Industry Update: Power Equipment & Energy Storage

Date: December 22, 2025
Sector: Power Equipment / Photovoltaics (PV) & Energy Storage
Rating: Outperform (Stronger than the Market)

Executive Summary

The global energy transition continues to exhibit a bifurcated trajectory as we approach the end of 2025. While the domestic Chinese photovoltaic (PV) manufacturing sector faces short-term headwinds due to inventory adjustments and seasonal demand fluctuations, the overseas export market remains robust, driven by sustained international demand for renewable energy infrastructure. Concurrently, the energy storage sector, particularly in China, is experiencing an unprecedented surge in tendering activity, signaling a structural shift towards grid-scale storage integration.

In this report, we analyze the latest industry data for November 2025, focusing on production schedules, pricing dynamics, and demand trends across PV modules, inverters, and lithium-ion battery cells. Our analysis highlights three critical developments:
1. Resilient Overseas PV Demand: Despite a slight month-on-month decline in domestic production schedules, PV module exports reached $2.41 billion in November 2025, representing a 34.08% year-over-year (YoY) increase. This underscores the decoupling of domestic saturation from global growth opportunities.
2. Storage Sector Acceleration: Domestic energy storage tenders hit a record high in November, with new capacity reaching 64 GWh, a 65% month-on-month (MoM) increase. This surge is accompanied by stabilizing battery cell production schedules, where storage cells now account for over 35% of total output.
3. Price Stabilization & Margin Pressure: While PV supply chain prices (polysilicon, wafers, modules) have stabilized at low levels, energy storage system prices continue to face downward pressure, particularly for 4-hour duration systems. However, the volume growth in storage is beginning to offset margin compression for leading players.

We maintain an Outperform rating on the Power Equipment sector. The divergence between domestic PV consolidation and overseas/export-led growth, combined with the explosive expansion of the energy storage market, creates selective alpha opportunities. We recommend investors focus on companies with strong overseas channel capabilities and integrated storage solutions. Key recommendations include Sungrow Power Supply (300274.SZ), Narada Power Source (300068.SZ), Tongrun Equipment (002150.SZ), Huashengchang (002980.SZ), and Shouhang New Energy (301658.SZ).

Key Takeaways

1. Production Schedules: Divergence Between PV and Batteries

Photovoltaic Modules: Seasonal Dip and Inventory Build-up

According to data from Shanghai Metals Market (SMM), the overall production volume of PV modules in November 2025 decreased by 2.43% month-on-month compared to October. This contraction is attributed to a combination of domestic and international factors:

• Domestic Market: The pace of terminal installations in December has fallen short of corporate expectations. Furthermore, recent upticks in module prices have triggered resistance from downstream developers, leading to a hesitation in procurement. Consequently, domestic module inventory levels, which had been declining, have begun to rise again.
• Overseas Market: The entry into the traditional off-season for terminal installations in key markets, coupled with the diminishing impact of export tax rebate policies, has led to a significant drop in overseas demand. In response, manufacturers have synchronously revised their production schedules downward.

This temporary reduction in production is a healthy correction mechanism, allowing manufacturers to digest inventory before the potential pickup in demand in early 2026. However, it signals that the domestic market is currently in a "wait-and-see" mode regarding price trends and policy implementation.

Lithium-Ion Cells: Storage Drives Growth

In contrast to the PV sector, the lithium-ion battery sector shows resilience, driven primarily by energy storage applications. Data from TD (TaiDong Times Think Tank) forecasts the following for December 2025:

• China Market: The combined production schedule for power, energy storage, and consumer batteries is projected to reach 220 GWh, a 5.3% MoM increase. Notably, energy storage cells account for approximately 35.3% of this total, highlighting the shifting balance within the battery ecosystem.
• Global Market: The global production schedule for these categories is expected to reach 235 GWh, a 3.1% MoM increase.

While power battery production faces阶段性 (phased) pressure due to the maturing electric vehicle (EV) market in certain regions, energy storage batteries continue to demonstrate high-growth momentum. This trend is consistent with the broader global push for grid stability and renewable energy integration, where storage is no longer optional but essential.

2. Pricing Dynamics: Stability in PV, Compression in Storage

Photovoltaic Supply Chain: Bottoming Out

As of December 17, 2025, prices across the main PV supply chain segments have stabilized, showing no significant week-on-week changes. This stabilization suggests that the industry may have reached a price floor, reducing the risk of further margin erosion for manufacturers, although profitability remains thin.

• Polysilicon: Dense material prices remained flat at 52.00 CNY/kg.
• Silicon Wafers: The mainstream average price for 183mm N-type monocrystalline silicon wafers held steady at 1.18 CNY/wafer.
• Modules: TOPCon double-glass module prices remained unchanged at 0.69 CNY/W.

The stability in module prices is crucial for downstream project economics. With prices hovering near cost lines for many inefficient producers, we anticipate continued industry consolidation, which will benefit leading firms with superior cost structures and technology advantages (such as TOPCon efficiency gains).

Energy Storage Systems: Mixed Price Trends

The pricing landscape for energy storage systems is more dynamic, reflecting intense competition and varying value propositions for different duration systems. In November 2025, domestic quotes for lithium-ion battery energy storage systems (excluding commercial and industrial cabinets) were concentrated in the range of 0.4452–0.6828 CNY/Wh.

• Average Quote: 0.5721 CNY/Wh.
• Weighted Average Winning Bid Price: 0.4912 CNY/Wh, representing a 6.4% MoM decline.

However, a deeper dive reveals divergent trends based on system duration:

1. 2-Hour Systems:

   • Quote Range: 0.5466–0.588 CNY/Wh.
   • Average Quote: 0.5631 CNY/Wh.
   • Weighted Average Winning Bid: 0.569 CNY/Wh (+2.88% MoM).
   • Analysis: The slight price increase for 2-hour systems may reflect higher demand for frequency regulation and short-duration peak shaving applications, where performance reliability commands a premium.

2. 4-Hour Systems:

   • Quote Range: 0.4452–0.54 CNY/Wh.
   • Average Quote: 0.4983 CNY/Wh.
   • Weighted Average Winning Bid: 0.4537 CNY/Wh (-10.86% MoM).
   • Analysis: The significant price drop in 4-hour systems indicates fierce competition in the long-duration storage segment. As more players enter this space, economies of scale and technological optimizations are being passed down to customers in the form of lower prices. This compresses margins for integrators but accelerates the adoption curve for utility-scale projects.

3. Demand Analysis: Overseas Strength and Domestic Storage Surge

Overseas Demand: Robust Export Performance

Despite the seasonal slowdown in production schedules, actual export data for November 2025 demonstrates remarkable strength, indicating that the "off-season" narrative may be overstated or that inventory restocking in key markets is occurring ahead of schedule.

Photovoltaic Modules:
* November Exports: Reached $2.412 billion, a 34.08% YoY increase and a 6.84% MoM increase.
* Cumulative (Jan-Nov 2025): Total export value stood at $25.885 billion, up 4.89% YoY.

This data contradicts the notion of collapsing overseas demand. Instead, it suggests that while new orders might be slowing slightly due to seasonality, the fulfillment of existing orders and strategic stockpiling remain strong. The YoY growth of nearly 35% in a single month is a significant positive signal for exporters.

Inverters:
* November Exports: Reached $767 million, a 25.91% YoY increase and a 13.29% MoM increase.
* Cumulative (Jan-Nov 2025): Total export value was $8.202 billion, up 29.57% YoY.

The inverter sector outperforms modules in terms of cumulative YoY growth (29.57% vs 4.89%), suggesting that the mix of exports is shifting towards higher-value components or that inverter replacement cycles in mature markets (like Europe) are accelerating.

Regional Breakdown of Inverter Exports (Jan-Nov 2025):
* Europe: Remains the largest market with $3.13 billion in exports. Despite some saturation concerns, Europe continues to lead in absolute volume.
* Asia: Second largest with $2.866 billion, driven by emerging markets in Southeast Asia and India.
* Australia: A standout performer. In November 2025 alone, inverter exports to Australia grew by over 177% YoY. This surge is likely driven by aggressive residential and commercial solar-plus-storage adoption rates in Australia, supported by favorable regulatory frameworks.
* South America: Provides diversified growth potential, though volumes are smaller compared to Europe and Asia.

Note: Table data derived from Chart 13 in the source report. Cumulative totals reflect the sum of monthly data provided.

Domestic Demand: Storage Tendering Hits Record Highs

Photovoltaic Installations:
* October 2025: New installed capacity was 12.6 GW, a 30.4% MoM increase but a 38.3% YoY decrease.
* Cumulative (Jan-Oct 2025): Total new installations reached 252.87 GW, a 39.5% YoY increase.

The YoY decline in October reflects the high base effect from the previous year's rush-to-install periods. However, the cumulative growth of nearly 40% confirms that China remains the world's largest and fastest-growing PV market. The MoM increase suggests a seasonal pickup as developers aim to meet annual targets.

Energy Storage Tendering:
The most striking data point in this report is the surge in domestic energy storage tenders.
* November 2025: New tender volume for EPC/PC (including DC-side equipment) + Energy Storage Systems reached 21.8 GW / 64 GWh.
* Growth Metrics: This represents a 65% MoM increase in capacity scale, setting a new monthly record for 2025. Although there was a slight 4% YoY decline, the sequential growth is indicative of accelerating project approvals and bidding processes.

This record-high tendering volume is a leading indicator for future revenue recognition for storage integrators and battery suppliers. It validates the thesis that China's energy storage market is transitioning from policy-driven pilots to commercial-scale deployment. The ratio of GWh to GW (approx. 2.9 hours average duration) suggests a mix of 2-hour and 4-hour systems, aligning with the pricing trends observed earlier.

Risks / Headwinds

While the sector outlook is positive, institutional investors must carefully weigh the following risks, which could impact margins and valuation multiples:

1. Intensifying Competition and Margin Compression

The photovoltaic and energy storage sectors are characterized by low barriers to entry for assembly and integration, leading to severe homogenization.
* PV Sector: With module prices stabilized at low levels (0.69 CNY/W), manufacturers operate on razor-thin margins. Any further cost inflation in raw materials or logistics could push weaker players into negative territory, potentially triggering bankruptcies or distressed M&A.
* Storage Sector: The 10.86% MoM drop in 4-hour system bid prices highlights the intensity of price wars. Companies that cannot achieve scale economies or differentiate through technology (e.g., higher cycle life, better safety features) will see their gross margins erode significantly. Investors should scrutinize the gross margin trends of recommended stocks in upcoming earnings reports.

2. Policy Uncertainty and Demand Volatility

The renewable energy sector is heavily influenced by government policies, subsidies, and electricity market reforms.
* Domestic China: Changes in grid connection policies, curtailment rates, or the pace of electricity market liberalization can alter the economic viability of storage projects. If the arbitrage spread in spot electricity markets narrows, the return on investment (ROI) for standalone storage projects could deteriorate, slowing down future tendering.
* International: While the global trend towards low-carbon development is irreversible, specific national policies can fluctuate. For instance, changes in feed-in tariffs, net metering rules, or subsidy caps in key markets like Europe or Australia could dampen demand unexpectedly.

3. International Trade Frictions and Geopolitical Risks

Trade barriers remain a significant threat to Chinese exporters, who rely heavily on overseas markets for growth.
* Tariffs and Duties: The US, EU, and other jurisdictions have historically imposed anti-dumping and countervailing duties on Chinese solar and battery products. Recent trends suggest a tightening of these measures, including potential carbon border adjustment mechanisms (CBAM) or supply chain due diligence requirements.
* Market Access: Some countries are actively seeking to localize their supply chains ("friend-shoring"), which could limit the market share of Chinese firms in the long term. While current export data is strong, any escalation in trade disputes could lead to sudden drops in order volumes or increased compliance costs.
* Specific Risk for Inverters: As inverters are critical grid infrastructure, they may face heightened security scrutiny in Western markets, potentially leading to exclusions from certain government-funded projects.

Rating / Sector Outlook

Sector Rating: Outperform (Stronger than the Market)

We maintain our Outperform rating for the Power Equipment sector, specifically favoring the Energy Storage and PV Export sub-segments.

Rationale:
1. Structural Growth in Storage: The record-breaking tender volumes in China (64 GWh in Nov) and the high growth rate of storage battery production (35.3% share) confirm that energy storage is entering a high-growth phase. This is a multi-year secular trend driven by the need for grid flexibility.
2. Export Resilience: The 34% YoY growth in PV module exports and 26% YoY growth in inverter exports demonstrate that Chinese manufacturers remain competitive globally. The diversification into markets like Australia and Asia reduces reliance on any single region.
3. Valuation Support: After a period of correction, valuations in the sector have become more attractive. Leading companies with strong balance sheets and overseas exposure are trading at reasonable multiples relative to their growth prospects.

Investment Theme:
The core investment theme for the next 6-12 months is "Global Expansion + Storage Integration." Companies that can successfully navigate trade barriers, establish local presence in key overseas markets, and offer integrated PV-plus-storage solutions will command a premium.

Investment View

Based on the analysis of production, pricing, and demand trends, we identify specific opportunities within the sector. We recommend focusing on companies with strong technological moats, diversified geographic revenue streams, and leadership in the energy storage value chain.

Recommended Stocks

1. Sungrow Power Supply (300274.SZ)

• Core Logic: As a global leader in solar inverters and energy storage systems, Sungrow is uniquely positioned to benefit from both the robust inverter export growth and the surging domestic storage tenders.
• Key Drivers:
  • Market Leadership: Dominant market share in both string inverters and central inverters globally.
  • Storage Integration: Strong capability in providing integrated ESS solutions, capturing value across the entire system.
  • Overseas Exposure: Significant revenue from Europe and emerging markets, benefiting from the high-margin overseas business.
• Risk Mitigation: Diversified product portfolio reduces reliance on any single segment.

2. Narada Power Source (300068.SZ)

• Core Logic: A leading player in the lithium-ion battery sector, particularly in energy storage applications.
• Key Drivers:
  • Storage Focus: High exposure to the fast-growing energy storage market, aligning with the 35.3% storage cell production share trend.
  • Technology: Advanced LFP (Lithium Iron Phosphate) battery technology with long cycle life, suitable for the demanding 4-hour storage applications.
  • Domestic Tender Wins: Well-positioned to capture a significant share of the record-high domestic storage tenders.

3. Tongrun Equipment (002150.SZ)

• Core Logic: Specializes in PV mounting structures and energy storage cabinet integration.
• Key Drivers:
  • Niche Leadership: Leading position in the mounting structure market, which benefits from every GW of PV installed, regardless of module manufacturer.
  • Storage Cabinets: Growing business in energy storage cabinet integration, directly benefiting from the 64 GWh tender surge.
  • Export Growth: Strong presence in overseas markets, particularly in Europe and North America.

4. Huashengchang (002980.SZ)

• Core Logic: Focuses on test and measurement instruments for the power and electronics industries.
• Key Drivers:
  • Quality Control Demand: As competition intensifies and technology evolves (e.g., TOPCon, high-voltage storage), the need for precise testing and quality control increases.
  • R&D Spending: Leading manufacturers are increasing R&D spending to differentiate products, driving demand for high-end testing equipment.
  • Defensive Characteristics: Less exposed to direct commodity price wars compared to module or cell manufacturers.

5. Shouhang New Energy (301658.SZ)

• Core Logic: A specialized player in the energy storage and PV inverter space.
• Key Drivers:
  • High Growth Potential: Smaller cap compared to peers, offering higher elasticity to positive industry trends.
  • Emerging Markets: Strong focus on growing markets like Australia and Asia, where inverter exports are surging.
  • Product Innovation: Continuous innovation in hybrid inverters and storage solutions for residential and C&I segments.

Strategic Allocation Advice

For institutional investors, we suggest a barbell strategy:
1. Core Holdings: Allocate the majority of the sector exposure to large-cap leaders like Sungrow and Narada, which offer stability, proven execution, and diversified revenue streams.
2. Satellite Positions: Consider smaller, high-growth names like Shouhang or specialized equipment providers like Huashengchang to capture alpha from niche trends and higher growth rates.

Monitoring Indicators

Investors should closely monitor the following indicators in the coming quarters:
* Monthly Export Data: Watch for any signs of slowdown in PV module and inverter exports, particularly to Europe and the US.
* Storage Bid Prices: Track whether the price decline in 4-hour systems stabilizes. Further declines could signal unsustainable margin pressure.
* Policy Announcements: Keep an eye on Chinese domestic electricity market reforms and international trade policy updates (e.g., US Section 301 tariffs, EU CBAM implementation).
* Inventory Levels: Monitor domestic PV module inventory levels. A continued build-up could lead to further production cuts and price volatility.

Detailed Data Analysis & Contextual Deep Dive

To provide a comprehensive understanding for institutional clients, we delve deeper into the implications of the data presented in the report.

The "Off-Season" Paradox in PV

The report notes that overseas demand began to "drop significantly" due to the off-season, yet export values rose by 34% YoY. This apparent contradiction can be explained by several factors:
1. Project Completion Rush: Many international projects have fiscal year-ends or funding deadlines in Q4, leading to a rush to import equipment before year-end.
2. Inventory Restocking: Distributors and installers may be restocking inventories in anticipation of potential supply chain disruptions or tariff changes in 2026.
3. Base Effect: The YoY comparison is against November 2024. If late 2024 saw any temporary disruptions, the 2025 growth appears exaggerated. However, the absolute value of $2.41 billion is substantial, indicating real demand.

For investors, this suggests that the "overseas growth" story is not just a narrative but a financial reality. Companies with strong logistics and distribution networks in Europe, Asia, and Australia are likely to report strong Q4 2025 revenues.

The Structural Shift in Battery Production

The fact that energy storage cells now account for 35.3% of total battery production in China is a pivotal metric. Historically, the battery industry was dominated by EV power batteries. This shift indicates:
1. Maturation of the EV Market: The EV market is growing, but at a slower, more sustainable pace. The hyper-growth phase is transitioning to a steady-state growth phase.
2. Explosion of Grid Storage: The grid storage market is in its early hyper-growth phase. As renewable penetration increases, the need for storage grows exponentially, not linearly.
3. Supply Chain Reallocation: Battery manufacturers are reallocating capacity from power to storage. This may lead to tighter supply for power batteries in the future if EV demand surprises to the upside, but for now, the focus is on storage.

Investors should favor battery manufacturers who have successfully pivoted to storage and have long-term contracts with utility-scale developers. Pure-play EV battery makers may face more competition and margin pressure.

Price War Dynamics in Storage

The 10.86% drop in 4-hour system prices is concerning but also indicative of market maturation.
* Short-Term Pain: Margins will be compressed in Q4 2025 and Q1 2026.
* Long-Term Gain: Lower prices make storage projects more economically viable, expanding the total addressable market (TAM). Projects that were previously marginal due to high CAPEX are now bankable.
* Consolidation: Only companies with vertical integration (owning cell production) or superior supply chain management can survive these price levels. Integrators who buy cells at spot prices will be squeezed out.

This reinforces our preference for vertically integrated players like Sungrow and Narada, who can control costs better than pure integrators.

Regional Nuances in Inverter Exports

The data on inverter exports reveals important regional shifts:
* Europe: Flat to slightly declining YoY. This market is saturated with residential solar. Future growth will come from replacements and commercial/industrial segments.
* Australia: >177% growth. This is a hot spot. Australia has high solar penetration and high electricity prices, making storage highly attractive. Companies with a strong Australian presence (like Sungrow and Shouhang) are well-positioned.
* Asia: Strong growth. Emerging markets in Southeast Asia are starting their renewable energy journey. This is a long-term growth engine.

Investors should assess the geographic revenue breakdown of their holdings. Companies overly reliant on Europe may face slower growth, while those with diversified exposure to Asia and Australia have higher upside.

Conclusion

The Power Equipment sector, encompassing PV and Energy Storage, presents a compelling investment case as we close 2025. While domestic PV faces short-term inventory and pricing challenges, the overseas export market remains robust, and the energy storage sector is experiencing explosive growth.

The key to success in this environment is selectivity. Investors should avoid generic players exposed to intense domestic price wars and instead focus on:
1. Export Leaders: Companies with strong brands and channels in high-growth overseas markets (Europe, Australia, Asia).
2. Storage Integrators: Vertically integrated players who can manage costs and capture value in the booming storage market.
3. Technology Innovators: Companies offering differentiated products (e.g., high-efficiency modules, long-life batteries) that can command a premium.

Our recommended list—Sungrow, Narada, Tongrun, Huashengchang, and Shouhang—represents a balanced portfolio of these themes. We maintain our Outperform rating and encourage investors to accumulate positions on any market weakness, viewing the current volatility as a buying opportunity for long-term structural growth.

Disclaimer: This report is based on data provided by Ajian Securities Research Institute as of December 22, 2025. All data, ratings, and recommendations are subject to change based on market conditions. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. The information contained herein is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities.