By Adriano Marchese
Shares of Canadian Solar fell sharply as it faces higher costs and a tougher regulatory climate, a combination that's squeezing sales and eroding profitability despite growing global demand for energy.
Shares fell 29% to $13.21.
"We continue to operate against a challenging solar market backdrop," said President Colin Parkin in an investor call, pointing to climbing prices for production materials, such as silver and lithium carbonate which are key materials in photovoltaic panels and batteries. He added that parts of its global supply chain are also sitting underused, pushing production costs higher.
As the economics shifted, Canadian Solar has been forced to abandon parts of its development pipeline. Several projects were delayed by slow permitting in the fourth quarter, but the bigger hit came from changing rules and soaring grid-connection costs.
"One is change in legislation in some of the countries we play, and many projects that we were developing at the earliest stage might not be making sense anymore," Chief Executive Shawn Qu said in the call.
In other jurisdictions, Qu said the cost of connecting to the grid has spiked. "Interconnection costs went through the roof, and we don't see them viable," he said.
Revenue in the first quarter is projected to be $900 million to $1.1 billion, far below Wall Street forecasts of $1.55 billion. The outlook follows a weak fourth quarter where Canadian Solar sold fewer solar panels than anticipated, by nearly half, dragging revenue down by 20% and pushing the company into a loss.
Demand for energy is still strong, however. Canadian Solar said that it is seeing higher demand for its energy storage solutions coming primarily for the rapid build-out of data centers to support artificial intelligence growth.
Canadian Solar said it will focus more on the U.S. market where it is reshoring manufacturing to North America, including doubling its solar module factory capacity by the end of the year.
For the full year, the company expects to deliver 6.5 to 7.0 gigawatts of solar modules and 4.5 to 5.5 gigawatt-hours of battery energy storage solutions to the U.S. in 2026.
"2026 will be a transition year as we accelerate our U.S. manufacturing road map to further diversify our long-term profitability drivers," Qu said.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
March 19, 2026 11:33 ET (15:33 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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