Power Equipment Sector: 2025 Performance Preview & "15th Five-Year Plan" Outlook

Date: January 30, 2026
Source: Huayuan Securities Research Institute
Analysts: Zha Hao, Liu Xiaoning, Dai Yingxin
Rating: Overweight (Maintained)

Executive Summary

The Chinese power equipment sector is entering a phase of robust structural growth, underpinned by accelerating grid investments, a resurgence in thermal and wind power installations, and the maturation of energy storage business models. Based on our analysis of industry data and company-specific fundamentals, we maintain an Overweight rating on the sector.

Our core thesis rests on three pillars:
1. Grid Investment Supercycle: State Grid Corporation of China’s (SGCC) fixed asset investment is projected to reach RMB 4 trillion during the "15th Five-Year Plan" (2026–2030), representing a ~40% increase from the previous plan. This capital expenditure surge is driven by the need to integrate renewable energy, support EV charging infrastructure, and enhance cross-regional transmission capabilities.
2. Generation Equipment Delivery Peak: Thermal power and wind power installations saw significant year-over-year growth in 2025 (Jan–Nov), with thermal power up 63% and wind power up 59%. We anticipate a sustained high level of equipment delivery over the next 2–3 years, directly benefiting manufacturers. Additionally, pumped hydro storage approvals totaling 170GW from 2022–2024 set the stage for a construction boom in the upcoming five-year plan.
3. Energy Storage Profitability Inflection: The commercialization of energy storage is improving, evidenced by a 38% YoY increase in new installed capacity (power basis) in 2025. Policy mechanisms such as capacity tariffs and compensation schemes in key provinces are enhancing revenue visibility for grid-side and user-side storage projects, leading to improved earnings prospects for产业链 (industry chain) participants.

We recommend focusing on leaders in wind power, grid automation, and high-voltage equipment, alongside emerging players in the energy storage ecosystem. Key top picks include Goldwind Science & Technology, Xuji Electric, Huaming Power Equipment, and Dongfang Electric.

Key Takeaways

1. Grid Equipment: "15th Five-Year Plan" Investment to Reach New Heights

The grid sector remains the most deterministic growth engine within the power equipment landscape. Recent data indicates that grid investment is not only maintaining high levels but is structurally shifting towards ultra-high voltage (UHV) and digitalization to accommodate the energy transition.

2025 Performance Review:
According to Wind data, grid investment completion reached RMB 560.4 billion in the first 11 months of 2025, representing a 6% year-over-year (YoY) growth. This figure confirms that investment levels have stepped up to a new plateau. Notably, major UHV projects, such as the Southeast Tibet to Greater Bay Area line, received approval in 2025, signaling continued momentum in long-distance transmission infrastructure.

"15th Five-Year Plan" (2026–2030) Outlook:
Citing China Electric Power News, SGCC’s fixed asset investment during the 15th Five-Year Plan is expected to total RMB 4 trillion. This represents an approximate 40% increase compared to the 14th Five-Year Plan period. The strategic objectives driving this capex include:
* Renewable Integration: Supporting the annual addition of approximately 200 GW of wind and solar capacity within the SGCC service area.
* EV Infrastructure: Accommodating the connection needs of 35 million charging facilities.
* Transmission Capacity: Accelerating the construction of UHV DC outward transmission channels, with cross-provincial and cross-regional transmission capacity expected to increase by more than 30% compared to the end of the 14th Five-Year Plan.

This substantial increase in capital expenditure provides a strong revenue backlog visibility for grid equipment suppliers, particularly those specializing in UHV transformers, switchgear, and secondary protection systems.

2. Generation Equipment: Thermal and Wind Installations Surge, Driving Delivery Peaks

The generation equipment segment is experiencing a dual-drive effect from the stabilization of thermal power as a baseload safeguard and the rapid expansion of wind power.

A. Thermal Power: Resilient Growth and Extended Cycle

Contrary to earlier expectations of a decline in thermal power, recent data shows a significant rebound.
* Installation Data: From January to November 2025, China’s newly added thermal power installed capacity reached 77.52 GW, a remarkable 63% YoY increase.
* Outlook: We project that thermal power installations will remain at elevated levels for the next 2–3 years. This persistence is driven by the need for grid stability and peak-shaving capabilities amidst higher renewable penetration. Consequently, companies involved in boiler manufacturing, turbines, and auxiliary systems are poised to benefit from a prolonged delivery cycle.

B. Pumped Hydro Storage: Approvals Precede Construction Boom

Pumped hydro storage remains a critical component of long-duration energy storage.
* Approval Trends: Our statistics indicate that approved pumped hydro capacity was 70 GW in 2022, 65 GW in 2023, and 35 GW in 2024, cumulatively totaling 170 GW.
* Implication: Given the typical construction timeline, the "15th Five-Year Plan" period is likely to witness a peak in construction activity for these approved projects. This creates a multi-year order book for civil engineering, turbine, and generator suppliers in the hydropower sector.

C. Wind Power: Competitive Advantage Over Solar

Wind power continues to demonstrate strong installation momentum, outperforming solar in certain market dynamics due to its higher capacity factor and better alignment with load centers in some regions.
* Installation Data: From January to November 2025, newly added wind power installed capacity reached 82.50 GW, reflecting a 59% YoY growth.
* Market Position: Wind power holds certain advantages over photovoltaics (PV) in the electricity market, particularly regarding predictability and grid friendliness in offshore and large-scale onshore bases. We expect installation volumes to remain high, supporting revenue growth for turbine manufacturers and component suppliers (e.g., blades, towers, cables).

3. Energy Storage: Business Model Maturation Fuels High Growth

The energy storage sector is transitioning from policy-driven pilot projects to commercially viable assets, driven by clearer revenue streams from capacity markets and ancillary services.

2025 Installation Statistics (CESA Preliminary Data):
* Total New Installations: 58.6 GW / 175.3 GWh.
* Power capacity YoY growth: +38%
* Energy capacity YoY growth: +60%
* Cumulative Installations (End-2025): 133.3 GW / 351.7 GWh.
* Power capacity YoY growth: +78%
* Energy capacity YoY growth: +99%

Segment Breakdown & Drivers:

Investment Implication:
The disproportionate growth in grid-side and user-side storage highlights the effectiveness of recent policy reforms. The introduction of capacity electricity prices and compensation mechanisms in key provinces has significantly improved the internal rate of return (IRR) for storage projects. As a result, we expect tangible performance improvements for battery integrators, PCS (Power Conversion System) manufacturers, and EMS (Energy Management System) providers in 2025 and beyond.

4. 2025 Corporate Performance Preview

Based on industry trends and company-specific order books, we have updated our earnings forecasts for key listed companies. The table below summarizes the net profit attributable to shareholders for the full year 2024 (actual/estimated) and 2025 (estimated).

Table 1: Key Power Equipment Companies – 2025 Net Profit Forecast (RMB Billion)

Source: Wind, Huayuan Securities Research Institute. Note: Except for Huaming Power (which released earnings guidance), 2025 estimates are from Huayuan Securities.

Key Observations from Forecasts:
* Goldwind Science & Technology (2208.HK): Expected to deliver a stellar performance with a 71% YoY growth in full-year 2025 net profit. The massive jump in Q4 2025 estimates (+778% YoY) suggests significant project recognitions or margin improvements in the wind turbine segment.
* Dongfang Electric (600875.SH): Solid double-digit growth (+22%) driven by the thermal power and hydro equipment delivery cycle. Q4 2025 is expected to be particularly strong (+102% YoY).
* Guoneng Rixin (301162.SZ): As a leader in renewable power prediction and grid dispatch software, it benefits directly from the increased complexity of grid management, showing consistent ~39% growth.
* Huaming Power Equipment (002270.SZ): Demonstrates steady, resilient growth (+15%) with high visibility, supported by its dominant position in transformer tap changers and overseas expansion.
* Orient Cable (603606.SH) & Zhongtian Tech (600522.SH): Both benefit from the offshore wind recovery and grid cable demand, with Orient Cable showing a strong Q4 rebound.

Risks / Headwinds

While the outlook is positive, investors should monitor the following risks that could impact sector performance:

1. Gross Margin Compression:

   • Intense competition in the wind turbine and energy storage battery sectors may lead to price wars, compressing gross margins below current expectations.
   • Raw material price volatility (e.g., copper, steel, lithium carbonate) could adversely affect manufacturing costs if not fully passed through to customers.

2. Project Delivery Delays:

   • Large-scale infrastructure projects (UHV, pumped hydro) are subject to regulatory approvals, land acquisition issues, and environmental assessments. Any significant delays in project commencement or completion could push revenue recognition into later periods, affecting short-term earnings.

3. Deterioration of Competitive Landscape:

   • The influx of new entrants into the energy storage and PV inverter markets may exacerbate competition.
   • In the grid equipment sector, while the barrier to entry is high, bidding processes can sometimes prioritize price over quality, potentially impacting profitability for incumbent players.

4. Policy Uncertainty:

   • Changes in subsidy policies, capacity tariff implementation speeds, or electricity market rules could alter the economic viability of storage and renewable projects.

Rating / Sector Outlook

Sector Rating: Overweight (Maintained)

We believe the power equipment sector is well-positioned to outperform the broader market over the next 6–12 months. The convergence of rising grid capex, a robust delivery cycle for generation equipment, and the commercial turning point for energy storage creates a favorable risk-reward profile.

Sub-Sector Outlook:
* Grid Equipment: Positive. The certainty of SGCC’s RMB 4 trillion investment plan provides a strong floor for revenue growth. Focus on UHV and digital grid solutions.
* Wind Power: Positive. High installation volumes and improving tender prices support margin recovery. Offshore wind offers additional upside potential.
* Thermal/Hydro Equipment: Neutral to Positive. Steady demand from retrofitting and new builds provides stable cash flows, though growth rates may moderate after the initial peak.
* Energy Storage: Positive. Moving from "concept" to "cash flow." Companies with integrated solutions and strong channel access to grid-side projects will lead the pack.

Investment View

We recommend a barbell strategy: combining established leaders with stable dividends and visible order books (Grid/Thermal) with high-growth beneficiaries of the energy transition (Wind/Storage).

1. Core Recommendations (Top Picks)

2. Watch List (Energy Storage & Others)

For the energy storage sector, where business models are still evolving, we suggest monitoring companies with strong technological moats and integrated capabilities:

• Hyperstrong (Haibo Sichuang): Leading independent storage integrator.
• Sungrow Power Supply: Global leader in PV inverters and storage systems.
• CATL (Ningde Shidai): Battery cell dominance with increasing focus on system integration.
• EVE Energy: Strong presence in cylindrical and large-format batteries for storage.
• Penghui Energy: Focused on small-to-medium storage and consumer batteries.
• CALB (Zhongchuang Xinhang): Rapidly growing battery manufacturer with strong utility-scale storage orders.
• Haixi Communication & Yilian Technology: Component suppliers benefiting from the broader storage build-out.

Other Notable Mentions:
* Sifang Jidian (601126.SH): Strong in relay protection and automation.
* Sieyuan Electric (002028.SZ): Comprehensive grid equipment provider with strong overseas growth.
* Yunda Shares (300772.SZ): Wind turbine manufacturer with competitive cost structure.
* Harbin Electric (1133.HK): Traditional power equipment giant with exposure to hydro and thermal upgrades.
* Yunlu Shares (688190.SH): Advanced magnetic materials for transformers and EVs.

Conclusion

The power equipment sector in 2026 is characterized by policy-supported certainty and structural growth. The "15th Five-Year Plan" serves as a clear roadmap for capital allocation, de-risking the investment case for grid and generation equipment. Meanwhile, the energy storage sector is crossing the chasm from subsidy-dependence to market-driven profitability. Investors should prioritize companies with strong order backlogs, technological leadership, and exposure to the high-growth segments of UHV transmission, offshore wind, and grid-side storage.

Disclaimer: This report is based on information available as of January 30, 2026. Past performance is not indicative of future results. Investors should conduct their own due diligence and consider their risk tolerance before making investment decisions. The analysts certify that the views expressed in this report accurately reflect their personal views about the subject securities and issuers.