NEW YORK (AP) -- Shares of solar companies got a boost Monday after the Chinese government announced ambitious plans to expand solar power capacity and perhaps, ease the glut of solar panels on the global market.
Chinese officials said that the country plans to add 10 gigawatts of solar capacity each year between 2013 and 2015, installing more than 35 gigawatts between now and the end of 2015.
In addition, the government said it will help profitable solar companies with loans and encourage overseas investment, while also supporting restructuring efforts that will encourage industry consolidation.
An oversupply of photovoltaic materials has sent panel prices plummeting in recent years and eviscerated the profits of solar panel makers around the world. The glut followed an increase in manufacturing capacity at a time when renewable energy subsidies had begun to shrink, especially in Europe, the world's biggest solar market.
Shares in solar companies suffered as a result, but in recent months investors have snapped up shares on any news that the panel glut could be easing, sales were beginning to rise, or the price drop was beginning to slow.
Citi analyst Shahriar Pourreza said he remains "cautiously optimistic" about the pledge from China. He noted that at the beginning of this year, China boosted its installation target to 10 gigawatts, twice as much as what it installed in 2012, but it has yet to follow up with any legislation to make that happen.
Pourreza added that it's unlikely that China will meet its 10 gigawatt goal for 2013, since its half-year installations weren't in line with that prediction.
But he said the news is still good for solar companies, especially upstream companies like Trina Solar Ltd. and Yingli Green Energy Holding Co. Ltd. In afternoon trading, Trina shares jumped 12 percent to $7.67, while Yingli shares rose 9 percent to $4.07.
First Solar Inc. was the biggest percentage gainer on the Standard & Poor's 500 index from the start of the day, rising nearly 6 percent to $50.40.
Other solar companies posting big gains included LDK Solar Co. whose shares jumped 18 percent to $1.70. Suntech Power Holdings Co. rose 17 percent, to $1.35; JinkoSolar Holding Co. rose 16 percent to $11.85 and Canadian Solar Inc. rose $1.48, or 13 percent, to $13.03.
Elsewhere in the sector, China Sunergy Co Ltd. added 23 cents, or 10 percent, to $2.46; ReneSola Ltd. rose 29 cents, or 11 percent, to $2.89 and JA Solar Holdings Co. rose 76 cents, or 10 percent, to $8.55.