Solar stocks plunge after China enacts curbs

Shares of solar stocks fell on Monday after the Chinese government announced late last week that it would impose caps on its industry and reduce benefits for solar power users.

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Companies like First Solar, RenaSolar, JinkoSolar and Canadian Solar all moved lower, while the broader market climbed higher.

TickerSecurityLastChangeChange %
SOLRENESOLA LTD3.64-0.30-7.61%
FSLRFIRST SOLAR INC.81.60-2.70-3.20%

On Friday, Beijing cut subsidies for its solar industry and suspended construction of new farms, in what was viewed as a surprise reduction in state support for solar power in order to stem overheating. The Chinese government also said that it was going to reduce benefits for people who use solar panels for energy.

China has been a global leader in solar installations throughout recent years. According to the World Economic Forum, China, the U.S. and India are expected to account for two-thirds of global renewable expansion to 2022, largely due to “booming” solar panel deployment in China. The country, which is attempting to combat the effects of heavy pollution, has already surpassed a solar panel target it had set for 2022, the World Economic Forum reported earlier this year.

However, rapid construction of solar panels in China has overtaken the modernization of the country’s electrical grid, which has led to waste.