Power Equipment Sector Update: Q3 PV Exports Beat Expectations; Robust Energy Storage Demand Drives Growth

Date: November 19, 2025
Sector: Power Equipment (Photovoltaics & Energy Storage)
Rating: Outperform (Stronger than Market)
Source: Aijian Securities Research Institute

Executive Summary

The Chinese power equipment sector, specifically the photovoltaic (PV) and energy storage (ESS) segments, is exhibiting a divergent yet increasingly resilient trajectory as we approach the end of 2025. Our analysis of industry data from September and October 2025, combined with forward-looking production schedules for November, reveals a complex landscape characterized by stabilizing domestic PV installation rates, surprisingly robust export performance in Q3, and accelerating momentum in the energy storage sector.

Key Thesis:
While the domestic PV market faces headwinds from year-over-year comparisons due to high bases in previous periods, the export sector has demonstrated significant resilience, with September 2025 component exports exceeding expectations in both volume and value. Concurrently, the energy storage sector is emerging as the primary growth engine, driven by surging domestic tender volumes and tight supply conditions for leading battery manufacturers. The convergence of policy support—exemplified by the National Energy Administration’s new guidelines on integrated renewable development—and strategic industry consolidations, such as the landmark agreement between Hyperstrong and CATL, suggests a structural shift towards higher-quality, integrated growth rather than pure capacity expansion.

We maintain an "Outperform" rating on the Power Equipment sector. The investment narrative is shifting from broad-based capacity proliferation to a focus on companies with strong overseas channels, technological leadership in next-generation storage solutions, and robust balance sheets capable of weathering price volatility. We recommend investors overweight positions in leading inverter and storage system integrators who are benefiting from the global diversification of demand, particularly in emerging markets like Australia and South America, alongside established European strongholds.

This report provides a comprehensive deep-dive into the supply-demand dynamics, pricing trends, and policy landscape shaping the sector in late 2025, offering actionable insights for institutional investors navigating this transitional phase.

Key Takeaways

1. Supply Side: Divergent Trends in PV Module and Battery Production

Photovoltaic Modules: Stabilization Amidst Inventory Clearance
According to data from Shanghai Metals Market (SMM), PV module production schedules have stabilized throughout the second half of 2025. However, November 2025 presents a mixed picture:
* Headline Volume: SMM forecasts that domestic PV module production in November will fall below 44.5 GW, representing a month-on-month decline from October.
* Structural Shift: There is a clear divergence between tier-1 leaders and smaller players. Leading enterprises have slightly increased their production schedules, leveraging their scale and order books. In contrast, the majority of other manufacturers are reducing output to clear existing inventory.
* Outlook: This consolidation in production is viewed as a healthy correction. The potential for price rebounds in the near term could restore profit margins, thereby incentivizing a subsequent increase in production volumes. The current reduction is largely tactical, aimed at balancing supply with immediate demand and preventing further erosion of spot prices.

Battery Production: Strong Momentum Led by Energy Storage
In stark contrast to the cautious stance in PV modules, the battery sector is experiencing vigorous growth, driven primarily by the energy storage segment. Data from TrendBank (TD) highlights the following for November 2025:
* China Market: The combined scheduled production for power (EV), energy storage, and consumer batteries is projected to reach 209 GWh. This represents a 12.4% month-on-month (MoM) increase and a substantial 64.6% year-on-year (YoY) increase.
* Storage Dominance: Energy storage cells account for approximately 33.6% of the total production mix. This high proportion underscores the shifting center of gravity within the battery industry from purely automotive applications to grid-scale and commercial storage.
* Capacity Tightness: Leading battery manufacturers are reporting sustained tightness in effective capacity, indicating strong order visibility and robust demand for high-quality cells.
* Global Context: Globally, the combined production schedule for November is estimated at 228 GWh, reflecting an 11.2% MoM growth. This confirms that the demand surge is not isolated to China but is part of a broader global trend towards electrification and grid stabilization.

2. Pricing Dynamics: Storage Prices Rebound, PV Prices Under Pressure

The pricing environment in October 2025 revealed a critical inflection point for energy storage systems, while PV upstream materials continued to face downward pressure.

Energy Storage System (ESS) Pricing: Signs of Stabilization and Rebound
October 2025 data for Lithium Iron Phosphate (LFP) battery energy storage systems (excluding commercial/industrial cabinets) indicates a notable recovery in pricing power:
* Overall Average: The weighted average winning bid price rose to 0.5248 RMB/Wh, a 10% month-on-month increase. The average quoted price ranged between 0.43 and 0.7487 RMB/Wh, with an average of 0.5547 RMB/Wh.
* Duration Differentiation:
* 2-Hour Systems: The weighted average winning bid price was 0.5531 RMB/Wh, a 5.5% MoM decrease. Quotes ranged from 0.485 to 0.7487 RMB/Wh. The slight decline here may reflect competitive bidding for shorter-duration, frequency regulation, or peak-shaving applications where technology is more commoditized.
* 4-Hour Systems: The weighted average winning bid price surged to 0.5089 RMB/Wh, a significant 23.23% MoM increase. Quotes ranged from 0.43 to 0.65 RMB/Wh. This sharp rebound in 4-hour systems is particularly bullish, as longer-duration storage is critical for renewable integration and arbitrage. It suggests that buyers are prioritizing quality and reliability over lowest-cost bids for long-duration assets, or that raw material costs for larger packs are being passed through more effectively.

Photovoltaic Supply Chain: Continued Downward Pressure
The PV upstream and midstream sectors continue to grapple with oversupply, leading to price concessions:
* Polysilicon: The price of dense polysilicon stood at 52.00 RMB/kg last week. While stable relative to recent lows, it remains at levels that squeeze margins for non-integrated producers.
* Silicon Wafers: The 183mm N-type monocrystalline silicon wafer market saw low-price transactions at 1.25 RMB/piece, exerting downward pressure on the broader market. The mainstream average price dipped to 1.30 RMB/piece. This indicates that despite production cuts, inventory overhangs persist, forcing sellers to accept lower prices to maintain cash flow.
* Cells and Modules:
* TOPCon Cells: The average price for 210mm N-type cells was 0.30 RMB/W.
* TOPCon Modules: Domestic delivery prices for centralized projects ranged from 0.64 to 0.70 RMB/W, while distributed projects commanded a slight premium, ranging from 0.66 to 0.70 RMB/W. These prices remain near historical lows, limiting profitability for module assemblers unless they have vertically integrated cost advantages.

3. Demand Analysis: Domestic Resilience and Export Surprise

Domestic Market: PV Installation Slowdown vs. Storage Surge
* PV Installations: In September 2025, China’s newly installed PV capacity reached 9.7 GW. While this represents a 31.3% MoM increase, it marks a 53.8% YoY decline. This significant year-over-year drop is largely attributable to the high base effect from the previous year’s rush-to-install before policy changes. However, the cumulative installation from January to September 2025 reached 240.27 GW, a 49.3% YoY increase. This confirms that the domestic market remains large and growing in absolute terms, even if the growth rate is normalizing.
* Storage Tenders: The energy storage sector shows no signs of slowing down. In October 2025, new tenders for Energy Storage EPC/PC (including DC-side equipment), storage systems, and cells totaled 12.7 GW / 38.7 GWh. This represents an impressive 85% YoY growth in capacity scale, although it was an 11.24% MoM decrease from September. The YoY surge validates the thesis that storage is becoming an mandatory and integral component of new renewable energy projects, driven by grid stability requirements and policy mandates.

Overseas Market: Exports Defy Gravity
The most positive surprise in the recent data comes from the export sector, which has outperformed conservative expectations.
* PV Module Exports:
* September Value: Export value reached $2.8 billion, a 39.0% YoY increase and a modest 4.2% MoM decrease.
* September Volume: Export volume was approximately 1.3 billion units (pieces/modules), a staggering ~140% YoY increase and a ~13% MoM decrease.
* Cumulative Performance: From January to September 2025, cumulative export value was $21.2 billion, a 14.0% YoY decrease. Note: The discrepancy between the strong September YoY growth (+39%) and the YTD decline (-14%) suggests that the first half of 2025 was weak, but Q3 has seen a dramatic recovery in outbound shipments. The volume surge (+140% YoY) outpacing value growth (+39% YoY) implies that average selling prices (ASPs) for exports remain under pressure, but volume compensation is driving revenue recovery.
* Inverter Exports:
* September Value: Export value was $713 million, a 5.01% YoY increase and an 18.83% MoM decrease.
* Cumulative Performance: January to September cumulative export value reached $6.758 billion, a 6.76% YoY increase. Unlike modules, inverters have maintained positive YTD growth, indicating stronger pricing power or a more favorable product mix.
* Regional Diversification:
* Europe: Remains the largest market with $2.67 billion in exports (Jan-Sep). However, monthly data shows some volatility, with September 2025 exports to Europe at $264.1 million, a 9.29% YoY decline. This suggests market saturation or inventory digestion in key European markets.
* Asia: The second-largest market with $2.372 billion (Jan-Sep). September exports were $237.1 million, a 3.62% YoY decline.
* Emerging Markets (The Growth Engine):
* Australia: September 2025 exports to Australia surged by over 300% YoY to $62.8 million. This explosive growth highlights Australia as a critical new growth pole, likely driven by residential and commercial storage uptake alongside PV.
* South America: Showed strong resilience with September exports of $52.59 million, a 49.57% YoY increase. Cumulative Jan-Sep exports reached $514.97 million. Despite some monthly fluctuations, the region offers diversified growth potential.
* North America: Exports remain relatively small but stable, with September at $42.69 million (-9.79% YoY). Trade barriers continue to limit direct exports, favoring local manufacturing or third-country transshipment strategies for some players.

4. Policy and Industry Catalysts

Three major developments in November 2025 are reshaping the strategic landscape:

A. National Energy Administration (NEA) Guidelines on Integrated Development
On November 12, 2025, the NEA issued the "Guiding Opinions on Promoting the Integrated and Fusion Development of New Energy."
* Core Objective: To address the challenges of grid absorption and resource allocation caused by the rapid scaling of renewable energy.
* Strategic Shift: The policy mandates a transition from "single-point" renewable projects to multi-dimensional integrated development. This includes:
* Multi-industry collaborative development (e.g., PV + Agriculture, PV + Transportation).
* Diversified non-electric utilization (e.g., green hydrogen, heating).
* Enhanced grid-friendly operation modes.
* Investment Implication: This policy favors large, integrated energy developers and technology providers who can offer holistic solutions (generation + storage + load management) rather than simple equipment suppliers. It creates a moat for companies with strong EPC capabilities and software/platform integration skills.

B. World Power Battery Conference & MIIT Strategic Direction
Held in Yibin, Sichuan, on November 12-13, 2025, the conference featured key remarks from Vice Minister of Industry and Information Technology (MIIT) Xin Guobin.
* Expansion of Application Scenarios: The MIIT emphasized the penetration of electrification into engineering machinery, ships, and robotics, expanding the total addressable market (TAM) for batteries beyond passenger vehicles.
* Four Core Measures for High-Quality Development:
1. Strategic Planning: Formulation of the "15th Five-Year Plan" for intelligent connected new energy vehicles and new battery industries.
2. Application Expansion: Support for battery swapping innovation and Vehicle-to-Grid (V2G) interactions.
3. Governance Framework: Improvement of comprehensive battery utilization regulations and the establishment of a carbon management policy system.
4. International Cooperation: Acceleration of rule and standard alignment to foster a global business environment.
* Investment Implication: The explicit mention of the "15th Five-Year Plan" provides long-term visibility. The focus on carbon management and recycling favors industry leaders with established closed-loop supply chains and ESG compliance capabilities.

C. Strategic Alliance: Hyperstrong and CATL
On November 12, 2025, Hyperstrong (Haibo Sichuang) announced a strategic cooperation agreement with Contemporary Amperex Technology Co. Limited (CATL).
* Deal Structure:
* Procurement Commitment: Hyperstrong agrees to prioritize and purchase a significant volume of cells and system products from CATL.
* Volume Target: Cumulative procurement of no less than 200 GWh between 2026 and 2028.
* CATL’s Commitment: Guarantee of quality, technology access, priority supply, and competitive pricing.
* Deepened Collaboration: Beyond supply, the parties will explore joint establishment of an energy storage industry fund, create an integrated management platform, and collaborate on supply chain and AC-side system component procurement.
* Investment Implication: This deal solidifies the vertical integration trend. For Hyperstrong, it secures supply chain stability and cost competitiveness in a tight market. For CATL, it locks in a major outlet for its capacity. This partnership raises the barrier to entry for smaller integrators who lack such secure, scaled supply relationships, accelerating industry consolidation.

Risks / Headwinds

While the outlook is generally positive, institutional investors must carefully weigh the following risks:

1. Intensified Competition and Margin Compression

• Risk Description: The PV and ESS sectors remain highly fragmented with significant overcapacity in certain mid-stream segments (e.g., modules, standard cells). Despite production cuts, the threat of price wars persists.
• Impact: If demand growth fails to absorb the existing capacity, average selling prices (ASPs) could decline further, eroding gross margins. This is particularly relevant for companies without vertical integration or proprietary technology differentiation. The recent dip in wafer prices and the competitive bidding in 2-hour storage systems are early warning signs.
• Mitigation: Focus on companies with strong brand premiums, overseas exposure (where margins are typically higher), and technological moats (e.g., high-efficiency TOPCon/HJT, long-duration storage tech).

2. Policy Uncertainty and Demand Volatility

• Risk Description: The renewable energy sector is heavily influenced by government policies, including subsidies, grid connection rules, and electricity market reforms.
• Impact:
  • Domestic: Changes in feed-in tariffs, mandatory storage allocation ratios, or delays in grid approval processes could slow down domestic installation rates. The recent YoY decline in PV installations highlights the sensitivity to policy cycles.
  • International: Subsidy schemes in Europe (e.g., REPowerEU implementation speed) and the US (Inflation Reduction Act details) are subject to political shifts. Any rollback or delay could impact export orders.
• Mitigation: Diversification across multiple geographic markets reduces reliance on any single policy regime. Companies with flexible manufacturing footprints can adapt faster.

3. International Trade Frictions and Geopolitical Barriers

• Risk Description: Rising protectionism in key markets poses a significant threat to Chinese exporters.
• Impact:
  • Tariffs: Potential increases in import duties in the US, EU, or India could make Chinese products less competitive.
  • Non-Tariff Barriers: Stricter carbon footprint requirements, supply chain transparency laws (e.g., UFLPA in the US), and anti-subsidy investigations could lead to shipment delays or bans.
  • Market Access: Some countries may restrict foreign participation in critical infrastructure projects, including grid-scale storage.
• Mitigation: Companies are increasingly pursuing "local-for-local" manufacturing strategies (building factories in Hungary, Vietnam, the US, etc.). Investors should favor companies with advanced global manufacturing layouts and robust legal/compliance teams.

4. Raw Material Price Volatility

• Risk Description: While lithium prices have stabilized, they remain subject to fluctuation based on mining output and geopolitical factors. Similarly, polysilicon and silver (used in PV paste) prices can be volatile.
• Impact: Sudden spikes in raw material costs can squeeze margins if companies cannot pass these costs downstream quickly enough. Conversely, rapid price declines can lead to inventory write-downs.
• Mitigation: Long-term supply agreements (like the Hyperstrong-CATL deal) and hedging strategies help mitigate this risk. Vertical integration also provides a natural hedge.

Rating / Sector Outlook

Sector Rating: Outperform (Stronger than Market)

Rationale:
We maintain our Outperform rating on the Power Equipment sector, driven by the following core convictions:

1. Fundamental Bottoming in PV: The PV sector appears to be nearing a cyclical bottom. Production cuts are aligning supply with demand, and export volumes are surging, indicating that global demand remains robust despite trade headwinds. The valuation of many PV stocks has already priced in significant pessimism, offering an attractive risk-reward ratio for contrarian investors.
2. Structural Growth in Energy Storage: ESS is no longer a niche segment but a central pillar of the energy transition. The 85% YoY growth in domestic tenders and the tight capacity among leading battery makers confirm a strong upcycle. The rebound in 4-hour storage prices suggests improving profitability for specialized players.
3. Policy Tailwinds: The NEA’s new guidelines and the MIIT’s strategic roadmap provide clear long-term direction, reducing policy uncertainty and favoring high-quality, integrated players.
4. Export Diversification Success: The surprising strength in exports to Australia, South America, and other emerging markets demonstrates that Chinese companies are successfully diversifying away from traditional saturated markets, unlocking new growth vectors.

Investment Horizon: 6-12 Months

Valuation Perspective:
Many leading companies in the sector are trading at historically low Price-to-Earnings (P/E) ratios, reflecting past concerns over overcapacity. However, given the improving earnings visibility from storage growth and export recovery, we believe the current valuations do not fully reflect the medium-term growth potential. A re-rating is likely as earnings reports in Q4 2025 and Q1 2026 confirm margin stabilization.

Investment View

Based on the analysis of supply, demand, pricing, and policy dynamics, we identify several key investment themes and specific recommendations.

Core Investment Logic

1. Prioritize Energy Storage Integrators with Supply Chain Security:
   The ESS sector is experiencing tighter supply and better pricing power than PV. Companies that have secured long-term cell supply agreements (like Hyperstrong with CATL) or have vertical integration capabilities will enjoy superior margins and delivery reliability. Look for firms with strong expertise in long-duration storage (4h+) systems, as this segment shows the strongest price recovery.

2. Focus on Inverter Leaders with Emerging Market Exposure:
   Inverter exports have shown remarkable resilience (+6.76% YTD growth). Companies with a strong foothold in Australia, South America, and Asia are well-positioned to capitalize on the fastest-growing regional markets. These markets often have less intense competition than Europe and offer higher margins. Additionally, inverters are increasingly becoming "smart energy routers," integrating storage and grid services, which enhances their value proposition.

3. Select PV Leaders with Cost Advantages and Global Footprints:
   While the PV module sector faces challenges, top-tier manufacturers with vertical integration (controlling polysilicon to module) and overseas manufacturing capacity can mitigate trade risks and maintain profitability. Avoid smaller, non-integrated assemblers who are most vulnerable to price wars and inventory write-downs.

4. Beneficiaries of Policy-Driven Integration:
   The NEA’s push for "integrated fusion development" favors companies that can provide whole-system solutions (PV + Storage + Charging + Energy Management Software). Companies with strong R&D in digital energy platforms and V2G technologies will gain a competitive edge in future tenders.

Recommended Stocks

We recommend the following companies, which align with the above logic:

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

• Role: Global leader in solar inverters and energy storage systems.
• Investment Thesis:
  • Dual Engine Growth: Strong presence in both inverter and ESS markets. Sungrow is one of the few companies globally with significant scale in both.
  • Export Strength: Highly diversified global sales network, with strong growth in emerging markets. Beneficiary of the robust inverter export trends.
  • Technology Leadership: Leading position in hybrid inverters and large-scale storage integration, aligning with the trend towards integrated solutions.
  • Financial Health: Strong balance sheet and consistent cash flow generation, allowing for sustained R&D investment.

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

• Role: Leading provider of lithium-ion batteries and energy storage solutions.
• Investment Thesis:
  • Storage Focus: Significant exposure to the high-growth ESS sector. The company has been expanding its capacity and market share in domestic and international storage projects.
  • Valuation Appeal: Often trades at a discount to peers, offering potential upside as the storage narrative strengthens.
  • Technological Edge: Expertise in LFP chemistry and system integration, well-positioned to benefit from the 4-hour storage price rebound.

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

• Role: Manufacturer of solar mounting structures and energy storage enclosures.
• Investment Thesis:
  • Pick-and-Shovel Play: As a supplier of essential structural components, Tongrun benefits from overall volume growth in PV and ESS installations, regardless of module/cell price fluctuations.
  • Export Oriented: Significant portion of revenue comes from overseas markets, benefiting from the weak RMB and strong global demand.
  • Margin Stability: Less exposed to the intense technological obsolescence risks of cells/modules, offering more predictable margins.

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

• Role: Provider of electrical testing and measurement instruments, including for PV and battery systems.
• Investment Thesis:
  • Quality Control Demand: As the industry shifts towards higher quality and safety standards (driven by policy and insurance requirements), demand for advanced testing equipment rises.
  • Niche Leader: Dominant position in specific testing segments, providing a moat against competition.
  • Beneficiary of Capacity Expansion: Both PV and battery manufacturers need testing equipment for new production lines, linking growth to capex cycles.

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

• Role: Specialized in distributed PV inverters and residential storage solutions.
• Investment Thesis:
  • Distributed Focus: Strong presence in the residential and C&I segments, which are less sensitive to utility-scale tender price wars.
  • Emerging Market Growth: Aggressive expansion in high-growth regions like Australia and South America, directly capturing the export growth trends identified in our analysis.
  • Agility: Smaller size allows for quicker adaptation to market changes compared to larger conglomerates.

Strategic Allocation Advice

• Overweight: Energy Storage System Integrators and Inverter Manufacturers with strong emerging market exposure.
• Neutral: Pure-play PV Module Manufacturers (unless vertically integrated with strong cost advantages).
• Underweight: Small-cap, non-integrated PV component suppliers with high debt levels.

Conclusion

The Power Equipment sector is undergoing a qualitative transformation. The era of unchecked capacity expansion is giving way to a period of consolidation, integration, and global diversification. The data from late 2025 confirms that while challenges remain, the fundamental demand drivers—global decarbonization, grid modernization, and energy security—are stronger than ever.

Investors who position themselves in companies with technological leadership, secure supply chains, and diversified global footprints are well-placed to capture the alpha generated by this transition. The unexpected strength in Q3 exports and the robust growth in energy storage tenders provide a solid foundation for optimism heading into 2026. We advise institutional investors to accumulate positions in the recommended names on any market weakness, viewing the current volatility as a buying opportunity in a structurally growing sector.

Appendix: Detailed Data Tables

Table 1: China Inverter Export Breakdown by Region (Jan-Sep 2025)

Source: General Administration of Customs, Aijian Securities Research Institute

Table 2: Key Price Indicators (October-November 2025)

Source: CESA, InfoLink, SMM, Aijian Securities Research Institute

Analyst Certification and Disclosures

Analyst Certification:
The analysts named in this report hereby certify that all of the views expressed herein 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.

Important Disclosures:
* Aijian Securities holds a license for securities investment consulting business approved by the China Securities Regulatory Commission (CSRC).
* This report is intended for institutional clients only. It does not constitute an offer to sell or a solicitation of an offer to buy any securities.
* Investors should be aware that past performance is not indicative of future results. The securities mentioned in this report may not be suitable for all investors, and investors must make their own independent decisions based on their own investment objectives, financial situation, and risk tolerance.
* Conflict of Interest: Aijian Securities may have investment banking relationships with the companies mentioned in this report. Please refer to the full disclosure statement on the Aijian Securities website for detailed information.

Risk Warning:
The securities market involves risks. Investment decisions should be made cautiously. The content of this report is based on information believed to be reliable, but Aijian Securities does not guarantee its accuracy or completeness. The opinions and estimates contained herein are subject to change without notice.

End of Report