Power Equipment Sector Update: Diverging Trends in Photovoltaics and Energy Storage – A Strategic Pivot Towards High-Growth Storage Segments

Date: November 25, 2025
Sector: Power Equipment / New Energy
Rating: Outperform (Stronger than Market)
Analyst: Zhu Pan (S0820525070001)
Contact: Lu Jiayi (S0820124120008)
Source: Aijian Securities Research Institute

Executive Summary

The Chinese power equipment sector, particularly the photovoltaic (PV) and energy storage segments, is currently exhibiting a pronounced divergence in fundamental trends as we approach the end of 2025. Our analysis of industry data from October and November 2025 reveals that while the PV sector is undergoing a necessary consolidation phase characterized by declining export momentum and stable but pressured domestic pricing, the energy storage sector is experiencing robust demand growth, driven by significant increases in domestic tendering volumes and improving price stability.

Key Macro Observations:
1. Photovoltaic Consolidation: The PV module export market saw a notable month-on-month (MoM) decline in October 2025, with export values dropping by 19.34% to $2.258 billion. Domestic production schedules for November indicate a slight contraction, with total estimated output falling below 44.5 GW as manufacturers prioritize inventory clearance over volume expansion. However, year-to-date (YTD) domestic installations remain strong, up 49.3% through September, suggesting that the primary headwind is external demand softness rather than domestic stagnation.
2. Energy Storage Surge: In stark contrast, the energy storage sector demonstrates vigorous growth. Domestic new tenders for storage EPC, systems, and cells in October 2025 reached 38.7 GWh, representing an impressive 85% year-on-year (YoY) increase. Furthermore, battery production schedules for November are projected to rise by 12.4% MoM, with storage cells accounting for 33.6% of total output. Crucially, pricing dynamics are stabilizing and even improving in specific segments, with the weighted average bid price for 4-hour lithium iron phosphate (LFP) storage systems rising by 23.23% MoM, signaling a potential inflection point in profitability.
3. Investment Implication: Given these diverging trajectories, we maintain an "Outperform" rating on the Power Equipment sector but advise a strategic reallocation of capital. Investors should reduce exposure to pure-play PV module manufacturers facing margin compression and export headwinds, while increasing allocation to leading energy storage integrators and battery suppliers benefiting from volume growth and pricing recovery. We specifically highlight opportunities in companies with strong overseas inverter channels and integrated storage solutions.

This report provides a comprehensive deep-dive into the supply-demand dynamics, pricing mechanisms, and regional export structures of the PV and storage industries. It aims to equip institutional investors with the granular data necessary to navigate the transitional phase of the new energy sector in late 2025.

Key Takeaways

1. Photovoltaic Sector: Inventory Clearance and Export Softness

1.1 Production Schedules: A Shift Towards Discipline

According to data from Shanghai Metals Market (SMM), the production landscape for PV modules in the second half of 2025 has been relatively stable, but November marks a shift towards defensive production strategies.
* November Outlook: Total domestic PV module production is estimated to be below 44.5 GW. This represents a decrease compared to October levels.
* Corporate Strategy Differentiation: There is a clear bifurcation in corporate behavior. Leading tier-1 manufacturers have slightly increased their production schedules, leveraging their cost advantages and brand strength to maintain market share. Conversely, the majority of smaller and mid-tier enterprises are actively reducing production to clear existing inventory.
* Future Catalyst: The current reduction in output is a healthy correction. SMM notes that there is potential for production volumes to rebound if module prices stabilize or rise, allowing enterprises to restore profit margins. This suggests that the supply side is becoming more responsive to price signals, which is a positive indicator for long-term industry health.

1.2 Pricing Dynamics: Stabilization at Low Levels

As of November 21, 2025, prices across the PV supply chain have largely stabilized, with minor fluctuations in upstream and midstream components. The lack of significant price declines indicates that the market may have bottomed out, although a sharp recovery is not yet evident.

Source: InfoLink, Aijian Securities Research Institute

The stabilization of TOPCon module prices at 0.69 CNY/W is critical. While this level still implies thin margins for many producers, the cessation of price wars is a prerequisite for any meaningful earnings recovery in the sector.

1.3 Demand Analysis: Domestic Resilience vs. External Weakness

Domestic Market:
* Installation Data: In September 2025, China’s newly installed PV capacity reached 9.7 GW, a 31.3% MoM increase but a 53.8% YoY decrease. The YoY decline reflects the high base effect from previous years and potential grid connection bottlenecks.
* Cumulative Performance: Despite the monthly YoY dip, the cumulative installed capacity from January to September 2025 stands at 240.27 GW, a robust 49.3% YoY growth. This confirms that domestic demand remains the backbone of the Chinese PV industry, providing a stable baseline for manufacturers.

Export Market (The Primary Headwind):
* Module Exports: October 2025 data from the General Administration of Customs reveals a significant slowdown in overseas demand.
* Export Value: $2.258 billion, up 4.39% YoY but down 19.34% MoM.
* Export Volume: 1.283 billion units, up 73.14% YoY but down 0.97% MoM.
* Cumulative Context: From January to October, cumulative export value was $23.473 billion, down 4.89% YoY. This indicates that the global market is absorbing higher volumes at lower average selling prices (ASPs), compressing revenue growth despite volume resilience.
* Inverter Exports:
* October Performance: Export value reached $677 million, up 2.76% YoY but down 5.02% MoM.
* Cumulative Strength: Jan-Oct cumulative exports totaled $7.435 billion, up 17.45% YoY. Inverters continue to outperform modules in terms of value retention and growth, highlighting the superior competitive positioning of Chinese inverter manufacturers globally.

2. Energy Storage Sector: Robust Growth and Pricing Recovery

2.1 Production Schedules: Strong Momentum

Data from TD (Tai Dong Times Think Tank) highlights the accelerating pace of the battery sector, driven largely by energy storage applications.
* November Production Forecast:
* China Market: Total production (Power + Storage + Consumer) is forecast at 209 GWh, a 12.4% MoM increase and a 64.6% YoY surge.
* Global Market: Total production is forecast at 228 GWh, up 11.2% MoM.
* Storage Dominance: Storage cells now account for approximately 33.6% of total production. This structural shift underscores the transition of the battery industry from being solely EV-driven to a dual-engine model powered by both electrification and grid-scale storage.
* Capacity Utilization: Leading enterprises are reporting tight effective capacity, indicating that high-quality, cost-competitive production lines are operating at or near full utilization. This contrasts with the excess capacity concerns in the PV module sector.

2.2 Pricing Dynamics: The Inflection Point

October 2025 marked a significant turning point in energy storage system pricing, particularly for longer-duration systems.

Overall LFP Storage System Prices (Excluding C&I Cabinets):
* Bid Range: 0.43 – 0.7487 CNY/Wh.
* Average Bid Price: 0.5547 CNY/Wh.
* Weighted Average Winning Bid: 0.5248 CNY/Wh, representing a 10% MoM increase. This rise is a critical signal that the intense price competition of early 2025 is abating, allowing manufacturers to recover some margin.

Segment-Specific Analysis:

Source: CESA, Aijian Securities Research Institute

The divergence between 2-hour and 4-hour system pricing is noteworthy. The 23.23% MoM increase in 4-hour system winning bids indicates that projects requiring longer discharge durations (likely for peak shaving and deeper grid arbitrage) are less price-sensitive and more focused on reliability and lifecycle costs. This favors established players with proven track records in long-duration storage deployments.

2.3 Demand Analysis: Surge in Domestic Tendering

• October Tendering Volume: New tenders for Storage EPC/PC (including DC-side equipment), storage systems, and cells totaled 12.7 GW / 38.7 GWh.
• Growth Metrics: This represents an 85% YoY increase in capacity scale, although it is an 11.24% MoM decrease. The YoY growth is the more significant metric, confirming the structural expansion of the domestic storage market.
• Implication: The sheer volume of tenders ensures a strong order book for storage manufacturers heading into 2026. The slight MoM decline is likely seasonal or due to project timing variations and does not detract from the overall bullish trend.

3. Global Inverter Export Structure: Regional Diversification

The geographic distribution of inverter exports reveals shifting global demand patterns, offering insights into where future growth may emerge.

Regional Breakdown (Jan-Sep 2025 Cumulative):
1. Europe: Remains the largest market with $2.67 billion in exports. However, monthly data shows volatility, with September exports down 9.29% YoY. Europe’s market is maturing, and growth is becoming more dependent on replacement cycles and policy updates rather than greenfield expansion.
2. Asia: The second-largest market with $2.372 billion in exports. Asia shows consistent growth, with September exports down only 3.62% YoY, demonstrating resilience.
3. Emerging Markets (High Growth Potential):
* Australia: A standout performer. In September 2025, inverter exports to Australia surged by 305.83% YoY to $62.8 million. This exponential growth highlights Australia as a key emerging hub for distributed energy resources.
* South America: Shows mixed performance but offers diversification. September exports rose 49.57% YoY to $52.59 million, recovering from earlier declines.

Strategic Insight: The rapid growth in Australia and the steady performance in Asia suggest that Chinese inverter manufacturers are successfully diversifying away from reliance on the European market. Companies with strong distribution networks in these high-growth regions are likely to outperform peers who are overly exposed to the slowing European market.

Risks / Headwinds

While the outlook for the energy storage sector is positive, and the PV sector is stabilizing, several risks persist that could impact investment returns. Institutional investors should monitor these factors closely.

1. Intensified Competition and Margin Compression

• PV Sector: Despite production cuts, the overall industry capacity remains substantial. If demand does not pick up sufficiently in Q1 2026, manufacturers may resume price wars to maintain cash flow, leading to further gross margin erosion. The current stabilization at 0.69 CNY/W for modules is fragile.
• Storage Sector: While prices are recovering, the entry of new players and the expansion of existing battery giants into system integration could reignite competition. The 10% MoM price increase in October is encouraging, but sustainability depends on disciplined capacity expansion.

2. Policy and Regulatory Uncertainty

• Domestic Policy: The pace of PV and storage installations in China is heavily influenced by grid connectivity policies, electricity market reforms, and subsidy structures. Any delay in grid approval processes or changes in feed-in tariffs could dampen domestic demand.
• International Policy: The global energy transition is subject to political shifts. Changes in renewable energy targets or subsidy schemes in key markets like Europe, the US, and Australia could lead to demand shortfalls. For instance, any rollback in European Green Deal initiatives would directly impact inverter and module exports.

3. International Trade Frictions and Geopolitical Risks

• Tariffs and Barriers: The risk of trade protectionism remains elevated. Several countries are considering or have implemented higher tariffs on Chinese solar and storage products.
  • US Market: Continued restrictions and high tariffs limit direct access, forcing companies to rely on third-country manufacturing, which adds complexity and cost.
  • EU Investigations: Ongoing anti-subsidy investigations or potential carbon border adjustment mechanisms (CBAM) could increase compliance costs and reduce the competitiveness of Chinese exports.
  • Emerging Markets: While growing, markets like India and Brazil have historically shown willingness to impose local content requirements or import duties to protect domestic industries.

4. Raw Material Price Volatility

• Although polysilicon and lithium carbonate prices have stabilized, they remain subject to supply shocks. A sudden spike in raw material costs could squeeze margins for manufacturers who have locked in lower selling prices through long-term contracts. Conversely, a sharp drop could lead to inventory write-downs.

Rating / Sector Outlook

Sector Rating: Outperform (Stronger than Market)

We maintain our "Outperform" rating for the Power Equipment sector. This rating is predicated on the belief that the sector’s long-term growth trajectory remains intact, supported by global decarbonization goals and the increasing economic viability of renewable energy plus storage solutions.

However, within this broad rating, we emphasize a structural differentiation:
* Overweight Energy Storage: We are bullish on the storage sub-sector due to strong volume growth (85% YoY in tenders), improving pricing power (especially in 4h systems), and high capacity utilization among leaders.
* Neutral/Selective on Photovoltaics: We adopt a cautious stance on pure-play PV module manufacturers. While the sector is stabilizing, the lack of significant export growth and the ongoing inventory clearance phase limit near-term upside. We prefer PV companies with diversified business models (e.g., integrated storage, inverters) or strong domestic market positions.

Investment Thesis Summary

1. Storage is the New Growth Engine: The data clearly shows that energy storage is transitioning from a niche accessory to a core component of the power grid. The 33.6% share of storage cells in total battery production and the 85% YoY growth in tenders confirm this structural shift.
2. Pricing Power is Returning: The 23.23% MoM increase in 4-hour storage system bids is a pivotal data point. It suggests that the market is valuing quality and duration over mere lowest-cost procurement, which benefits established, technologically advanced players.
3. Export Diversification is Key: The success of inverter exports in Australia (+300% YoY) and South America demonstrates that Chinese companies can find growth outside traditional Western markets. Companies with agile global sales networks will capture this alpha.
4. PV Bottoming Out, But Recovery is Slow: The PV sector is likely at or near its cyclical bottom in terms of pricing, but the volume recovery will be gradual. Investors should look for signs of sustained price increases above 0.70 CNY/W before becoming aggressively bullish on module makers.

Investment View

Based on the analysis of production schedules, pricing trends, and demand dynamics, we recommend a focused investment strategy that capitalizes on the strength of the energy storage sector while selectively engaging with the stabilizing PV market.

Recommended Stocks

We highlight the following companies as top picks, selected for their strong positioning in the energy storage value chain, robust export channels, and technological leadership.

1. Sungrow Power Supply Co., Ltd. (300274.SZ)

• Core Logic: As a global leader in solar inverters and energy storage systems, Sungrow is uniquely positioned to benefit from both the resilient inverter export market and the booming storage sector.
• Key Drivers:
  • Storage Integration: Sungrow’s integrated storage solutions are gaining traction globally, allowing it to capture higher value per project compared to pure hardware suppliers.
  • Global Channel: Strong presence in Europe, Asia, and emerging markets like Australia mitigates regional risk.
  • Brand Premium: Ability to command better pricing in competitive tenders due to brand reliability and bankability.

2. Narada Power Source Co., Ltd. (300068.SZ)

• Core Logic: Narada has successfully transformed from a traditional lead-acid battery maker to a key player in lithium-ion energy storage, particularly in communication and grid-side applications.
• Key Drivers:
  • Capacity Utilization: Benefiting from the tight capacity conditions in the storage cell market.
  • Cost Advantage: Vertical integration and operational efficiency allow it to maintain margins even in competitive bidding environments.
  • Growth Alignment: Directly exposed to the 85% YoY growth in domestic storage tenders.

3. Tongrun Equipment Co., Ltd. (002150.SZ)

• Core Logic: Through its subsidiary, Tongrun has become a significant supplier of energy storage cabinets and enclosures, a critical component in the storage value chain.
• Key Drivers:
  • Niche Leadership: Dominant position in the mechanical and thermal management aspects of storage systems.
  • Export Exposure: Benefits from the strong global demand for storage infrastructure, particularly in markets requiring high-standard equipment.
  • Valuation: Often trades at a discount to pure-play battery makers, offering a value entry point.

4. Huashengchang Measurement & Control Technology Co., Ltd. (002980.SZ)

• Core Logic: Specializes in testing and measurement instruments, including those for new energy systems. As the storage and PV industries grow, the need for quality control and maintenance testing increases.
• Key Drivers:
  • Aftermarket Growth: As the installed base of PV and storage grows, the demand for O&M (Operations and Maintenance) and testing services rises.
  • Technological Moat: High barriers to entry in precision measurement technology.
  • Resilience: Less exposed to raw material price volatility compared to component manufacturers.

5. Sofar Solar Co., Ltd. (301658.SZ) (Note: Ticker verified as per report recommendation)

• Core Logic: A fast-growing inverter and storage solution provider with a strong focus on distributed generation and residential storage.
• Key Drivers:
  • High-Growth Markets: Strong penetration in emerging markets and Europe’s residential sector.
  • Product Mix: Increasing share of hybrid inverters and storage batteries in its revenue mix enhances average selling prices and margins.
  • Agility: Smaller size allows for quicker adaptation to market changes compared to larger conglomerates.

Strategic Allocation Advice

1. Prioritize Storage Integrators: Allocate the majority of new capital to companies that offer integrated storage solutions (inverter + battery + EMS) rather than pure cell manufacturers. Integrators capture more value and have stronger customer stickiness.
2. Monitor Pricing Trends: Keep a close watch on the weekly weighted average bid prices for 4-hour storage systems. A sustained trend above 0.52 CNY/Wh would confirm the margin recovery thesis.
3. Geographic Diversification: Favor companies with demonstrated success in non-European markets (Australia, Asia, South America) to hedge against potential European policy headwinds.
4. Avoid Pure-Play Module Makers: Until module prices show a consistent upward trend and export volumes recover MoM, avoid heavy exposure to companies whose revenue is predominantly derived from standard PV module sales.

Conclusion

The Power Equipment sector is at a crossroads. The photovoltaic industry is digesting excess capacity and adjusting to a new normal of lower margins, while the energy storage industry is entering a phase of accelerated growth and improving profitability. For institutional investors, the opportunity lies in recognizing this divergence. By shifting focus towards the high-growth, pricing-recovering storage segment and selecting companies with robust global diversification, investors can navigate the current volatility and capture the long-term value creation potential of the energy transition.

We reiterate our Outperform rating on the sector, with a strong preference for the identified storage-focused标的 (targets). The data from October and November 2025 provides a clear roadmap: follow the volume and pricing power into storage, and exercise caution in the still-consolidating PV module space.

Appendix: Detailed Data Tables and Charts Analysis

(Note: The following section provides a deeper textual analysis of the data presented in the original report’s charts, ensuring all quantitative details are preserved and contextualized for the institutional investor.)

Chart 1: China PV Module Production Schedule (GW)

• Trend: The chart illustrates the monthly production volumes from H2 2025. The stability observed in July-September is followed by a slight dip in November.
• Interpretation: The dip is not alarming but rather indicative of healthy inventory management. The fact that top-tier firms are maintaining or slightly increasing output while others cut back suggests a "flight to quality" in the supply chain. This consolidation will likely lead to a more concentrated market structure in 2026, benefiting the leaders.

Chart 2: Lithium Battery Production Schedule (GWh)

• Trend: A steep upward trajectory is visible, with November 2025 projected at 209 GWh for China.
• Interpretation: The 64.6% YoY growth is exceptional. This chart underscores that the battery industry is not suffering from the same demand slack as the PV module industry. The 33.6% storage share is a critical structural metric to watch; if this exceeds 40% in 2026, it will fundamentally redefine the valuation multiples of battery companies, aligning them more with infrastructure growth stocks than cyclical automotive suppliers.

Charts 3-6: PV Supply Chain Price Trends

• Polysilicon (Chart 3): Flat at 52 CNY/kg. This stability is crucial for downstream cost predictability.
• Wafers (Chart 4): The 183mm N-type wafer price drop of 0.02 CNY to 1.28 CNY is minor but indicates that wafer makers are still competing for volume.
• Cells (Chart 6): The 210mm N-type cell price drop to 0.29 CNY/W reflects the pass-through of wafer costs.
• Modules (Chart 5): The flat TOPCon double-glass module price at 0.69 CNY/W is the most important signal. It shows that downstream buyers are accepting the current price level, and manufacturers are refusing to sell below cost. This equilibrium is the foundation for any future profit recovery.

Chart 7: Domestic Storage System Monthly Weighted Average Bid Price (CNY/Wh)

• Trend: The chart shows the volatility in 2024-2025, with a notable uptick in October 2025.
• Interpretation: The 10% overall increase and the 23.23% increase in 4h systems are visually distinct spikes. This chart should be used as a primary leading indicator for earnings revisions for storage companies in Q4 2025 and Q1 2026. If the trend continues, margin expansion will be significant.

Chart 8: Domestic New PV Monthly Installations (GW)

• Trend: September’s 9.7 GW is a solid number, though the YoY decline is visible.
• Interpretation: The cumulative 240.27 GW YTD is the key takeaway. This volume ensures that domestic PV manufacturers have a baseline of demand that insulates them from complete reliance on exports. It also supports the domestic inverter and mounting structure markets.

Chart 9: Domestic New Energy Storage Project Tenders (GWh)

• Trend: October’s 38.7 GWh tender volume is a peak or near-peak figure for the year.
• Interpretation: The 85% YoY growth is the strongest bullish signal in the entire report. This chart validates the "Overweight Storage" recommendation. The slight MoM dip is negligible in the face of such strong YoY growth.

Charts 10-12: PV Module and Inverter Export Values

• Module Exports (Chart 10 & 11): The divergence between value (-19.34% MoM) and volume (-0.97% MoM) confirms the ASP compression. Investors must model lower revenues per watt for exporters in Q4.
• Inverter Exports (Chart 12): The resilience of inverter exports (+17.45% YTD) highlights the superior business model of inverters: higher tech barrier, easier logistics, and stronger brand loyalty compared to commoditized modules.

Chart 13 & Table: Inverter Export Regional Breakdown

• Detailed Analysis:
  • Europe: The table shows a decline in Sep 2025 vs Sep 2024 (-9.29%). This confirms the saturation/slowdown narrative.
  • Australia: The jump from $15.47M in Sep 2024 to $62.80M in Sep 2025 (+305.83%) is extraordinary. This single data point justifies overweighting companies with Australian distribution partners.
  • South America: The recovery in Sep 2025 (+49.57%) after several months of decline suggests that inventory issues in the region may be resolved, opening up a new window for exports.

Final Remarks for Institutional Investors

The data presented in this report from Aijian Securities provides a clear, evidence-based framework for navigating the Power Equipment sector in late 2025. The key distinction is between the consolidating PV sector and the accelerating Storage sector.

Actionable Steps:
1. Review Portfolio Exposure: Assess current holdings in pure-play PV module manufacturers. Consider reducing positions if they lack strong storage integration or overseas diversification.
2. Increase Storage Allocation: Initiate or add to positions in Sungrow, Narada, and other recommended storage leaders. The pricing recovery in 4h systems is a tangible catalyst for earnings beats in the coming quarters.
3. Monitor Trade Policy: Stay alert to any new tariff announcements from the EU or US, as these remain the primary external risks to the export-driven growth story.
4. Focus on Quality: In a consolidating market, market share will flow to the most efficient and technologically advanced players. Stick to tier-1 companies with strong balance sheets.

The "Outperform" rating is maintained with conviction, driven by the structural growth of energy storage and the eventual stabilization of the photovoltaic industry. The opportunities for alpha generation are present, particularly for those who can differentiate between the varying sub-sectors within the broader Power Equipment universe.

Disclaimer:
This report is prepared by Aijian Securities Research Institute. The information contained herein is derived from sources believed to be reliable, but Aijian Securities does not guarantee its accuracy or completeness. The opinions expressed are those of the analysts as of the date of publication and are subject to change without notice. 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. Past performance is not indicative of future results.