Europe’s attempts to cut its reliance on Russian oil and gas supplies is likely to drive more buyers towards solar panels from Chinese manufacturers, helping sustain prices near a three-year high, analysts said. Since Russia invaded Ukraine on February 24, commodity prices from oil to nickel and wheat have surged to multi-year highs on concerns about supply chain disruptions. The US and its allies have imposed widening sanctions on Russia and its key exports, pushing the European Union to take steps to build alternative energy sources. The European Commission has proposed on March 8 to make Europe independent from Russian fossil fuel by accelerating the switch to renewable energy. The region, which currently relies on Russia for 40 per cent of its natural gas needs, is looking to trim that by two-thirds by the end of 2022, officials have said. That would call for a near-quadrupling of installed capacity, in the form of 480 gigawatt (GW) of wind farms and 420GW of solar farms by 2030 from current levels. The initiative could also raise the EU’s installed solar-energy capacity to 585GW in 2030. These could compensate for the loss of 20 billion cubic metres of annual Russian gas imports. “We believe overseas demand for China’s [solar panels] will remain strong” even at higher prices, said Dennis Ip, regional head of utilities and renewables research at Daiwa Capital Markets, wrote in a note on Monday. Besides supply security concerns, the Ukraine conflict will also encourage energy users to go green faster, he added. Solar panels currently fetch around 1.88 yuan per watt, according to Ip. Prices hit 2.1 yuan in December last year, a level not seen since July 2019, under pressure from a surge in raw materials like polysilicon because of tightening supply. Ukraine crisis: Nord Stream 2 gas pipeline firm files for bankruptcy after Russian invasion Prices are likely to stay elevated before easing off after the fourth quarter this year when additional new raw material capacity comes on stream, said Frank Haugwitz, founder of Asia Europe Clean Energy (Solar) Advisory. China’s annual polysilicon capacity may surge to 3 million tonnes by 2025, enough to produce 1,000GW of panels, assuming all the projects announced in the past 18 months are built as planned, he forecasts. China is the world’s biggest solar-panel producer and the biggest market as well. The EU installed a record 25.9GW of solar farms last year, compared to 54.9GW in China, despite severe material supply shortages, logistic challenges and product price hikes. The EU could install 30GW this year, according to SolarPower Europe, a Brussels-based industry association. Europe, including non-EU nations, was the biggest export market of Chinese solar panels. It accounted for 45GW last year, a 54 per cent increase from 2020, as the region stepped up efforts to fight climate change. China’s solar panels output jumped 46 per cent last year to 182GW, according to official data. Some 100.5GW worth US$25 billion were exported, a 27 per cent increase from a year earlier. Benefits from the EU’s latest pro-renewables policy will start to be reflected in shipments of Chinese panels next year, when more components become available, said Edurne Zoco, an executive director responsible for clean energy technology research at S&P Global. SolarPower Europe, the industry association, earlier this month called on the European Commission to boost solar installations to 1,000GW by 2030. It has previously projected that 672GW of solar capacity can be put in place by 2030, under existing policies. The association has on March 8 proposed measures including mandatory solar installations on new buildings, banning fossil-fuel boilers, freezing grid connection fees and setting aside 1 billion euros to help boost its own solar-panel production capacity. Eight leading European solar projects developers have lobbied the European Commission in January for policy support to boost the EU’s annual solar-panel capacity to 20GW by 2030 from 2GW currently, to enhance energy security. Even so, Europe will still be highly dependent on imports this decade, particularly from China, given the investment and time it takes to develop a local supply chain, S&P’s Zoco said.