Power Equipment & New Energy Sector Weekly Report

Date: January 12, 2026
Rating: Outperform (Stronger than Market)
Analysts: Jiaxiong Wu (S1300523070001), Zhen Gu (S1300525040003)
Source: BOC International (China) Co., Ltd.

Executive Summary

The Power Equipment and New Energy sector demonstrated robust momentum in the first week of January 2026, with the broader index rising 5.02%, outperforming the Shanghai Composite Index (+3.82%). The rally was led by the Wind Power sector (+22.06%) and Power Generation Equipment (+18.04%), driven by strong policy tailwinds including Premier Li Qiang’s commitment to adding 10GW each of solar and wind capacity within SCO cooperation frameworks over the next five years, and the National Development and Reform Commission’s (NDRC) guidelines on high-quality grid development.

Our investment thesis for 2026 centers on "Anti-Involution" (Rationalization of Competition) and Supply Side Discipline. In the photovoltaic (PV) sector, regulatory interventions—including talks by the State Administration for Market Regulation (SAMR) with polysilicon leaders and the cancellation of VAT export rebates effective April 1, 2026—are expected to curb irrational pricing, stabilize upstream prices, and restore profitability downstream. Simultaneously, the surge in silver prices is accelerating the adoption of non-precious metal alternatives and favoring high-efficiency modules (BC, HJT), thereby driving a market-clearing mechanism based on technological efficiency rather than just cost.

In the battery sector, the Ministry of Industry and Information Technology (MIIT) has convened meetings to standardize competition in power and energy storage batteries, signaling a shift towards healthier industry margins. We anticipate continued strong growth in global New Energy Vehicle (NEV) sales, supported by the large-scale application of sodium-ion batteries and the industrial progression of solid-state batteries. The energy storage sector remains highly景气 (prosperous), with system prices firming up due to rising raw material costs and a shift in procurement logic from "lowest price" to "deliverability and quality."

We maintain an Outperform rating on the sector. Key recommendations include focusing on companies with strong competitive moats in PV modules (high-power/BC tech), polysilicon, encapsulation films, wind turbines (especially offshore), energy storage integration, and emerging themes like green hydrogen and nuclear fusion supply chains.

Key Takeaways

1. Market Performance: Wind Leads, PV Lags but Stabilizes

• Sector Rotation: The week saw significant capital inflow into wind power and traditional power generation equipment. Wind stocks surged 22.06%, reflecting optimism around international cooperation projects and domestic offshore wind acceleration.
• PV Resilience: Despite being the laggard (+2.09%), the PV sector is undergoing a critical structural adjustment. Price hikes in silicon materials and cells are beginning to transmit through the value chain, supported by regulatory "anti-involution" measures.
• Battery & NEV: Lithium battery indices rose 5.05%, while the NEV index gained 2.77%. The sector is benefiting from positive volume data (2025 NEV retail sales +17.6% YoY) and expectations of margin repair due to standardized competition.

2. Photovoltaics: Policy-Driven Supply Discipline & Cost Push

• Regulatory Intervention: The SAMR’s约谈 (regulatory talks) with major polysilicon producers and the China Photovoltaic Industry Association marks a decisive step towards controlling upstream output. This is expected to stabilize silicon prices, which have shown an upward trend (Dense Material: RMB 53-60/kg).
• Export Tax Rebate Cancellation: Effective April 1, 2026, the VAT export rebate for PV products will be cancelled. While this may pressure short-term exports, it is a long-term bullish signal for industry consolidation, forcing low-efficiency产能 (capacity) out and allowing leading firms to pass on costs, thereby improving overall industry profitability.
• Silver Price Impact: With silver prices exceeding RMB 19,000/kg, the cost pressure on cell manufacturers is intense. This accelerates the substitution of base metals and favors high-efficiency technologies (like BC and HJT) that offer better $/W economics despite higher initial costs. Module prices are rising, with TOPCon domestic averages reaching RMB 0.70/W.
• Investment Implication: Focus on segments with improved competitive landscapes: Polysilicon (price stabilization), Modules (pricing power via high-efficiency tech), Encapsulation Films (consolidated格局), and BC/HJT technology leaders.

3. Batteries & NEVs: Margin Repair & Technological Inflection

• Industry Standardization: The MIIT-led symposium on power and storage batteries aims to optimize capacity management and strengthen market supervision. This "anti-involution" drive is crucial for repairing the severely compressed margins of the past two years.
• Technology Milestones:
  • Sodium-Ion: CATL announced large-scale application in 2026, opening a new cost-effective segment for entry-level EVs and storage.
  • Solid-State: Hongqi’s all-solid-state battery pack has entered vehicle testing, marking a tangible step towards commercialization.
• Price Trends: Lithium carbonate prices rebounded sharply (+17.36% WoW to RMB 142,000/ton for battery grade), driven by supply concerns (environmental restrictions on tailings) and geopolitical risks. This cost push is transmitting to electrolytes and cells, supporting price floors.
• Investment Implication: Look for material suppliers with cost advantages and technological leadership in solid-state precursors and sodium-ion supply chains. Battery makers with strong OEM partnerships and disciplined capacity expansion will benefit from margin recovery.

4. Energy Storage: From Price War to Value Competition

• Price Firming: Storage system bids are rising. DC-side liquid cooling (2h) averages RMB 0.45/Wh, and AC-side systems are seeing similar upticks. This is driven by:
  1. Rising cell costs (LFP cells up ~RMB 0.01-0.018/Wh).
  2. Pre-holiday supply tightening.
  3. Higher qualification thresholds in tenders (emphasis on safety, grid compatibility, and track record).
• Policy Support: The NDRC’s "Basic Rules for Medium and Long-Term Electricity Markets" enhances the bankability of storage assets by clarifying settlement mechanisms and risk boundaries. This improves cash flow visibility for independent storage projects.
• Large Capacity Trend: CRRC Zhuzhou Institute’s direct procurement of 20.06 GWh from CATL (including 587Ah large cells) signals a shift towards platform-based, reliable delivery over lowest-bid sourcing.
• Investment Implication: Favor leading cell manufacturers (CATL, etc.) and integrated system providers with proven grid-connection capabilities and strong balance sheets.

5. Emerging Themes: Wind, Hydrogen, & Nuclear Fusion

• Wind Power: Premier Li Qiang’s announcement of 10GW wind/solar additions via SCO cooperation provides a clear demand visibility horizon. Offshore wind and turbine manufacturers are primary beneficiaries.
• Green Hydrogen: The coupling of green hydrogen with coal chemical industries and green methanol is entering the import phase. As the "Green Power-Green Hydrogen-Green Fuel" chain rationalizes, early movers in hydrogen equipment and green fuel operations may enjoy premium valuations.
• Nuclear Fusion: Recent R&D agreements between ENN Energy Research Institute and Shanghai Electric highlight the growing commercial interest in fusion. While long-term, this creates catalysts for fusion power supply and specialized equipment suppliers.

Detailed Sector Analysis & Data Review

I. Photovoltaic (PV) Supply Chain: Price Transmission & Structural Shift

The PV sector is currently navigating a pivotal transition from pure capacity expansion to quality-driven consolidation. The "anti-involution" narrative is no longer just rhetoric; it is being enforced through regulatory channels and market mechanics.

1. Upstream: Polysilicon & Wafers

• Polysilicon Prices: After a prolonged period of depression, silicon prices are firming.

  • Dense Material: RMB 53-60/kg.
  • Granular Silicon: RMB 50-60/kg.
  • Market Dynamics: New orders are being signed at RMB 60-65/kg levels, though some wafer makers with high inventory are hesitant. The consensus among top players to control Q1 production is a key supportive factor. However, investors should monitor actual production cuts, as Q1 is traditionally a weak demand season. Inventory accumulation remains a risk if demand does not pick up by late Q1.
  • International Markets: Overseas silicon prices remain higher ($17-18/kg), with US local prices stable at $20-21/kg due to long-term contracts. Spot prices in the US are trending up ($23-24/kg) due to policy avoidance risks.

• Wafer Prices: Stability with slight upward bias.

  • 183N Wafer: RMB 1.38-1.40/piece. Transaction volumes are improving, indicating acceptance of higher costs.
  • 210RN Wafer: RMB 1.48-1.50/piece.
  • 210N Wafer: RMB 1.70/piece (limited volume).
  • Outlook: With silicon costs rising and wafer utilization rates aligned with December levels, further price drops are unlikely. The market is accepting the cost pass-through.

2. Midstream: Cells & Modules

• Cell Prices: Significant upward movement, constrained by silver costs.

  • N-Type (183N/210RN/210N): Average price rose to RMB 0.39/W. Top-tier manufacturers are quoting above RMB 0.40/W and halting deliveries to renegotiate.
  • Cost Pressure: Silver prices hitting RMB 19,000/kg have squeezed cell margins. This is forcing a reduction in cell output in Jan-Feb to manage costs.
  • Export Prices: N-type export prices rose to $0.051/W. High-end cells for the US market (via Southeast Asia) command $0.10-0.12/W.

• Module Prices: Reflecting cost pushes and product mix shifts.

  • TOPCon Domestic Average: RMB 0.70/W. The increase is partly due to a higher share of distributed (higher margin) projects vs. centralized utility projects.
  • HJT Modules: Averaging RMB 0.76/W, with high-power (730-740W) variants reaching RMB 0.78-0.84/W.
  • BC Modules: Showing strong pricing power in distributed and C&I segments.
  • Global Markets:
    • Europe: Stable at $0.084-0.088/W.
    • US: Highly fragmented. Southeast Asian imports at $0.27-0.28/W; distribution markets nearing $0.30/W. The FEOC (Foreign Entity of Concern) rules under the Inflation Reduction Act are causing supply chain restructuring, with increased compliance costs.
    • India: Non-DCR modules at $0.14-0.15/W, facing local oversupply pressure.

3. Auxiliary Materials: The Silver Squeeze

• Silver Paste: Prices have skyrocketed. Front-side fine grid paste reached RMB 17,810/kg. This is the single biggest cost driver for cell makers, accelerating the industry's move towards silver-free or low-silver technologies (e.g., copper plating, aluminum back contact).
• Glass: Prices weakened slightly (-2.8% to -4.5%) due to low downstream operating rates and high inventory. However, losses in production limit further downside.
• Aluminum Frames: Prices rose 3.9% to RMB 23,021/ton, supported by restocking and buy-on-rise sentiment.

Table 1: Key PV Product Price Changes (Week Ending Jan 9, 2026)

Source: InfoLink Consulting, Sobue Consulting, BOC International

II. Lithium Batteries & NEVs: Recovery & Innovation

The NEV and battery sectors are entering a phase of "quality growth." Volume remains strong, but the focus is shifting to profitability and next-gen technology.

1. NEV Market Performance

• 2025 Full Year Data: China’s NEV retail sales reached 12.809 million units, a 17.6% YoY increase. Production reached 15.348 million units (+26.1% YoY).
• OEM Standouts:
  • BYD: 4.60 million units (+145% YoY), consolidating its dominant position.
  • Geely: 3.02 million units (+39% YoY).
  • Chery: 2.81 million units (+8% YoY).
  • XPeng: 500,000 units (+126% YoY), showing strong recovery.
  • NIO: 330,000 units (+47% YoY).
• Implication: The market is growing, but competition is fierce. Leaders are gaining share, while smaller players face existential threats. This consolidation benefits top-tier battery suppliers.

2. Battery Material Prices

• Lithium Carbonate: A sharp rebound. Battery-grade prices hit RMB 142,000/ton (+17.36% WoW). Industrial grade reached RMB 128,500/ton (+19.53% WoW).
  • Drivers: Supply constraints (environmental checks on tailings in Yichun), geopolitical tensions (Venezuela/Chile rumors), and speculative capital flows.
  • Outlook: Prices are at a one-year high. While demand fundamentals (commercial vehicles/storage) support a floor, the rapid rise is partly sentiment-driven. Expect volatility.
• Cathodes:
  • LFP (Power Type): RMB 50,800/ton (+12.64% WoW).
  • NCM 523: RMB 166,000/ton (+6.75% WoW).
  • NCM 811: RMB 180,000/ton (+4.96% WoW).
• Electrolytes:
  • LFP Electrolyte: RMB 32,000/ton (+16.58% WoW).
  • Ternary Electrolyte: RMB 35,500/ton (+16.01% WoW).
  • LiPF6 (Domestic): RMB 157,500/ton (-12.50% WoW). Note: The divergence between electrolyte and LiPF6 prices suggests strong demand for formulated electrolytes and potential lag in LiPF6 spot adjustments.
• Anodes & Separators: Stable. Artificial graphite (mid-end) at RMB 31,700/ton. Wet base film (9μm) at RMB 0.825/sqm (+4.76%).

3. Technological Catalysts

• Sodium-Ion: CATL’s announcement of 2026 mass adoption is a game-changer for the lower-end EV and two-wheeler market, offering a cheaper alternative to LFP when lithium prices are high.
• Solid-State: Hongqi’s prototype testing indicates that semi-solid and all-solid-state batteries are moving from lab to pilot line. This benefits suppliers of solid electrolytes, lithium metal anodes, and specialized equipment.

Table 2: Key Lithium Battery Material Prices (Week Ending Jan 9, 2026)

Source: Xinluo Lithium, BOC International

III. Energy Storage: Pricing Power Returns

The energy storage sector is witnessing a healthy correction in pricing dynamics, moving away from destructive price wars.

• Cell Prices:
  • 280Ah/314Ah LFP Cells: Average price RMB 0.320/Wh, up RMB 0.01/Wh.
  • 100Ah Cells: Average price RMB 0.403/Wh, up RMB 0.018/Wh.
  • Lead Times: Extended into Q2 2026, indicating tight supply for high-quality cells. Manufacturers are reluctant to accept small, low-margin spot orders.
• System Prices:
  • DC Side (2h Liquid Cooling): RMB 0.45/Wh.
  • AC Side (2h Liquid Cooling): RMB 0.52/Wh.
  • AC Side (4h Liquid Cooling): RMB 0.48/Wh.
• Key Drivers for Price Increase:
  1. Cost Pass-Through: LFP material prices rose by RMB 3,000/ton in processing fees. Electrolyte and other components are also up.
  2. Quality Premium: Tenders now heavily weight operational track record, safety certifications, and grid adaptability. This disqualifies low-cost, low-quality bidders.
  3. Policy Clarity: The new medium-to-long-term trading rules reduce revenue uncertainty for storage operators, allowing them to bid more realistically rather than desperately low to secure any project.

Investment View: The era of "race to the bottom" in storage is ending. Companies with integrated manufacturing capabilities (cell + system) and strong software/grid integration skills will capture higher margins.

IV. Wind Power & Grid: Policy Tailwinds

• Wind Power: The sector’s 22.06% weekly gain was exceptional.
  • Catalyst: Premier Li Qiang’s statement on SCO cooperation (10GW wind + 10GW solar over 5 years) provides a concrete export/order pipeline.
  • Domestic Demand: Offshore wind projects are accelerating. The "Thousand Villages Wind Power" initiative continues to drive distributed wind demand.
  • Top Performers: Goldwind (+56.57%), Taisheng Wind Power (+46.85%).
• Grid Equipment:
  • Policy: NDRC/NEA issued "Guidance on Promoting High-Quality Grid Development." This emphasizes UHV transmission, digitalization, and flexibility to accommodate high renewable penetration.
  • AI + Manufacturing: MIIT’s action plan targets AI integration in manufacturing, benefiting smart grid equipment providers.
  • Performance: Power Generation Equipment index +18.04%; Nuclear +10.25%.

V. Corporate Highlights & Financials

Several key companies released significant updates, highlighting the diverging fortunes within the sector.

Valuation Snapshot (as of Jan 9, 2026):

Note: NR = No Rating. EPS and P/E based on iFinD consensus estimates where not rated by BOC.

Risks / Headwinds

While the outlook is positive, investors must remain cognizant of the following risks:

1. Excessive Price Competition: Despite regulatory efforts, the mid-stream manufacturing sectors (PV modules, batteries) still face overcapacity. If "anti-involution" measures fail to enforce strict production discipline, price wars could resume, eroding margins.
2. International Trade Frictions:
   • PV: The cancellation of export tax rebates may reduce competitiveness in price-sensitive markets.
   • Batteries/EVs: Potential escalation of tariffs or non-tariff barriers (e.g., carbon footprint requirements, supply chain tracing) in the EU and US could hinder export growth. The US FEOC rules continue to create uncertainty for Chinese supply chains.
3. Slower-than-Expected Investment Growth: The sector is heavily dependent on CAPEX in power generation and grid infrastructure. Any slowdown in government or utility spending due to fiscal constraints would directly impact demand for wind, solar, and grid equipment.
4. Policy Implementation Risk: The success of the "anti-involution" strategy relies on consistent enforcement. If local governments prioritize GDP growth over industry health, they may subsidize inefficient capacity, undermining national consolidation efforts.
5. Raw Material Volatility:
   • Lithium/Cobalt/Nickel: Sharp price increases (as seen recently with Lithium) can squeeze downstream margins if not fully passed on.
   • Silver: High silver prices threaten PV cell profitability and accelerate the need for unproven alternative technologies, creating execution risk.
6. Technological Iteration Risk: The rapid pace of change (e.g., BC vs. TOPCon, Solid-State vs. Liquid, Large Format Cells) means that today’s leading capacity could become stranded assets tomorrow. Companies failing to keep up with R&D cycles face obsolescence.

Rating / Sector Outlook

Sector Rating: Outperform (Stronger than Market)

We maintain our Outperform rating on the Power Equipment and New Energy sector. The combination of policy-driven supply discipline, technological innovation, and resilient demand creates a favorable environment for industry leaders.

Sub-Sector Outlooks:

• Photovoltaics: Neutral to Positive. Short-term pain from tax changes and silver costs, but medium-term margin recovery is highly probable due to supply rationalization. Focus on leaders with tech advantages (BC, HJT) and integrated models.
• Batteries/NEV: Positive. Margin inflection point is near. Volume growth remains robust. Sodium-ion and solid-state developments offer new growth vectors.
• Energy Storage: Positive. High景气度 (prosperity). Shift to quality-based competition benefits established players with strong balance sheets and grid expertise.
• Wind Power: Positive. Strong policy support domestically and internationally (SCO). Offshore wind is a key growth driver.
• Grid Equipment: Positive. Essential for renewable integration. Beneficiary of AI-manufacturing and grid modernization policies.
• Hydrogen/Nuclear Fusion: Speculative/Long-term Positive. Early-stage opportunities with high potential upside for specialized equipment suppliers.

Investment View

Based on the current landscape, we recommend a barbell strategy: Core Holdings in Consolidated Leaders and Satellite Positions in High-Growth/New Tech Themes.

1. Core Holdings: Beneficiaries of "Anti-Involution" & Margin Repair

These companies have strong market shares, cost advantages, and the ability to pass on costs or benefit from price stabilization.

• PV Module & Cell Leaders (BC/HJT Focus):
  • Logic: As silver prices rise and efficiency becomes paramount, companies with advanced BC (Back Contact) or HJT technologies will command premiums. The cancellation of export rebates will weed out low-margin traders, benefiting integrated giants.
  • Focus: Companies with strong brand recognition in distributed markets and high-efficiency product portfolios.
• Polysilicon & Encapsulation Film Leaders:
  • Logic: Polysilicon prices are stabilizing at profitable levels due to production controls. Encapsulation film (EVA/POE) has a consolidated competitive landscape, allowing for better pricing power.
  • Focus: Top-tier polysilicon producers with low cash costs; Leading film suppliers with POE capacity.
• Battery Giants & Material Leaders:
  • Logic: MIIT’s regulation favors large, compliant players. CATL and BYD Battery have unparalleled scale and tech leads. Material suppliers like Tinci Materials (electrolyte) are seeing profit rebounds.
  • Focus: Tinci Materials (Profit forecast beat, capacity discipline), Capchem (Global expansion, diversified portfolio).

2. Growth Engines: Wind, Storage, & Grid

• Wind Turbine & Offshore Wind Suppliers:
  • Logic: Direct beneficiary of SCO commitments and domestic offshore acceleration.
  • Focus: Goldwind (Market leader, recent stock surge reflects momentum), Taisheng Wind Power (Tower/Offshore structures).
• Energy Storage Integrators & Cell Makers:
  • Logic: System prices are rising, and tender criteria favor quality.
  • Focus: Companies with strong grid-connection track records and vertical integration (Cell + System). CATL (via direct procurement deals) and leading integrators.
• Grid Equipment & Automation:
  • Logic: Grid modernization is a non-negotiable prerequisite for renewable growth.
  • Focus: Suppliers of UHV transformers, smart meters, and grid automation software.

3. Thematic/Satellite Plays: Future Energy

• Green Hydrogen & Green Methanol:
  • Logic: Industrial decarbonization (coal-to-chemicals) is driving early demand.
  • Focus: Electrolyzer manufacturers and companies developing green methanol/ammonia production facilities.
• Nuclear Fusion Supply Chain:
  • Logic: Long-term optionality. Recent partnerships (ENN, Shanghai Electric) signal commercial progress.
  • Focus: Suppliers of superconducting magnets, high-voltage power supplies, and specialized vacuum components. Shanghai Electric (involved in R&D agreements).
• Sodium-Ion & Solid-State Battery Chain:
  • Logic: Next-gen tech disruption.
  • Focus: Suppliers of hard carbon anodes (for Na-ion), solid electrolytes, and lithium metal anodes.

Strategic Allocation Advice

• Overweight: Wind Power, Energy Storage, Grid Equipment.
• Neutral/Selective: Photovoltaics (Select leaders only, avoid pure-play low-efficiency manufacturers), Lithium Materials (Monitor lithium price volatility).
• Underweight: Pure-play EV assemblers without strong brand/margin power (due to intense consumer-facing competition).

Conclusion

The first week of 2026 confirms that the Power Equipment and New Energy sector is entering a new phase of rationalized growth. The era of blind capacity expansion is giving way to a focus on profitability, technological superiority, and global compliance. Investors should pivot from betting on pure volume growth to selecting companies with pricing power, technological moats, and resilient balance sheets. The regulatory "hand" is guiding the market towards sustainability, creating attractive entry points for high-quality assets that were previously undervalued due to fears of endless price wars.

Appendix: Detailed Data Tables

Table 3: Weekly Stock Performance (Top Gainers & Losers)

Source: iFinD, BOC International

Table 4: Global PV Module Price Indicators (USD/W)

Source: InfoLink Consulting

Table 5: Energy Storage System Bid Prices (RMB/Wh)

Source: InfoLink Consulting, BOC International

Analyst Certification & Disclosure

Analyst Certification:
The analysts, Jiaxiong Wu and Zhen Gu, hereby certify that all of the views expressed in this report accurately reflect their personal views about the subject securities or issuers. They also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Disclaimer:
This report is prepared by BOC International (China) Co., Ltd. for institutional clients only. It is not intended for retail investors. The information contained herein is believed to be reliable but does not constitute a representation or warranty, express or implied, regarding the accuracy or completeness of the information. Opinions expressed are subject to change without notice. BOC International (China) Co., Ltd. and its affiliates may have positions in the securities mentioned and may perform or seek to perform investment banking services for these companies.

Risk Warning:
Investing in securities involves risks, including the loss of principal. Past performance is not indicative of future results. Investors should carefully consider their investment objectives, risk tolerance, and financial situation before making any investment decisions.

(End of Report)