar modules represents only about 1% to 2%. The Chinese supplier said that slimmer margins have manufacturers concerned, especially if customers compel them to cover freight to project sites. The margins had already depleted due to historically low prices. Because the cost of modules has fallen significantly, the additional cost is being absorbed without any issues. Two weeks of additional transit time must be built into the supply chain and inventories. Suppliers said they hope that this is a short-term situation that will be resolved. If not, they will have to explore the long-term viability of alternative routes and a comparative increase in shipping prices.

Next Story
Infrastructure Urban

ABB to Invest Rs 6.25 Billion to Expand India Manufacturing

ABB recently announced plans to invest approximately Rs 6.25 billion ($75 million) in India during 2026 to expand its manufacturing footprint and research and development capabilities. The investment follows more than $35 million spent in 2025 and reflects the company’s continued focus on strengthening its ‘local-for-local’ strategy in the country.The investment will support ABB’s Electrification, Motion and Automation businesses and expand manufacturing capacity for infrastructure sectors such as renewable energy, metro rail, data centres and industrial applications. Approximately 300..

Next Story
Equipment

Six WOLFF Cranes Handle 60,000 m³ Concrete for German Hospital

Six WOLFF tower cranes are playing a key role in constructing a new hospital complex in Memmingen, Germany, supporting large-scale material handling for the project. The facility is being built on a 7.7-hectare site and will feature six floors, around 480 beds and a gross floor area exceeding 75,000 sq m.Building shell works began recently in February 2025. One WOLFF 6531.12 Cross crane supported early site preparation before being dismantled in autumn 2025, while five remaining cranes continue operations. Over an average deployment period of 16 months, the cranes are expected to move approxim..

Next Story
Equipment

REC Funds Rs 115.6 Million CSR Support for Bihar Eye Hospital

REC recently committed Rs 115.6 million under its Corporate Social Responsibility (CSR) programme for the procurement of clinical and non-clinical equipment at Sankara Eye Hospital in Saharsa, Bihar. The initiative aims to strengthen healthcare infrastructure and improve access to specialised eye care services in the region.A Memorandum of Agreement (MoA) was recently signed between Pradeep Fellows, Executive Director (CSR), REC Limited, and Wg Cdr V. Shankar (Retd), Trustee and Executive Director of Sankara Eye Hospital, at the REC office in the SCOPE Complex, New Delhi.The support is expecte..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement