Energy crisis escalates—could the photovoltaic and battery industries become the biggest winners?

```

Media reports indicate that amid severe disruptions to the oil and gas markets caused by the war in the Middle East, if attacks on energy infrastructure further increase, estimates suggest that crude oil prices could rise to $108 per barrel, which would significantly drive up inflation and could even push some European economies to the brink of recession.

This price shock will have global impacts. In the last century, when similar price surges occurred, import-dependent countries had almost no choice but to pay higher prices or reduce fuel usage. However, in this century, the decline in prices of solar energy and batteries offers another option.

Antoine Vagneur-Jones, head of trade and supply chain at Bloomberg New Energy Finance, told the media:

“When a technology becomes cost-competitive, its adoption rate reaches a tipping point.”

Accelerating Europe’s new energy transition

The media says Europe is a typical example. Four years ago, after the outbreak of the Russia-Ukraine conflict, Europe plunged into a natural gas crisis. When the crisis first arose, the region was forced to purchase any available liquefied natural gas at high prices. But in the following years, Europe’s installed solar capacity grew rapidly, followed by a surge in battery deployments.

Despite government debt levels in European countries reaching heights not seen since World War II, they still have enough capital to make upfront investments required to install solar panels and batteries. Meanwhile, before these new energy facilities go operational, they can also withstand higher prices for natural gas.

In contrast, the 2022 crisis hit developing countries much harder. Pakistan, Bangladesh, and Sri Lanka all experienced severe power outages, as they simply could not afford a supply of liquefied natural gas. Unlike China and India, these countries barely had enough domestic coal resources to rely on.

Therefore, some Pakistani businesses and households who could afford solar panels began purchasing equipment from China. The surge in demand was so rapid that in 2024, Pakistan became the fourth-largest importer of solar panels globally, just behind the United States, India, and Brazil. Similar to Europe, a year after the solar installation boom, battery installations also grew quickly.

Analysts: If oil and gas disruptions continue, customers will turn to new energy

The media notes that solar and batteries cannot replace the oil used by current internal combustion engine vehicles, nor can they replace the natural gas used by the chemical industry. In addition, in major economies like Germany, this week’s sharp increase in gas market prices still has limited impact on electricity prices. If natural gas prices do not continue rising, the motivation to switch to cleaner alternative energy will not be as strong.

In the past, developing countries found it difficult to build capital-intensive renewable energy projects due to a lack of financing channels. Now the situation has changed, as substantial demand for solar and batteries in Pakistan and Cuba comes directly from consumers. In addition, Chinese manufacturers of solar panels and batteries are seeking new markets and offering more attractive prices.

Last year, global installed solar capacity reached a record 655 gigawatts. Before the outbreak of the Iran war, analysts expected solar growth to remain roughly the same this year, while grid storage is expected to increase by more than 50% as battery prices are expected to fall further.

Analysts say if the interruption of oil and gas supply persists, this trend may change. The report also points out that green technology inventories are currently sufficient, so the likelihood of serious supply chain bottlenecks is low.

“This may drive customers to switch to technologies like solar and batteries.”

Risk warning and disclaimerThe market bears risks, and investment requires caution. This article does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific situation. Investment based on this is at your own risk. ```