Solar Sector Monthly Review: December 2025

Date: January 12, 2026
Sector Rating: In-Line with Market (Maintained)
Analysts: Xiao Suo, Jia Huilin

Executive Summary

The Chinese photovoltaic (PV) sector exhibited a mixed performance in November 2025, characterized by a divergence between domestic installation momentum and robust export growth. While domestic new installations experienced a year-on-year contraction of 11.9%, the sequential recovery of 74.8% suggests a stabilization in near-term demand. Conversely, the external market demonstrated significant resilience, with both module and inverter exports registering strong year-on-year growth in value terms, driven by diversified geographic demand and potential restocking cycles ahead of the year-end.

From a generation perspective, solar power continues to gain share in China’s energy mix, with output rising 23.4% year-on-year in November, accounting for 5.29% of total industrial power generation. This underscores the structural transition towards renewable energy despite short-term volume fluctuations in new capacity additions.

Investment themes for the upcoming period are shifting from broad-based beta plays to alpha-driven opportunities rooted in technological differentiation, supply-side consolidation, and grid integration. We maintain an "In-Line with Market" rating on the sector. Our strategic focus is directed towards companies leading in BC (Back Contact) technology, those benefiting from supply-side optimization, integrated storage solutions, and players facilitating electricity market reforms. Key recommendations include Aiko Shares (600732.SH), Daqo New Energy (688303.SH), Hyperstrong (688411.SH), and Sungrow Power Supply (300274.SZ).

Key Takeaways

1. Domestic Installations: Sequential Rebound Amidst YoY Decline

Domestic PV installation data for November 2025 reflects a complex demand landscape. According to the National Energy Administration (NEA):
* Monthly Volume: New installed capacity reached 22.0 GW, representing a 11.9% year-on-year (YoY) decline. However, this figure marks a substantial 74.8% month-on-month (MoM) increase, indicating a strong sequential recovery from October’s lows.
* Cumulative Performance: From January to November 2025, cumulative new installations totaled 274.89 GW, achieving a 33.2% YoY growth. This confirms that despite monthly volatility, the long-term expansion trajectory of China’s PV sector remains intact, supported by national renewable energy targets.

The YoY decline in November may be attributed to base effects from the previous year or temporary delays in project grid-connection approvals. However, the sharp MoM rebound suggests that project developers are accelerating commissions to meet annual targets or capitalize on favorable weather conditions before winter peaks.

2. Export Dynamics: Strong Value Growth in Modules and Inverters

Export data from the General Administration of Customs highlights the competitiveness of Chinese PV manufacturing in global markets, with value growth outpacing volume growth in several segments, implying stable or improving average selling prices (ASPs) in specific regions.

A. PV Modules: Value Resilience

• Export Value: In November 2025, module export value reached RMB 17.14 billion, surging 33.9% YoY and increasing 6.6% MoM.
• Export Volume: According to SMM (Shanghai Metals Market) incomplete statistics, export volume was 20.1 GW, up 22.9% YoY and 3.6% MoM.
• Cumulative Trend: For the first 11 months of 2025, cumulative export value stood at RMB 185.4 billion (-9.0% YoY), while cumulative volume reached 243.8 GW (+5.8% YoY).

Analysis: The discrepancy between the cumulative value decline (-9.0%) and the recent monthly value surge (+33.9%) suggests a potential bottoming out of price erosion. The fact that November’s value growth (33.9%) significantly exceeded volume growth (22.9%) indicates that ASPs may have stabilized or increased in key export markets, possibly due to a shift in product mix towards higher-efficiency modules or reduced discounting pressures.

B. Inverters: Broad-Based Geographic Recovery

Inverter exports showed robust momentum, reflecting strong global demand for grid-tied and hybrid systems.
* Export Value: November exports totaled RMB 5.45 billion, marking a 25.6% YoY increase and a 13.0% MoM rise.
* Cumulative Trend: Jan-Nov cumulative export value reached RMB 58.75 billion, up 8.7% YoY.

Regional Breakdown (November 2025):
The geographic diversification of inverter exports is a critical bullish factor, reducing reliance on any single market.

Key Insight: The explosive growth in Africa (+115.3%) and Oceania (+193.1%) highlights the globalization of solar demand beyond traditional strongholds. European demand remains resilient with nearly 30% YoY growth, countering narratives of inventory overhang. The sequential growth across almost all regions (except Europe) points to a broad-based pickup in global procurement activities heading into 2026.

3. Power Generation: Solar’s Rising Share in the Energy Mix

Solar power generation continues to scale rapidly, reinforcing its role as a pillar of China’s energy security.
* Generation Volume: In November 2025, above-scale solar power generation reached 41.22 billion kWh, a 23.4% YoY increase.
* Market Share: Solar accounted for 5.29% of total above-scale industrial power generation, an increase of 0.52 percentage points (pct) MoM.
* Context: Total national power generation was 779.2 billion kWh (+2.7% YoY). While thermal power declined by 4.2%, hydro (+17.1%), nuclear (+4.7%), and wind (+22.0%) all grew. Solar’s 23.4% growth outpaced the overall grid growth, demonstrating its increasing marginal contribution to electricity supply.

This data validates the fundamental demand for PV infrastructure. As solar penetration deepens, the focus of the industry is naturally shifting from mere capacity addition to grid integration, storage coupling, and market-based electricity trading, creating new investment avenues in software and grid-edge technologies.

Investment Logic & Strategic Themes

Based on the November data and broader industry trends, we identify five core investment themes for the solar sector. The market is transitioning from a phase of "capacity expansion" to "quality and efficiency competition." Investors should prioritize companies with technological moats, cost advantages, or exposure to high-growth adjacent sectors like storage and power trading.

1. Technological Leadership: The BC (Back Contact) Revolution

Theme: N-type TOPCon has become the mainstream, but differentiation is now sought in higher-efficiency technologies like BC (Back Contact) cells. BC technology offers superior aesthetics and efficiency, commanding premium pricing in distributed and high-end residential markets.
* Core Driver: As PERC capacity is phased out and TOPCon margins compress, BC technology represents the next frontier for margin preservation and brand premiumization.
* Top Pick: Aiko Shares (600732.SH) – Rating: Buy-B
* Logic: Aiko is a pure-play leader in ABC (All Back Contact) technology. Its proprietary non-contact metallization process yields industry-leading conversion efficiencies. With the market increasingly valuing efficiency gains, Aiko is well-positioned to capture high-margin segments in both domestic and European distributed markets. The company’s vertical integration in BC cells and modules provides a competitive cost structure despite the complex manufacturing process.

2. Supply-Side Optimization & Material Security

Theme: The polysilicon and glass sectors have undergone significant consolidation. With capacity expansion slowing and lower-cost producers gaining share, leaders with superior cost curves and balance sheet strength are poised to benefit from improved industry discipline.
* Core Driver: Price stabilization in upstream materials and the exit of high-cost capacity improve profitability for remaining leaders.
* Top Picks:
* Daqo New Energy (688303.SH) – Rating: Buy-B
* Logic: Daqo maintains one of the lowest cash costs in the polysilicon industry. As the sector moves towards equilibrium, Daqo’s financial robustness and high-purity product portfolio allow it to withstand price volatility better than peers. It is a direct beneficiary of any supply-side tightening.
* Flat Glass Group (601865.SH) – Rating: Buy-A
* Logic: As a duopoly leader in PV glass, Flat Glass benefits from economies of scale and continuous technological upgrades (thinner, larger formats). The consolidation in the glass sector reduces price war risks, supporting stable margins.

3. Solar-Storage Integration: The Next Growth Engine

Theme: With solar penetration exceeding 5% of total generation, grid stability concerns are driving mandatory storage requirements and economic arbitrage opportunities. The "Solar + Storage" model is becoming the standard for new projects.
* Core Driver: Declining battery costs and policy mandates for renewable energy storage are unlocking a massive addressable market for integrated system providers.
* Top Picks:
* Hyperstrong (688411.SH) – Rating: Buy-A
* Logic: Hyperstrong is a leading independent energy storage system (ESS) integrator in China. Its strong presence in utility-scale projects and growing overseas footprint position it to capture the surge in standalone and co-located storage deployments.
* Sungrow Power Supply (300274.SZ) – Rating: Buy-A
* Logic: Sungrow remains the global leader in PV inverters and has successfully pivoted to become a top-tier ESS provider. Its brand recognition, global channel network, and ability to offer integrated "inverter + storage" solutions provide a significant competitive advantage. The strong inverter export data (especially in Europe and Asia) directly supports Sungrow’s revenue visibility.

4. Electricity Market Reform: Digitalization & Trading

Theme: As China accelerates the liberalization of its electricity market, the ability to trade power efficiently and manage distributed energy resources (DERs) becomes critical. Software and platform providers that enable virtual power plants (VPPs) and smart charging are emerging as key beneficiaries.
* Core Driver: Policy shifts towards spot markets and time-of-use pricing create value for platforms that optimize energy consumption and generation.
* Top Pick: Longshine Technology (300682.SZ) – Rating: Buy-B
* Logic: Longshine is a leader in digital energy services, particularly in EV charging and distributed PV management. Its platforms facilitate the aggregation of distributed resources for grid interaction and power trading. As electricity market reforms deepen, Longshine’s software-as-a-service (SaaS) model offers recurring revenue potential and high operating leverage.

5. Import Substitution: High-Purity Quartz Materials

Theme: Critical materials for PV manufacturing, such as high-purity quartz sand used in crucibles for monocrystalline silicon growth, remain a bottleneck. Domestic substitution is a strategic imperative.
* Core Driver: Supply constraints in high-grade quartz sand and the push for supply chain security favor domestic producers who have mastered purification technologies.
* Top Pick: Quartz Shares (603688.SH) – Rating: Buy-A
* Logic: Quartz Shares is a dominant player in high-purity quartz products. Its ability to produce inner-layer quartz sand for crucibles reduces reliance on imports (primarily from The TQC Company). Given the persistent demand for N-type wafers which require higher quality crucibles, Quartz Shares enjoys strong pricing power and volume growth.

Watch List

We also recommend active monitoring of the following companies for potential tactical opportunities based on valuation resets or specific catalysts:
* Integrated Leaders: LONGi Green Energy (601012.SH), JA Solar (002459.SZ), Trina Solar (688599.SH), JinkoSolar (688223.SH), Tongwei Co. (600438.SH).
* Technology & Equipment: Maxwell Technologies (300316.SZ), Jingsheng Electromechanical (300316.SZ).
* Materials & Components: GCL Tech (03800.HK), TCL Zhonghuan (002129.SZ), Deye Shares (605117.SH), Hengdian East Magnetic (002056.SZ), Boway Alloy (601137.SH).

Risks / Headwinds

While the sector shows signs of stabilization, investors must remain cognizant of the following risks:

1. Domestic Installation Miss

• Risk: November’s 11.9% YoY decline in domestic installations highlights the volatility of demand. If terminal demand fails to meet expectations in Q4 2025 or Q1 2026 due to grid connection bottlenecks, subsidy delays, or reduced developer ROI, it will negatively impact revenue across the entire value chain.
• Impact: Lower volumes would exacerbate inventory buildup and pressure manufacturing utilization rates.

2. Supply Chain Price Volatility

• Risk: Although prices have stabilized recently, the PV industry is prone to severe cyclical swings. A resurgence of price wars in modules, cells, or upstream materials (polysilicon/wafers) could erode margins.
• Impact: Rapid price declines lead to inventory write-downs for manufacturers and distributors. Conversely, sudden price spikes can dampen downstream demand elasticity.

3. Geopolitical and Trade Policy Risks

• Risk: The export sector, which is a key growth driver (as seen in the strong November data), faces significant geopolitical headwinds.
  • Europe: Potential anti-subsidy investigations or carbon border adjustment mechanisms (CBAM) could increase compliance costs.
  • USA: Continued restrictions under the UFLPA (Uyghur Forced Labor Prevention Act) and potential tariff hikes under changing political administrations remain a threat.
  • Emerging Markets: While growing, these markets may introduce local content requirements or import tariffs to protect nascent domestic industries.
• Impact: Adverse policy changes could restrict market access, force supply chain reconfiguration, or compress export margins.

4. Grid Curtailment and Integration Challenges

• Risk: As solar’s share of generation rises (now >5%), grid congestion and curtailment rates may increase in key provinces. Without adequate storage deployment or grid upgrades, this could limit the economic viability of new PV projects.
• Impact: Could lead to stricter regulatory caps on new installations in certain regions or require higher capital expenditure for storage, affecting project IRRs.

Rating / Sector Outlook

Sector Rating: In-Line with Market (Maintained)

We maintain our "In-Line with Market" rating for the Solar sector. While the long-term fundamentals of the energy transition remain unshaken, the sector is currently in a phase of structural adjustment. The era of indiscriminate capacity expansion is giving way to a period of technological selection and supply-side consolidation.

• Bull Case: Accelerated adoption of BC technology, faster-than-expected recovery in European and emerging market demand, and successful implementation of electricity market reforms boosting profitability for storage and digital energy players.
• Bear Case: Prolonged global trade tensions, severe domestic grid curtailment issues, and a renewed price war in the module segment that destroys industry-wide profitability.

Our rating reflects a balanced view: we see selective opportunities in high-quality leaders and niche innovators, but we do not anticipate a broad-based sector rally until clear signs of sustained margin improvement and demand acceleration emerge.

Investment View

The November 2025 data presents a nuanced picture for institutional investors. The divergence between weak domestic YoY installation growth and strong export performance suggests that Chinese PV manufacturers are successfully navigating domestic saturation by expanding their global footprint. The robust growth in inverter exports to Africa, Oceania, and Asia indicates that the global energy transition is broadening geographically, reducing dependence on traditional Western markets.

Strategic Allocation Recommendations:

1. Overweight Technology Leaders: Prioritize companies with defensible technological moats. Aiko Shares stands out due to its leadership in BC technology, which offers a clear path to premium pricing and differentiation in a commoditized market.
2. Overweight Storage & Grid Integration: The correlation between solar growth and storage necessity is strengthening. Sungrow and Hyperstrong are best-in-class picks to play the "Solar + Storage" theme. Sungrow’s dual dominance in inverters and storage provides earnings stability, while Hyperstrong offers pure-play exposure to the rapidly growing ESS integration market.
3. Selective Upstream Exposure: Focus on low-cost leaders with strong balance sheets. Daqo New Energy and Flat Glass Group are well-positioned to survive the consolidation phase and capture market share as weaker competitors exit. Their current valuations likely reflect much of the downside risk, offering an attractive risk-reward profile for long-term holders.
4. Thematic Play on Market Reform: Longshine Technology offers a unique exposure to the digitalization of the energy grid. As China’s electricity market matures, the value of software platforms that optimize energy flow and trading will accrue, providing a high-margin, recurring revenue stream distinct from hardware manufacturing cycles.
5. Critical Materials: Quartz Shares remains a critical hold due to the structural shortage of high-purity quartz sand. Its role as a domestic substitute for imported materials provides a defensive hedge against supply chain disruptions.

Conclusion:
Investors should adopt a stock-specific approach rather than a broad sector beta strategy. The key to outperformance in 2026 will lie in identifying companies that can demonstrate technological superiority, cost leadership, or exposure to high-growth adjacent sectors like storage and power trading. We advise accumulating positions in our top picks on any market weakness, while maintaining a cautious stance on undifferentiated module assemblers facing intense price competition.

The data from November confirms that the solar industry is not shrinking but evolving. The winners of the next cycle will be those who innovate beyond simple capacity addition, focusing on efficiency, integration, and global market diversification.

Appendix: Selected Financial & Operational Metrics (Nov 2025)

Note: All data refers to November 2025 unless otherwise specified. YoY = Year-on-Year; MoM = Month-on-Month.

Disclaimer:
This report is prepared by Shanxi Securities Co., Ltd. The information contained herein is based on sources believed to be reliable, but the company does not guarantee its accuracy or completeness. This report is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investors should conduct their own independent research and consult with financial advisors before making investment decisions. The views expressed herein are subject to change without notice. Past performance is not indicative of future results.