Photovoltaic Industry Weekly Report: Policy Tailwinds Accelerate Structural Consolidation; Maintain "Overweight" Rating

Date: March 16, 2026
Source: Guoxin Securities Market Research Department
Analyst: Zhang Xinyi (S1490522090001)
Sector Rating: Overweight (Positive)

Executive Summary

The Chinese photovoltaic (PV) sector demonstrated robust relative strength during the week of March 9–13, 2026, driven by a confluence of supportive macro-policy signals and anticipated supply-side structural reforms. The Shenwan Photovoltaic Equipment Index surged 6.86%, significantly outperforming the broader CSI 300 Index (+0.19%) and ranking among the top-performing sub-sectors within the Power Equipment industry. This performance underscores a shifting market sentiment from pure capacity expansion concerns to a focus on quality growth, technological iteration, and policy-driven demand visibility.

The core investment thesis for the coming period rests on three pillars:
1. Policy-Driven Demand Visibility: The release of the "15th Five-Year Plan" and statements from the National Energy Administration (NEA) provide long-term clarity, targeting a doubling of new energy installed capacity to approximately 360 GW by 2035. This establishes a definitive floor for long-term demand.
2. Supply-Side Rationalization & Profit Repair: While upstream prices (polysilicon, wafers, cells) continued their downward trajectory this week, the industry is approaching a critical inflection point where inefficient capacity exits are accelerating. We anticipate that leading enterprises with cost advantages and technological moats will begin to see margin stabilization and subsequent repair.
3. Technological Alpha: The divergence in stock performance highlights the market’s preference for companies leading in next-generation technologies (such as perovskite tandem cells) and integrated solutions (storage + PV), rather than generic manufacturing capacity.

We maintain an "Overweight" rating on the PV sector. Investors are advised to focus on leaders benefiting from supply-side consolidation, companies driving technological iteration (Alpha opportunities), and those positioned to capture marginal demand shifts (Beta opportunities). Key risks remain centered on raw material price volatility, project commissioning delays, and escalating international trade friction.

Key Takeaways

1. Market Performance: Sector Outperformance Led by Inverters and Integrated Leaders

During the reporting week (March 9–13, 2026), the Power Equipment sector (Shenwan Classification) rose by 4.55%, ranking second among all 31 Shenwan industry indices and outperforming the CSI 300 by 4.36 percentage points. Within the secondary industries of Power Equipment, performance was mixed but generally positive for renewable energy segments:

• Photovoltaic Equipment: +6.86%
• Wind Power Equipment: +11.74%
• Battery (Li-ion/Energy Storage): +9.73%
• Other Power Equipment II: -5.44%
• Grid Equipment: -3.87%
• Motors II: -1.90%

Company-Level Divergence:
The rally was not uniform, reflecting a selective market appetite for specific business models and technological leadership.

Analytical Insight: The outperformance of inverter and storage-integrated companies (Sungrow, Deye, Airo) versus pure-play cell/module manufacturers or equipment suppliers suggests that the market is pricing in higher certainty in earnings from the "PV + Storage" synergy and overseas channel strength, while remaining cautious on the immediate profitability of domestic manufacturing capacity.

2. Upstream Price Trends: Continued Deflationary Pressure Across the Chain

Data from Datayes as of March 11, 2026, indicates that the deflationary trend in the PV supply chain persists. Prices across polysilicon, wafers, and cells declined week-over-week, while module prices remained stable at historically low levels. This environment continues to squeeze margins for mid-stream manufacturers but lowers the Levelized Cost of Energy (LCOE) for downstream developers, potentially stimulating demand if financing conditions improve.

Weekly Price Monitoring Table (March 11, 2026)

Implication for Investors:
The stabilization of module prices at 0.84 CNY/W is a critical signal. It suggests that the price war may be reaching its bottom. For integrated leaders with superior cost control, this price level may still offer thin but positive margins, while smaller players operate at a loss. This dynamic reinforces the "survival of the fittest" narrative, favoring large-cap leaders with vertical integration and balance sheet strength.

3. Policy Catalysts: Long-Term Demand Secured by "15th Five-Year Plan" and NEA Targets

The most significant development this week was the articulation of long-term national energy strategy, which provides a robust macro backdrop for the PV industry.

A. National Energy Administration (NEA): 2035 Capacity Doubling Target

In a seminal article titled "Anchoring the Goal of Building a Strong Energy Nation and Promoting Market-Oriented Reforms in the '15th Five-Year Plan' Period," NEA Director Wang Hongzhi outlined the strategic roadmap for China’s energy transition.

• Key Target: By 2035, China’s new energy installed capacity is set to double from the current base of 1.8 billion kW (1,800 GW) to approximately 3,600 GW.
• Strategic Shift: The NEA emphasized a transition from "policy-supported" growth to "market-driven" sustainable growth. This involves:
  • Establishing market mechanisms that reflect the green environmental value of renewable energy.
  • Ensuring that energy markets fairly compensate for reliability, flexibility, and system regulation services.
  • Activating endogenous motivation for green low-carbon development across all market participants.

Research View: This explicit quantitative target removes ambiguity regarding long-term demand. It implies a Compound Annual Growth Rate (CAGR) that requires sustained annual additions well above current records. For investors, this validates the long-term bull case for PV, shifting the debate from "if" demand will grow to "how" the grid will absorb it (hence the focus on storage and grid upgrades).

B. The "15th Five-Year Plan" Outline: Ten Major Clean Energy Bases

On March 13, 2026, Xinhua News Agency published the full text of the "Outline of the 15th Five-Year Plan for National Economic and Social Development," approved by the Fourth Session of the 14th National People's Congress. The Plan reiterates the "Energy Security New Strategy" and outlines specific infrastructure priorities:

1. Non-Fossil Energy Decoupling: Implementation of a "Ten-Year Doubling Action" for non-fossil energy, prioritizing wind, solar, hydro, and nuclear power.
2. Construction of Ten Major Clean Energy Bases:
   • "Three Norths" (Sanbei) Wind/Solar Base: Leveraging vast land resources in Northern, Northwestern, and Northeastern China.
   • Southwest Hydro-Wind-Solar Integration: Combining hydro’s regulatory capability with variable renewables.
   • Coastal Nuclear Power Bases.
   • Offshore Wind Power Bases.
3. Grid and Storage Infrastructure:
   • Acceleration of smart grid construction and optimization of cross-regional transmission channels.
   • Scientific layout of pumped hydro storage and vigorous development of new energy storage (battery, flow, etc.).
   • Goal: Basically complete a unified national electricity market system.

Research View: The emphasis on "bases" and "integration" favors large-scale utility projects and EPC contractors with strong government ties. Furthermore, the explicit mention of "new energy storage" and "smart grids" reinforces the investment logic for the PV + Storage nexus. Companies that can offer integrated solutions (generation + storage + grid interaction) will capture disproportionate value compared to pure hardware suppliers.

C. Regional Implementation: Sichuan and Jiangsu Leading the Charge

Local governments are rapidly aligning with national directives, creating immediate micro-economic drivers.

Sichuan Province (Yibin City): Targeting 40 Billion CNY PV Scale by 2026
On March 9, the Yibin Municipal Development and Reform Commission released its 2026 plan draft:
* 2025 Review: Added 511.95 MW of distributed PV; launched multiple industrial/commercial storage projects (Tianyuan Group, Sichuan Times); built "PV-Storage-Direct Current-Flexible" microgrid demonstrations.
* 2026 Goals:
* PV Industry Scale: Aim for 40 billion CNY in revenue.
* Technology Focus: Accelerate breakthroughs and project attraction in Perovskite Single-Junction and Tandem Cell technologies.
* Broader Context: Also targeting 150 billion CNY in power battery revenue and 10 billion CNY in new energy storage revenue.

Jiangsu Province (Wuxi City): Zero-Carbon Parks and Virtual Power Plants
On March 11, the Wuxi Municipal DRC announced its 2026 government work priorities:
* Green Low-Carbon Development: Strictly curb blind development of "high energy consumption, high emission, low efficiency" projects.
* Infrastructure: Actively develop new energy storage, virtual power plants (VPP), and microgrids.
* Zero-Carbon Zones: Orderly construction of 15 municipal-level zero-carbon industrial parks.
* Market Mechanism: Expand the application of green electricity and green certificates.

Research View: Yibin’s focus on Perovskite highlights the next frontier of technological competition. Investors should monitor companies with credible R&D pipelines in tandem cells. Wuxi’s focus on VPPs and Zero-Carbon Parks creates a direct addressable market for software-enabled energy management systems and distributed storage solutions, benefiting companies like Sungrow and regional integrators.

Investment Logic and Strategic Recommendations

Based on the weekly data and policy developments, we structure our investment framework around three core dimensions: Supply-Side Reform (Profit Repair), Technological Iteration (Alpha), and Demand Margins (Beta).

1. Supply-Side Reform and Profit Repair

The persistent decline in polysilicon and wafer prices (down to 46 CNY/kg and 1.15 CNY/piece respectively) is painful but necessary. It forces high-cost产能 (capacity) out of the market.
* Logic: As capacity clears, the supply-demand balance will tighten. Leaders with lower cash costs and better balance sheets will survive the winter and gain market share.
* Focus: Polysilicon Leaders and Module Integrators. Look for companies with significant operational leverage once prices stabilize. The stabilization of module prices at 0.84 CNY/W is the first sign of this bottoming process.

2. Technological Iteration (Alpha Opportunities)

The market is rewarding innovation. The differential performance of stocks like Airo Energy and Deye versus traditional manufacturers shows a premium on technology.
* Logic: Efficiency gains are the only way to maintain margins in a commoditized market. Next-gen technologies (TOPCon, HJT, BC, and Perovskite Tandems) offer higher efficiency and lower LCOE.
* Focus:
* Cell Technology Leaders: Companies transitioning successfully to N-type technologies.
* Perovskite Pioneers: Given Yibin’s policy push, companies with pilot lines or partnerships in perovskite/silicon tandem cells warrant close monitoring.
* Equipment Makers: While short-term orders may slow, leaders in metallization (silver reduction) and laser processing will see sustained demand from tech upgraders.

3. Demand Margins and System Integration (Beta Opportunities)

Policy targets (360 GW by 2035) and local initiatives (Zero-Carbon Parks) drive volume. However, the bottleneck is shifting from generation to consumption and grid integration.
* Logic: The value chain is moving downstream. Inverters, storage systems, and energy management software are becoming more critical than panels.
* Focus:
* Inverter & Storage Leaders: Sungrow, Ginlong, Deye. These companies benefit from global diversification and the "PV + Storage" bundling trend.
* Virtual Power Plant (VPP) Enablers: Companies involved in digital energy management, particularly in provinces like Jiangsu and Zhejiang where electricity market reforms are advanced.

Recommended Portfolio Structure

Risks / Headwinds

While the outlook is positive, institutional investors must remain cognizant of the following risks:

1. Raw Material Price Volatility:

   • Although prices are falling, sudden fluctuations in polysilicon or silver prices can disrupt cost modeling. Specifically, silver paste prices remain high (22,277 CNY/kg), pressuring margins for cell manufacturers who have not yet fully adopted silver-reduction techniques.

2. Project Commissioning Delays:

   • Despite policy targets, actual project start-ups may lag due to grid connection bottlenecks, financing constraints, or land approval issues. If the "15th Five-Year Plan" projects do not break ground at the expected pace, near-term demand could disappoint.

3. Intensifying Trade Friction:

   • The EU and US continue to scrutinize Chinese PV imports. Potential new tariffs, anti-circumvention investigations, or local content requirements (e.g., in the US IRA context or EU Net-Zero Industry Act) could restrict access to high-margin overseas markets, forcing greater reliance on the competitive domestic market.

4. Technological Obsolescence Risk:

   • The rapid pace of change (P-type to N-type, now to Perovskite) carries execution risk. Companies that bet on the wrong technology path or fail to scale new technologies quickly may face stranded assets.

5. Grid Curtailment Issues:

   • As renewable penetration increases, curtailment rates in key provinces (like Sichuan and Inner Mongolia) may rise if grid infrastructure and storage deployment do not keep pace. This could impact the realized yield of PV projects and dampen investor sentiment.

Rating / Sector Outlook

Sector Rating: Overweight (Positive)

We define "Overweight" as an expectation that the industry index will outperform the market benchmark by more than 5% over the next 6 months.

Rationale for Rating:
* Valuation Support: Many PV stocks are trading at historically low P/E ratios, pricing in significant pessimism about overcapacity. The recent policy announcements provide a catalyst for re-rating.
* Policy Put: The "15th Five-Year Plan" and NEA targets act as a "policy put," ensuring that long-term demand growth is not in question.
* Structural Improvement: The exit of inefficient capacity is improving the competitive landscape for survivors.
* Technological Moat: Leading companies are widening the gap between themselves and laggards through superior technology and global branding.

Outlook:
We expect the sector to exhibit high volatility in the short term as the market digests quarterly earnings and navigates the final stages of price bottoming. However, the medium-to-long-term trend is upward. We anticipate a bifurcation in performance: leaders will recover profits and share prices, while weaker players may face liquidity crises or delisting risks.

Investment View

The week of March 9–13, 2026, marks a pivotal moment for the Chinese PV industry. The convergence of definitive long-term policy targets (360 GW by 2035) and tangible supply-side clearing (falling upstream prices, stabilizing module prices) creates a compelling setup for strategic accumulation.

For Institutional Investors:

1. Shift from Beta to Alpha: The era of buying any PV stock and riding the sector wave is over. Future returns will be driven by stock selection based on technological leadership, cost advantage, and global market access.
2. Monitor the "Storage" Link: The integration of PV with storage is no longer optional; it is a policy mandate. Companies with strong energy storage businesses (like Sungrow and Deye) are better hedged against pure PV cyclicality.
3. Watch the Perovskite Timeline: Keep a close watch on developments in Yibin and other tech hubs. Commercial breakthroughs in perovskite-silicon tandem cells could trigger a new super-cycle of equipment replacement and efficiency gains.
4. Patience on Price Bottom: While module prices have stabilized, profit recovery will take time. Do not expect immediate V-shaped earnings rebounds. Instead, look for quarter-over-quarter improvements in gross margins and cash flow as indicators of turning fundamentals.

Conclusion:
We recommend maintaining an Overweight position in the PV sector, with a focus on high-quality leaders. The current dislocation between negative short-term sentiment (price wars) and positive long-term fundamentals (policy support, energy transition) offers an attractive entry point for disciplined, long-term capital. The "15th Five-Year Plan" has laid the tracks; the market now needs to identify the trains that will run fastest on them.

Disclaimer: This report is prepared by Guoxin Securities Market Research Department for institutional clients only. The information contained herein is believed to be reliable but is not guaranteed as to accuracy or completeness. The opinions expressed are subject to change without notice. This report 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.