The West Asia war has rapidly reshaped the trajectory of the global energy transition. The energy supply shock emanating from the blockade of the Strait of Hormuz is accelerating clean energy adoption across regions. This adoption, however, is likely to create new dependencies on China.
In Europe, the energy supply crisis has triggered a sharp behavioural and policy pivot towards accelerating clean energy adoption. Since most of Europe’s electricity prices are linked to the supply of gas, the War has led to electricity pricesexceeding €120–150/MWh in countries like Italy and Germany, and remaining around €60–80/MWh in France during periods of conflict. Soaring electricity prices have resulted in dramatic increases in rooftop solar demand, with homeowners increasingly opting for integrated systems that combine panels, batteries, and electric vehicle charging infrastructure. In Germany, which has been severely impacted by supply shortages, the year-on-year demand for these systems saw a 30% increase in March 2026. However, this rising demand in distributed solar systems is mostly met by Chinese equipment manufacturers.
The EU’s oil and gas import bill has increased by €24 billion since the beginning of the conflict, without any additional quantity supplied. While immediate policy responses include cutting down electricity taxes, long term plans like ‘AccelerateEU’ aim to support greater deployment of renewables and enhancing grid infrastructure to integrate renewable energy sources. The European commission has a clean energy investment strategy that will help bridge the gaps in investments,with European Investment Bank Group also planning to add €75 billion of financing in clean energy.
While Europe remains the largest destination for Chinese solar equipment exports, other regions like Africa and Southeast Asia are also witnessing an uptake. Africa’s solar market is gaining momentum and the region’s imports of Chinese solar modules increased to $43 million in March 2026, representing a 210% increase from February, 2026. Consequently, China’s solar panel exports in March increased 42.2%.
Southeast Asian economies are reverting to coal as a stop gap measure during supply constraints in oil and gas but countries like Indonesia and Philippines are also ramping up investments in solar projects. Southeast Asia’s imports of solar panels from China jumped203% between February and March. In a significant push for solar energy, IndonesianPresident Prabowo Subianto announced in March a plan to develop 100 gigawatts of solar power over the next two years. Similarly, the Philippinesis incentivising residential adoption, with state-owned pension offering loans of up to $8,300 to its members for the purchase and installation of home solar power systems.
The current crisis is therefore distinct from previous oil shocks. For the first time, cost-competitive and scalable alternatives such as solar, wind and EVs are available for deployment, although the adoption of these technologies differs widely across regions. So, while the Iran war accelerates adoption of clean technologies, it could also be a catalyst in creating new dependencies on Chinese supply chains.
China’s control over the Solar PV supply chain is overwhelming, encompassing everything from polysilicon to modules. Its manufacturing dominance is evident, as China produces over 95% of the world’s wafers and 85% of all Solar PV cells, a massive presence that extends to later production stages like PV modules.
This will not remain limited to solar going ahead. As national plans to diversify energy mix using renewable energy come into effect, demand for energy storage and other related technologies will also likely see an increase. The supply chains for energy storage technologies, particularly Li-ion batteries that are the most widely used, are also dominated by China.
This trend is visible in other clean technologies as well. For instance, Chinese exports of EVs also increased by 140% in March from the previous year. China’s investment in the new three industries – Solar, EVs and Li-ion batteries – for over a decade, has enabled the country to reap the economic opportunities provided by global energy transition. It is a result of continued state-support in manufacturing and R&D for clean technologies. This lead is likely to continue for a long time due to China’s overcapacity and high price competitiveness. Further, China continues to invest in future clean energy technologies like green hydrogen and its downstream sectors, and energy storage systems including large-scale batteries that can be used with renewable energy projects to stabilise the grids.
China has also led by example in installing renewable energy capacities domestically. Renewable energy accounts for about 30% of total energy consumption in the country, and has provided resilience for its economy during supply shortages. Its energy security strategy also sells a powerful story to the emerging economies. So, as countries accelerate their energy transition journeys, China stands to be the largest beneficiary as the supplier of necessary clean technologies, complicating de-risking strategies and making global sustainability a geographically concentrated endeavour.