Photovoltaic Industry Weekly Report: Stabilization at the Bottom and Structural Opportunities in N-Type & New Technologies

Date: October 28, 2025
Source: Guoxin Securities Market Research Department
Analyst: Zhang Xinyi (S1490522090001)
Rating: Overweight (Sector Outlook)

Executive Summary

The Chinese photovoltaic (PV) sector demonstrated resilience and relative outperformance during the week of October 20–24, 2025. The Shenwan Photovoltaic Equipment Index rose by 3.24%, closely tracking the broader CSI 300 index (+3.24%) and contributing to the strong performance of the Power Equipment sector (+4.90%, ranking 3rd among 31 industries). This weekly report analyzes the current market dynamics, highlighting a stabilization in main supply chain prices, significant policy developments in provincial electricity pricing mechanisms (Qinghai and Hubei), and robust growth in solar power generation capacity utilization.

Our core investment thesis posits that the PV sector has likely bottomed out following previous corrections. We maintain an Overweight rating on the industry, advising institutional investors to focus on two primary structural alpha opportunities:
1. Leaders in N-type Product Mix: Companies with higher proportions of advanced N-type technology production, which offers superior efficiency and margin potential.
2. Pioneers in Next-Generation Technologies: Firms with leading layouts in emerging technologies such as perovskite cells, which represent the next frontier in cost reduction and efficiency gains.

While main chain prices (polysilicon, wafers, cells, modules) remained flat week-over-week, indicating a balance between supply and demand at current levels, the slight decline in silver paste prices (-5.8%) may offer marginal cost relief for cell manufacturers. Policy-wise, the introduction of mechanism-based electricity price bidding in Qinghai and Hubei signals a maturing market structure where renewable energy integration is being managed through more sophisticated pricing mechanisms, potentially stabilizing long-term revenue expectations for project developers.

Key Takeaways

1. Market Performance: Sector Resilience and Divergence

The week ended October 24, 2025, saw broad-based gains in the A-share market, with the Power Equipment sector emerging as a top performer.

• Index Performance:

  • CSI 300 Index: +3.24%
  • Shenwan Power Equipment Index: +4.90% (Outperformed CSI 300 by 1.66 percentage points).
  • Shenwan Photovoltaic Equipment Index: +3.24%.
  • Peer Comparison: Within the power equipment secondary industries, Wind Power Equipment (+6.84%), Motors II (+6.56%), and Batteries (+6.12%) outperformed PV, while Grid Equipment (+3.44%) and Other Power Equipment II (+3.51%) showed moderate gains.

• Stock-Level Divergence:
  Performance within the PV sector was highly differentiated, reflecting investor preference for specific sub-segments and company fundamentals rather than a uniform sector beta play.

  Top Gainers (Weekly)	Top Losers (Weekly)
  Sungrow Power Supply (阳光电源)	LONGi Green Energy (隆基绿能)
  Tongling Shares (通灵股份)	Shuangliang Eco-Energy (双良节能)
  Jingsheng Electromechanical (晶盛机电)	Daqo New Energy (大全能源)
  Micro-Nano (微导纳米)	JA Solar (晶澳科技)
  Hengdian Group DMEGC Magnetics (横店东磁)	Tongwei Co. (通威股份)

  Analysis: The outperformance of equipment manufacturers like Jingsheng Electromechanical and Micro-Nano, alongside inverter leader Sungrow, suggests that investors are favoring companies with strong order books in equipment upgrades and high-margin auxiliary segments. Conversely, the underperformance of integrated module giants like LONGi, JA Solar, and Tongwei indicates lingering concerns over margin compression in the mainstream module segment despite price stabilization.

2. Supply Chain Price Analysis: Stabilization and Cost Dynamics

According to data from Datayes and Solarzoom as of October 22, 2025, the main PV supply chain prices remained stable week-over-week (WoW). This stability is a critical signal that the aggressive price wars of previous periods may be pausing, allowing manufacturers to plan production with greater visibility.

Main Chain Prices (WoW Change: Flat)

Auxiliary Materials

Strategic Insight: The flattening of polysilicon, wafer, cell, and module prices suggests that the industry has reached a temporary equilibrium. The notable 5.8% decline in silver paste prices is a key positive driver for cell manufacturers, particularly those utilizing silver-intensive technologies like HJT (Heterojunction) or advanced TOPCon. This cost reduction can directly enhance profitability in the short term, assuming no corresponding drop in cell selling prices.

3. Policy Developments: Mechanism-Based Pricing in Qinghai and Hubei

Two major provincial announcements this week highlight the evolving landscape of renewable energy pricing in China, moving from fixed feed-in tariffs to competitive, mechanism-based pricing. This shift aims to balance grid stability, consumer costs, and sustainable developer returns.

A. Qinghai Province: 2.241 Billion kWh Mechanism Electricity Bidding

On October 17, 2025, the Qinghai Provincial Development and Reform Commission (DRC) released the "Announcement on the Organization of Bidding for New Energy Mechanism Electricity Prices in 2025."

• Scope: Projects commissioned between June 1, 2025, and December 31, 2025.
• Volume: Total mechanism electricity volume of 2.241 billion kWh.
  • Wind Power: 633 million kWh.
  • Photovoltaic: 1.608 billion kWh (Dominant share).
• Price Bounds:
  • Upper Limit (Cap): 0.24 CNY/kWh for both Wind and PV.
  • Lower Limit (Floor):
    • Wind: 0.205 CNY/kWh.
    • PV: 0.18 CNY/kWh.
• Execution Period: 12 years, starting from January 1, 2026.
• Bidding Caps (Volume Limits):
  • Centralized Projects: $Capacity_{AC} \times Annual Hours \times (1 - Plant Usage Rate) \times Upper Limit Ratio$.
  • Distributed/Decentralized Projects: $Capacity_{AC} \times (1 - Self-Consumption Ratio) \times Annual Hours \times Upper Limit Ratio$.
  • Key Parameters:
    • Annual Utilization Hours: Wind = 1,509 hrs; PV = 1,222 hrs.
    • Plant Usage Rate: Wind = 0.65%; PV = 0.49%.
    • Self-Consumption Ratio (Distributed): 13.12%.
    • Upper Limit Ratio: 40%.

Implication: The establishment of a 12-year contract window with a defined price floor (0.18 CNY/kWh for PV) provides long-term revenue visibility for developers in Qinghai. The 40% cap on mechanism electricity implies that 60% of generation will likely be sold at market rates or through other trading mechanisms, exposing developers to some market volatility but also upside potential if spot prices rise. The relatively low floor price reflects Qinghai’s abundant solar resources and lower marginal cost of generation, but it also sets a benchmark for competitive pricing in western China.

B. Hubei Province: Sustainable Development Price Settlement Mechanism

Also on October 17, 2025, the Hubei Provincial DRC issued the "Hubei Province New Energy Sustainable Development Price Settlement Mechanism Bidding Scheme."

• Eligible Entities:
  • Wind (including decentralized) and Centralized PV projects.
  • Must be fully commissioned after June 1, 2025, or planned for full commissioning before December 31, 2026.
  • Must not have been previously included in any mechanism execution scope.

Implication: Hubei’s scheme aligns with national trends to integrate new renewable capacity into the grid through structured pricing mechanisms. By targeting projects commissioned in the near future (2025–2026), the policy aims to guide investment decisions and ensure that new capacity is economically viable without imposing excessive burdens on the grid or end-users. This reduces policy uncertainty for developers planning projects in central China.

4. Operational Data: Solar Generation Growth Accelerates

Data from the National Bureau of Statistics (NBS) for September 2025 underscores the continued expansion and operational efficiency of the solar sector.

• Overall Power Generation:

  • September Industrial Power Generation: 826.2 billion kWh, +1.5% YoY.
  • Jan–Sep Cumulative: 7,255.7 billion kWh, +1.6% YoY.

• Solar Power Specifics:

  • September Solar Generation Growth: +21.1% YoY.
  • Acceleration: This represents an acceleration of 5.2 percentage points compared to August’s growth rate.
  • Comparative Context:
    • Thermal Power: -5.4% (Turned negative from +1.7% in Aug).
    • Hydropower: +31.9% (Rebounded from -10.1% in Aug).
    • Nuclear Power: +1.6% (Slowed down by 4.3 ppt).
    • Wind Power: -7.6% (Turned negative from +20.2% in Aug).

Analysis: Solar power is the only major renewable source showing accelerating growth in September, outperforming wind and thermal power. The 21.1% increase highlights the successful integration of new capacity installed in late 2024 and early 2025. The divergence between solar (strong growth) and wind (decline) may be attributed to seasonal weather patterns (wind resource variability) and the faster deployment cycle of utility-scale solar projects. This robust operational data supports the fundamental demand for PV equipment and services, validating the sector’s long-term growth trajectory despite short-term price pressures.

Investment View & Strategy

Core Investment Logic: Bottoming Out and Structural Alpha

We believe the PV sector has entered a bottoming phase. The combination of stabilized supply chain prices, accelerating generation growth, and clearer policy frameworks for electricity pricing reduces downside risk. However, broad-based beta returns are less likely than in previous boom cycles. Instead, investors should seek structural alpha driven by technological leadership and cost advantages.

1. Focus on N-Type Technology Leaders

The industry is rapidly transitioning from P-type (PERC) to N-type (TOPCon, HJT, BC) technologies. N-type modules offer higher efficiency, lower degradation, and better temperature coefficients, commanding a premium in high-value markets.
* Investment Criterion: Prioritize companies with a high proportion of N-type product shipments. These firms are better positioned to maintain margins as P-type assets become stranded or commoditized.
* Beneficiaries: Integrated manufacturers who have successfully pivoted their capacity to N-type lines and equipment suppliers enabling this transition.

2. Bet on Next-Generation Tech (Perovskite & Tandem)

As crystalline silicon approaches its theoretical efficiency limit, perovskite and silicon-perovskite tandem cells represent the next disruptive innovation.
* Investment Criterion: Look for companies with leading R&D pipelines, pilot line successes, and clear commercialization roadmaps for perovskite technology. Early movers in this space will capture significant value as the technology matures towards mass production in the late 2020s.
* Beneficiaries: Specialized equipment makers (e.g., coating, laser processing) and innovative cell manufacturers with strong IP portfolios.

3. Equipment and Auxiliary Material Resilience

The weekly performance of stocks like Jingsheng Electromechanical and Sungrow highlights the resilience of the equipment and inverter segments.
* Equipment: As older P-type lines are retrofitted or replaced with N-type capable lines, equipment demand remains robust.
* Inverters/Storage: Companies like Sungrow benefit from the global trend towards hybrid solar-plus-storage systems, diversifying revenue streams beyond pure PV hardware.

Recommended Themes

Risks / Headwinds

While the outlook is constructive, investors must remain vigilant regarding the following risks:

1. Raw Material Price Volatility

• Risk: Although prices are currently stable, any sudden disruption in polysilicon supply or a surge in demand could lead to price spikes, squeezing module margins. Conversely, a further drop in prices could trigger inventory write-downs.
• Monitor: Polysilicon inventory levels, production restarts/idlings, and energy costs in producing regions.

2. Project Commissioning Delays

• Risk: The realization of revenue for equipment and module makers depends on the timely completion of downstream projects. Delays due to grid connection bottlenecks, land acquisition issues, or financing constraints can push revenue recognition into future periods.
• Monitor: Monthly installation data, grid curtailment rates, and policy implementation speed at the local level.

3. Intensifying Trade Frictions

• Risk: The global PV market is subject to geopolitical tensions. Potential tariffs, anti-dumping investigations, or supply chain decoupling efforts in the US, Europe, or India could restrict export opportunities for Chinese manufacturers.
• Monitor: Trade policy announcements from key import markets, localization requirements, and tariff schedules.

4. Technology Iteration Risk

• Risk: Rapid technological changes (e.g., the shift from TOPCon to HJT or Perovskite) can render existing capacity obsolete. Companies that fail to keep pace with tech transitions may face significant asset impairment losses.
• Monitor: Efficiency breakthroughs, CAPEX allocation towards new tech, and patent litigation.

Rating / Sector Outlook

Sector Rating: Overweight (看好)

• Definition: Expected industry index to outperform the market index by more than 5% in the next 6 months.
• Rationale:
  1. Valuation Support: The sector has undergone significant correction, valuing many leaders at historically low multiples relative to their long-term growth potential.
  2. Policy Tailwinds: National and provincial policies (Qinghai, Hubei) are providing clearer pathways for renewable energy integration and pricing, reducing uncertainty.
  3. Demand Resilience: Strong solar generation growth (+21.1% in Sept) confirms robust underlying demand and utilization.
  4. Technological Moat: Leaders in N-type and new technologies are creating widening gaps in efficiency and cost, allowing them to capture disproportionate market share and profits.

Investment Horizon: 6–12 Months.

Detailed Analysis of Market Dynamics

The Significance of Price Stabilization

The week-over-week flatness in polysilicon (51 CNY/kg), wafers (1.40 CNY/piece), cells (0.29 CNY/W), and modules (0.69 CNY/W) is a pivotal development. For the past two years, the PV industry has been characterized by deflationary pressure, where continuous price drops eroded manufacturer margins and delayed investment decisions as buyers waited for lower prices.

Why Stability Matters:
1. Inventory Normalization: Stable prices encourage downstream developers to finalize procurement contracts, reducing the "wait-and-see" behavior. This helps clear manufacturer inventories.
2. Margin Visibility: With input costs (polysilicon, wafers) and output prices (modules) stable, manufacturers can better forecast gross margins. The additional benefit of falling silver paste prices (-5.8%) acts as a direct margin enhancer for cell producers, particularly for those using high-silver-content technologies.
3. Consolidation Acceleration: In a stable but low-price environment, inefficient high-cost producers continue to bleed cash and exit the market, while low-cost leaders gain market share. This consolidation is healthy for the long-term profitability of the sector.

Policy Deep Dive: The Shift to Mechanism-Based Pricing

The announcements from Qinghai and Hubei are not isolated events but part of a broader national strategy to reform renewable energy pricing. Historically, fixed feed-in tariffs guaranteed returns but burdened the subsidy fund. The new Mechanism Electricity Price (机制电价) approach introduces competition and market linkage.

Key Features of the New Mechanism:
* Competitive Bidding: Developers bid for a portion of their output (e.g., up to 40% in Qinghai) at a determined price. This ensures that only efficient projects with competitive cost structures secure long-term contracts.
* Long-Term Contracts (12 Years): Provides bankability. Banks and investors can finance projects with greater confidence knowing that a portion of revenue is locked in for over a decade.
* Hybrid Revenue Model: By capping the mechanism volume (e.g., 40%), the policy forces developers to engage with the spot market or green power trading for the remaining 60%. This encourages flexibility, storage integration, and better grid responsiveness.

Impact on Investors:
* Developers: Need to enhance trading capabilities and optimize project design for both base-load (mechanism) and peak/trading (market) revenue streams.
* Manufacturers: May see demand for modules with better performance in varied conditions (e.g., bifaciality, low-light performance) as developers seek to maximize revenue from the market-traded portion of their generation.

Operational Excellence: Solar vs. Other Renewables

The NBS data showing solar generation growing at 21.1% while wind declined by 7.6% in September is instructive.

• Seasonality vs. Structural Growth: While wind can be seasonal, the magnitude of the divergence suggests structural factors. Solar deployment has been faster and more scalable in recent years. Additionally, solar projects often have shorter construction cycles, allowing them to come online and contribute to generation statistics more quickly than large-scale wind farms.
• Grid Integration: The ability of the grid to absorb 21% more solar power year-over-year indicates improvements in grid infrastructure, storage deployment, and dispatch algorithms. This supports the thesis that grid constraints, often cited as a risk, are being actively managed and improved.

Company-Specific Observations from Weekly Performance

• Sungrow Power Supply (Gainer): As a global leader in inverters and energy storage systems, Sungrow benefits from the global energy transition beyond just PV modules. Its strong performance reflects investor confidence in its diversified product mix and international exposure.
• Jingsheng Electromechanical & Micro-Nano (Gainers): These equipment suppliers are critical enablers of the N-type transition. Their stock strength suggests that the market anticipates continued CAPEX spending by manufacturers to upgrade lines for TOPCon/HJT, even if module CAPEX overall slows.
• LONGi, Tongwei, JA Solar (Losers): These integrated giants face the brunt of intense competition in the standard module market. Their underperformance relative to the sector index highlights investor caution regarding near-term margins in the absence of significant technological differentiation or pricing power. However, for long-term investors, these dips may present entry points if these companies demonstrate successful cost leadership and tech transition.

Conclusion

The Photovoltaic sector is navigating a critical transition phase. The era of indiscriminate growth and easy profits is over, replaced by a landscape defined by technological differentiation, cost leadership, and policy sophistication.

For institutional investors, the current environment offers a compelling risk-reward profile. The sector has bottomed out, evidenced by price stabilization and resilient demand growth. The key to generating alpha lies in selecting companies that are not just participating in the market but are shaping its future through N-type dominance and next-generation technology innovation.

We recommend maintaining an Overweight position in the PV sector, with a strategic tilt towards:
1. Equipment Suppliers enabling the N-type transition.
2. Inverter/Storage Leaders with global diversification.
3. Module Manufacturers with proven N-type scale and emerging perovskite capabilities.

Investors should monitor raw material prices, policy implementation details in key provinces, and trade developments closely, but the long-term trajectory of solar energy as a cornerstone of the global energy mix remains intact and robust.

Disclaimer: This report is based on the "Photovoltaic Industry Weekly Report (20251020-20251024)" issued by Guoxin Securities on October 28, 2025. All data, ratings, and opinions are derived from the source document. This translation and analysis are for informational purposes only and do not constitute investment advice. Investors should conduct their own due diligence.