Solar Rally Halted as First Solar Sees Lingering Supply Woes

(Bloomberg) -- Solar stocks plunged on Wednesday after First Solar Inc., the largest U.S. panel maker, said supply-chain woes and rising costs will pinch earnings this year.

First Solar had its biggest decline since April 30 in New York trading, falling 8.1% to $69.51. The Tempe, Arizona-based company forecast earnings for 2022 that fell short of expectations in a statement Tuesday after the close of U.S. markets. Stocks of other solar companies fell, ending the sector's rally that followed Russia's invasion of Ukraine.

Solar equipment manufacturer Array Technologies Inc. fell 20% amid the sector decline, after disclosing in a filing that it's unable to submit its annual report by its original due date. Canadian Solar Inc. fell 5% while Enphase Energy Inc. dropped 3.9% and SolarEdge Technologies Inc. declined 3.1%.

First Solar cited lingering issues including higher freight rates, commodity inflation and soaring aluminum costs as impacting prospects this year during a Tuesday earnings call after U.S. markets closed. Rising costs and trade disputes are among the biggest headwinds for a renewables industry grappling with several obstacles that threaten to slow adoption of solar, even as climate-minded governments and companies prioritize the use of cleaner power.

“We will not be able to offset a number of the headwinds experienced in 2021 and therefore our module cost will be higher than our road map,” First Solar Chief Executive Officer Mark Widmar said on Tuesday's call. “This is expected to negatively impact 2022 gross margin by approximately $100 million.”