The geopolitical tensions in the key shipping route amid attacks since last November on ships by Iran-backed Houthi rebels would not have a direct effect on deployment figures at the moment, said Johan Lindahl, secretary general of the European Solar Manufacturing Council (ESMC).
“China has exported to Europe a vast amount of modules, more than we have installed in the last two years,” Lindahl added.
Europe imported between 160-180 GW of solar PV modules from China in the past two years, he said, citing Chinese customs data.
But in the same period, Europe has installed just under 100 GW of solar, so the continent’s renewables developers “should have enough modules in the inventories for one and a half year of deployment”.
However, the situation in the Red Sea – which has led to ships taking the longer and more expensive route around South Africa – could become a problem if it persisted for 2-3 years Lindahl said.
His comments come after Miguel Stilwell, CEO of Portuguese utility EDP, told the Davos world economic forum last month that the Red Sea turmoil was becoming a problem as solar panels for new projects were transported through that region.
Rising freight rates
However, there could be issues on the horizon amid rising freight rates, which have increased up to six-fold since the end of last year, said Raul Quinto, global director of logistics at renewable firm Soltec.
Developers may delay material purchasing decisions until the second half of this year amid an expected drop in interest rates, he said, which would likely back up the supply chain.
Lindahl agreed that lower interest rates could increase renewables deployment later in the year.
However, a market source who wished to remain anonymous said the higher transport costs could be offset by a decrease in Chinese production prices, adding: “As a result, a large price impact on the arrival of such products and equipment in Europe would not be expected.”