Canadian Solar Inc. saw its shares soar 5.06% in trading on Wednesday, outperforming the broader market. The stock move came after China announced stricter rules for investments in solar manufacturing to address overcapacity issues plaguing the industry.
In a bid to rein in excess supply, China issued new guidelines tightening the investment criteria for solar photovoltaic (PV) manufacturing projects. The key change is raising the minimum capital ratio requirement from 20% to 30%, meaning investors must fund a larger portion of projects with their own assets.
This move is aimed at curbing the booming but unsustainable solar manufacturing growth in China. Rampant capacity expansions have led to oversupply, fierce price wars, and even quality issues as some manufacturers sacrificed standards to remain competitive and profitable amid the supply glut.
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