Photovoltaic Industry Weekly Report: Navigating the Bottom – Policy Shifts and Price Stabilization Signal Emerging Opportunities

Date: November 24, 2025
Sector: Power Equipment / Photovoltaics (PV)
Rating: Overweight (Positive)
Analyst: Zhang Xinyi (S1490522090001)
Source: Guoxin Securities Market Research Department

Executive Summary

The Chinese photovoltaic (PV) sector experienced a significant correction during the week of November 17–21, 2025, with the Shenwan PV Equipment Index declining by 12.26%, substantially underperforming the broader CSI 300 Index (-3.77%). This sharp drawdown places the power equipment sector at the bottom of all 31 Shenwan industry indices. Despite the severe market sentiment pressure, fundamental indicators suggest that the industry may be approaching a cyclical bottom.

Key observations from this week include:
1. Price Stabilization in Main Chain: Core PV supply chain prices have largely stabilized. Polysilicon, wafers, and modules held steady week-over-week, while battery cell prices saw a marginal decline of CNY 0.01/W. The stabilization of upstream and midstream prices indicates that the intense price war may be losing momentum, potentially marking the floor for current valuation levels.
2. Policy-Driven Structural Changes: Significant policy developments in Gansu, Jilin, and Hebei are reshaping the operational landscape. The introduction of Virtual Power Plant (VPP) frameworks in Gansu enhances the grid integration value of distributed PV. Meanwhile, Jilin’s inaugural mechanism-based electricity price bidding for new energy projects introduces a more market-oriented pricing discovery process. Conversely, Hebei’s massive cleanup of wind and solar projects—canceling or delaying nearly 18 GW—signals a rigorous shift towards quality over quantity, clearing out inefficient capacity and speculative development.
3. Investment Implication: We maintain an "Overweight" rating on the sector. The recent pullback has compressed valuations into an attractive range. We advise institutional investors to focus on companies with high proportions of N-type product capacity and those leading in next-generation technologies such as perovskite. The divergence between generic capacity and high-efficiency, technologically advanced capacity is widening, creating alpha opportunities amidst the beta recovery.

Key Takeaways

1. Market Performance: Deep Correction Creates Entry Window

The week ended November 21, 2025, was characterized by broad-based weakness in the A-share market, with the power equipment sector bearing the brunt of the sell-off.

• Index Performance: The Shenwan Power Equipment Index fell by 10.54%, ranking last (31st) among all industries. It underperformed the CSI 300 by 6.77 percentage points.
• Sub-Sector Breakdown: All secondary indices within power equipment declined. The PV Equipment Index was the hardest hit, dropping 12.26%. Other sub-sectors also faced pressure: Battery (-4.15%), Grid Equipment (-9.92%), Other Power Equipment II (-8.99%), Wind Power Equipment (-7.16%), and Motors II (-4.15%).
• Individual Stock Dynamics:
  • Outperformers: Mubang High-Tech led the gains, suggesting selective interest in specific niche technologies or turnaround stories.
  • Underperformers: Significant declines were observed in Ancai High-Tech, Canadian Solar (Artes), DKEM (Dike Shares), Hongyuan Green Energy, and GCL Integration. These drops reflect broader concerns over margin compression and inventory adjustments rather than company-specific failures alone.

Analyst Note: The magnitude of the decline (-12.26% for PV) in a single week is extreme and often indicative of capitulation selling. When combined with stabilizing fundamentals, such dislocations frequently precede a mean-reversion rally.

2. Supply Chain Pricing: Signs of Bottoming Out

According to data from Datayes and Solarzoom as of November 19, 2025, the main PV supply chain prices have shown remarkable stability, with only minor fluctuations in the mid-stream. This stability is crucial for restoring manufacturer confidence and halting the deflationary spiral that has plagued the sector throughout 2024 and early 2025.

Detailed Price Analysis

Interpretation of Price Trends:
* Silicon & Wafers: The flattening of polysilicon and wafer prices is the most critical signal. After months of volatile declines, the market appears to have found a temporary equilibrium. At 51 CNY/kg, polysilicon prices are near the cash cost curve for older产能 (capacity), limiting further aggressive price cuts by major players.
* Cost Side Relief: The nearly 10% decline in silver paste prices is a notable positive for cell manufacturers. As silver constitutes a significant portion of non-silicon costs, this reduction helps offset the slight decrease in battery cell selling prices, protecting gross margins for efficient producers.
* Module Floor: The module price of 0.69 CNY/W is historically low. Stability here implies that project Internal Rates of Return (IRR) for developers are becoming highly attractive, which should stimulate installation demand in Q4 2025 and Q1 2026.

3. Policy Landscape: Structural Optimization and Market Mechanisms

Three major policy developments this week highlight a shift from pure capacity expansion to grid integration, market-based pricing, and quality control.

A. Gansu Province: Virtual Power Plant (VPP) Integration

On November 14, the Gansu Provincial Department of Industry and Information Technology released the "Implementation Plan for the Construction and Operation Management of Virtual Power Plants."

• Core Mandate: VPP operators must act as independent market entities capable of aggregating and managing adjustable resources. They are required to connect to the new power load management system or power dispatch automation system.
• Aggregated Resources: The plan explicitly includes distributed PV, dispersed wind power, user-side energy storage, electric vehicles (charging piles), thermal storage/cooling air conditioners, electric water heaters, and high-energy-consuming industrial loads.
• Technical Requirements: VPPs must achieve "observable, measurable, adjustable, and controllable" status for aggregated resources.
• Investment Implication: This policy enhances the value proposition of distributed PV and energy storage. Companies with strong software capabilities, grid-edge hardware, or integrated VPP platforms will benefit. It transforms PV from a passive generation asset into an active grid-support resource, potentially unlocking new revenue streams via ancillary services.

B. Jilin Province: Mechanism-Based Electricity Price Bidding

On November 18, the Jilin Development and Reform Commission initiated the first-ever mechanism-based electricity price bidding for incremental new energy projects.

• Volume: Total annual mechanism electricity volume is 4.576 billion kWh.
  • Wind Power: 3.862 billion kWh.
  • Photovoltaic: 0.714 billion kWh.
• Price Bounds:
  • Bid Ceiling: 334 CNY/MWh (0.334 CNY/kWh).
  • Bid Floor: 150 CNY/MWh (0.150 CNY/kWh).
• Significance: This moves away from fixed feed-in tariffs towards a competitive bidding mechanism. While the floor price (0.15 CNY/kWh) is low, it establishes a clear market signal. Developers with lower Levelized Cost of Energy (LCOE) due to superior technology (e.g., N-type modules, better tracking systems) will win bids. This favors technologically advanced manufacturers and efficient EPC contractors.

C. Hebei Province: Massive Resource "Reshuffle"

Hebei Province has undertaken a comprehensive verification and cleanup of wind and PV projects, described as a rare "reshuffle" in the industry's history.

• Scope: Covered 64 development enterprises across 23 counties/districts, involving 110 projects with a total installed capacity of approximately 17.966 GW.
• Actions Taken:
  • Delayed: 11.97 GW of projects are explicitly postponed to 2026.
  • Cancelled: 5.996 GW of projects were formally cancelled due to voluntary abandonment by investors or repeated delays.
• Impact on Major Players:
  • National Energy Group: 930 MW cancelled.
  • Shijiazhuang State-owned Capital Investment & Operation Group: 750 MW cancelled.
  • Hebei Guojiu Technology Co., Ltd.: 700 MW cancelled.
  • Huaneng Group: 650 MW cancelled.
• Strategic Interpretation: This cleanup removes "zombie projects" and speculative reserves that cluttered the pipeline without contributing to actual generation. While negative in the short term for the affected developers' booked backlog, it is positive for the industry's long-term health. It ensures that future grid connections are granted to viable, ready-to-build projects, reducing curtailment risks and improving the utilization rate of remaining assets. It also signals stricter regulatory oversight, raising the barrier to entry for less capitalized or inefficient developers.

Risks / Headwinds

While the sector shows signs of bottoming, several risks persist that could delay the recovery or exacerbate volatility:

1. Raw Material Price Volatility:

   • Although prices are currently stable, the PV supply chain remains sensitive to shifts in industrial silicon, polysilicon, and silver prices. A sudden spike in silver prices (given its industrial demand beyond PV) could erode cell margins. Conversely, if polysilicon prices drop below cash costs for extended periods, it could trigger bankruptcies and supply chain disruptions.

2. Project Commencement Delays:

   • The Hebei cleanup highlights the risk of regulatory delays. If other provinces follow suit with strict verification processes, the expected surge in Q4 installations might be pushed into 2026. Furthermore, grid connection approvals and land use permits remain bottlenecks. If project start-ups fall short of expectations, revenue recognition for module manufacturers will be delayed.

3. Intensifying Trade Frictions:

   • Global trade protectionism remains a significant overhang. Potential new tariffs or non-tariff barriers from the US, EU, or India could restrict export channels for Chinese PV manufacturers. Given that many leading Chinese firms have significant overseas exposure, any escalation in trade disputes could impact profitability and force costly supply chain reconfigurations (e.g., accelerating overseas factory builds in the Middle East or Southeast Asia).

4. Technology Iteration Risk:

   • The rapid transition from P-type to N-type (TOPCon, HJT) and the emerging promise of perovskite create execution risks. Companies that fail to keep pace with efficiency upgrades may find their existing capacity stranded or depreciated faster than anticipated.

Rating / Sector Outlook

Rating: Overweight (Positive)

Rationale for Rating:
We believe the PV sector has entered a bottom-range interval following the recent correction. The combination of stabilized supply chain prices, attractive valuations after the 12% weekly drop, and supportive policy shifts towards grid integration and market mechanisms provides a compelling risk-reward profile for medium-to-long-term investors.

Sector Outlook:
* Short-Term (1-3 Months): Expect continued volatility as the market digests the Hebei project cancellations and year-end financial adjustments. However, the stabilization of module prices at 0.69 CNY/W should support Q4 installation volumes.
* Medium-Term (6-12 Months): The industry is poised for a structural recovery driven by the elimination of inefficient capacity (as seen in Hebei) and the premiumization of products (N-type). The implementation of VPPs in provinces like Gansu will create new demand for smart inverters and storage-integrated PV systems.
* Long-Term: The global energy transition remains intact. China’s dominance in PV manufacturing, coupled with technological leadership in N-type and perovskite cells, ensures that leading companies will emerge stronger from this consolidation phase.

Investment View

Based on the current market dynamics and policy environment, we recommend a differentiated strategy focusing on technological leadership and grid adaptability.

1. Core Strategy: Focus on N-Type Leaders

The price stability in wafers and modules, coupled with the slight decline in cell prices, underscores the importance of efficiency. N-type cells (TOPCon and HJT) offer higher efficiency and lower degradation rates, commanding a premium in both domestic and international markets.
* Action: Prioritize companies with high proportions of N-type production capacity. These firms are better positioned to maintain margins as the industry average efficiency rises.
* Why: As generic P-type capacity becomes obsolete, N-type leaders will capture greater market share. The Jilin bidding mechanism, which rewards lower LCOE, directly benefits high-efficiency module providers.

2. Thematic Opportunity: Next-Generation Technologies (Perovskite)

The report explicitly highlights opportunities in companies with leading layouts in perovskite and other new technologies.
* Action: Monitor and consider positions in firms actively commercializing perovskite-silicon tandem cells or pure perovskite modules.
* Why: Perovskite represents the next frontier in breaking the Shockley-Queisser limit of silicon cells. Early movers who achieve stability and scalability will enjoy significant valuation rerating as the technology transitions from lab to fab.

3. Policy Play: Virtual Power Plants & Distributed PV

The Gansu VPP implementation plan is a blueprint for other provinces.
* Action: Look for companies involved in distributed PV, energy storage integration, and smart grid software/hardware.
* Why: The ability to aggregate and control distributed resources will become a valuable service. Companies that can offer "PV + Storage + VPP" solutions will have a competitive edge in securing projects and generating recurring revenue from grid services.

4. Avoidance/Caution

• Legacy Capacity Holders: Companies heavily reliant on older P-type technology with high debt levels and slow transition plans face existential risks. The Hebei cleanup serves as a warning that regulatory tolerance for idle or delayed projects is diminishing.
• Pure Play Manufacturers without Tech Edge: In a market where module prices are flat at low levels, only those with cost advantages (via technology or scale) will survive. Avoid mid-tier manufacturers lacking distinct competitive moats.

Conclusion

The week of November 17–21, 2025, marked a painful but potentially pivotal moment for the Chinese PV sector. The double-digit decline in the PV Equipment Index has likely exhausted much of the negative sentiment, especially as fundamental prices stabilize. The policy landscape is evolving from simple capacity subsidies to sophisticated market mechanisms (Jilin bidding) and grid integration mandates (Gansu VPP), while simultaneously pruning dead wood (Hebei cleanup).

For institutional investors, this environment favors a selective, quality-focused approach. The "bottom" is not just a price level but a structural turning point where efficiency and grid value become the primary drivers of profitability. We recommend accumulating positions in N-type leaders and technology innovators while maintaining a cautious stance on legacy capacity holders. The risk-reward ratio is increasingly favorable for a 6-12 month investment horizon.

Appendix: Data Sources & Definitions

Data Sources:
* Market Performance: Wind Information, Shenwan Macro Research.
* Price Data: Datayes, Solarzoom.
* Policy Documents: Gansu Provincial Department of Industry and Information Technology, Jilin Development and Reform Commission, Hebei Provincial Government announcements.

Investment Rating Definitions (Guoxin Securities):

Industry Rating Definitions:

Disclaimer:
This report is prepared by Zhang Xinyi, a registered securities analyst with the Securities Association of China. The views expressed are independent and objective. Guoxin Securities Co., Ltd. holds the necessary qualifications for securities investment consulting. This report is intended solely for the clients of Guoxin Securities and does not constitute an offer or solicitation to buy or sell any securities. Investors should conduct their own independent assessment and consider their specific financial situation and investment objectives. Guoxin Securities and its affiliates may hold positions in the securities mentioned and may provide investment banking services to the companies discussed. Past performance is not indicative of future results.