Photovoltaic Industry Weekly Report: Price Stabilization and Policy Evolution Signal Bottoming Process

Date: September 23, 2025
Source: Market Research Department, Guoxin Securities
Analyst: Zhang Xinyi (S1490522090001)
Rating: Overweight (Sector Outlook)

Executive Summary

The Chinese photovoltaic (PV) sector demonstrated resilience during the week of September 15–19, 2025, amidst a broader market correction. While the CSI 300 Index declined by 0.44%, the Power Equipment sector (Shenwan classification) outperformed significantly, rising by 3.07% and ranking second among all 31 industry indices. Within this sector, performance was bifurcated; while the broader PV Equipment index dipped slightly by 0.84%, sub-sectors such as Batteries (+5.56%) and Wind Power (+5.26%) posted strong gains. This divergence suggests a rotational dynamic where investors are selectively positioning in areas with clearer immediate catalysts or defensive characteristics.

Fundamentally, the core PV supply chain has entered a phase of price stabilization. Key materials, including polysilicon, wafers, cells, and modules, showed flat week-on-week pricing, with only marginal increases in polysilicon and photovoltaic glass. This stabilization is a critical signal that the intense price wars characterizing the previous cycles may be abating, allowing margins to find a floor.

On the policy front, significant developments in Heilongjiang, Hebei, and Ningxia indicate a deepening市场化 (market-oriented) reform in renewable energy pricing and allocation. The introduction of competitive bidding mechanisms for incremental projects in Heilongjiang and Ningxia, alongside the approval of large-scale offshore PV projects in Hebei, underscores the government’s commitment to structured growth rather than unchecked expansion. These policies aim to balance grid stability, consumer affordability, and developer profitability.

We maintain an Overweight rating on the PV sector. We believe the sector has bottomed out following earlier corrections. Investment strategies should now pivot towards companies with high proportions of N-type product capacity and those leading in next-generation technologies such as perovskite. The stabilization of prices combined with policy clarity provides a conducive environment for valuation repair.

Key Takeaways

1. Market Performance: Relative Strength Amidst Volatility

The week of September 15–19, 2025, highlighted the relative strength of the power equipment sector against the broader A-share market backdrop.

• Broad Market Context: The CSI 300 Index closed down 0.44%. Out of the 31 Shenwan industry indices, 13 recorded gains, indicating a mixed but cautiously optimistic market sentiment.
• Sector Outperformance: The Power Equipment Index rose by 3.07%, outperforming the CSI 300 by 3.51 percentage points (pct). This places it as the second-best performing industry for the week, reflecting renewed institutional interest in the energy transition theme.

• Sub-Sector Divergence: Performance within the secondary industries of Power Equipment was varied:

  • Batteries (Shenwan): +5.56%
  • Wind Power Equipment (Shenwan): +5.26%
  • Motor II (Shenwan): +4.01%
  • Grid Equipment (Shenwan): +2.06%
  • Other Power Equipment II (Shenwan): -0.81%
  • PV Equipment (Shenwan): -0.84%

  Analysis: The slight underperformance of the specific PV Equipment index (-0.84%) compared to its peers (Batteries and Wind) suggests that while the broader energy theme is attractive, capital is currently favoring segments with potentially faster earnings visibility or less overcapacity concern. However, the decline is modest, indicating a lack of aggressive selling pressure.

• Individual Company Movements:

  • Top Gainers: Jingsheng Electromechanical, Eging Photovoltaic, Tongling Shares, Autowell, and Mubang High-Tech led the gains. These companies are often associated with equipment manufacturing or specialized niche markets, suggesting investor preference for upstream technology providers or firms with strong order books.
  • Top Decliners: Saiwu Technology, Jinko Solar, Hongyuan Green Energy, Shangneng Electric, and Almaden experienced the steepest declines. The presence of major module manufacturers like Jinko Solar among the decliners may reflect lingering concerns about module margin compression despite price stabilization, or profit-taking after recent rallies.

2. Supply Chain Pricing: Signs of Stabilization

According to data from Datayes (as of September 17, 2025), the main PV supply chain prices have stabilized, marking a potential turning point from the deflationary trend observed in prior quarters.

Interpretation: The stabilization across the value chain—from polysilicon to modules—is a pivotal development. For several quarters, the industry has grappled with prices falling below cash costs for many producers. The fact that polysilicon saw a slight uptick (+1 Yuan/kg) while other segments remained flat suggests that the deepest part of the price correction may be over. This environment allows manufacturers to focus on operational efficiency and technology differentiation rather than survival via predatory pricing. For investors, this reduces the uncertainty surrounding future earnings reports, as revenue visibility improves with stable average selling prices (ASPs).

3. Policy Developments: Structured Market Reforms

Three major policy announcements this week highlight the evolving regulatory landscape in China’s renewable energy sector, focusing on competitive bidding, offshore expansion, and price mechanism reforms.

A. Heilongjiang: Incremental New Energy Competitive Bidding Scheme

On September 16, the State Grid New Energy Cloud released a draft for public comment on the "Heilongjiang Province Incremental New Energy Project Competitive Bidding Work Plan."

• Scope: Applies to wind, centralized PV, and distributed PV projects approved/filed after June 1, 2025, that are fully grid-connected and have not previously been included in the mechanism execution scope. Excludes external transmission supporting power sources.
• Grid Connection Definition:
  • Wind/Centralized PV: Determined by the latest of three dates: the grid connection time on the power business license, the time in the grid dispatch agreement, or the corporate committed grid connection time. Verified by the Provincial Power Company.
  • Distributed PV: Based on the grid connection and power delivery time specified in the grid enterprise’s marketing system.
  • Phased Projects: Can participate in bidding by phase/batch, with grid connection times determined accordingly.
• Bidding Mechanism:
  • Bidding is organized separately for Wind and PV categories, with specific mechanism electricity volume scales set for each.
  • Scales are determined based on new energy classification planning targets and annual projected commissioning status.
  • If competition is insufficient (few participants or small scale), categories may be merged for unified bidding.
• Clearing Conditions: A declaration sufficiency test is conducted before price clearing. If the participating electricity volume does not meet the sufficiency requirement, the total mechanism electricity volume for that type is reduced until the minimum requirement is met.

Investment Implication: This move towards competitive bidding for incremental projects in Heilongjiang signals a shift from administrative allocation to market-driven selection. It encourages efficiency and cost competitiveness among developers. For equipment suppliers, this may pressure costs further but ensures that only viable, well-planned projects proceed, reducing the risk of stranded assets.

B. Hebei: 2GW Offshore PV Project Awards

On September 17, the Hebei Provincial Development and Reform Commission announced the proposed arrangement for the "Qinhuangdao City 'Wind-Solar Co-location' Offshore PV Project." Five projects totaling 2,000 MW (2 GW) were公示 (publicly公示ed) after meeting sea-use conditions and receiving grid company support.

• Project Allocation:
  • China National Building Material (CNBM): 2 projects, totaling 700 MW.
  • CECEP (China Energy Conservation and Environmental Protection Group): 1 project, 500 MW.
  • Dongfang Electric Corporation: 1 project, 400 MW.
  • PowerChina (Zhongdian Jian): 1 project, 400 MW.

Investment Implication: The approval of 2GW of offshore PV capacity is a significant milestone for the "Wind-Solar Co-location" model. Offshore PV presents higher technical barriers and maintenance challenges compared to land-based systems, favoring established state-owned enterprises (SOEs) with strong balance sheets and technical expertise. This development opens a new growth avenue for PV module manufacturers capable of producing high-durability, corrosion-resistant modules, as well as for specialized mounting system providers. The dominance of central SOEs in these awards reinforces their role as the primary drivers of large-scale infrastructure deployment.

C. Ningxia: Deepening Market-Oriented Electricity Price Reform

On September 15, the Ningxia Development and Reform Commission and the Northwest Regulatory Bureau of the National Energy Administration issued the "Implementation Plan for Deepening the Market-Oriented Reform of New Energy Feed-in Tariffs in the Autonomous Region." Effective October 1, 2025, this plan introduces distinct mechanisms for existing ("stock") and new ("incremental") projects.

1. Existing Projects (Stock):
* Definition: Projects commissioned before June 1, 2025.
* Mechanism Electricity Volume:
* Distributed/Decentralized: 100% of on-grid electricity included.
* Centralized Subsidized Projects: 10% included.
* Centralized Parity Projects (commissioned before June 1, 2024): 30% included.
* Centralized Parity Projects (commissioned on/after June 1, 2024): 10% included.
* Mechanism Price: Fixed at Ningxia’s coal-fired benchmark price of 0.2595 RMB/kWh.
* Duration: Until the earlier of reaching the full lifecycle reasonable utilization hours or 20 years of operation. Subsidized projects retain original subsidy standards within reasonable utilization hours.

2. Incremental Projects (New):
* Definition: Projects commissioned on/after June 1, 2025.
* Mechanism Electricity Volume: Initially aligned with existing non-marketized proportions. Annual additions adjusted based on national renewable consumption weight targets and user affordability.
* Participation: Voluntary bidding for projects already commissioned or to be commissioned within the next 12 months, not yet in the mechanism scope.
* Bidding Price Range:
* Cap: 0.2595 RMB/kWh (Coal benchmark).
* Floor: 0.18 RMB/kWh.
* Note: Prices determined by lowest-to-highest bid sorting. The mechanism price is set at the highest quoted price among selected projects, but cannot exceed the cap. Adjustments possible based on market conditions.
* Duration: 12 years for incremental projects included in the mechanism.
* Special Cases: Village-level poverty alleviation PV stations follow agricultural department policies.

Investment Implication: The Ningxia policy is a sophisticated attempt to balance market forces with social stability. By setting a price floor (0.18 RMB/kWh) and cap (0.2595 RMB/kWh), the regulator prevents destructive price wars while ensuring consumers are not exposed to excessive costs. The 12-year fixed term for new projects provides long-term revenue visibility, which is crucial for financing. However, the lower bound of 0.18 RMB/kWh implies that developers must achieve extremely low Levelized Cost of Energy (LCOE) to remain profitable. This favors technologically advanced players with high-efficiency N-type modules and superior operational management. It also accelerates the retirement or retrofitting of older, less efficient assets.

Risks / Headwinds

While the outlook is constructive, investors must remain cognizant of the following risks that could impede sector recovery or impact individual company performance:

1. Raw Material Price Volatility:
   Although prices stabilized this week, the PV supply chain remains sensitive to fluctuations in key inputs such as polysilicon, silver paste, and aluminum frames. Unexpected spikes in raw material costs, driven by energy price shifts or supply disruptions, could compress manufacturing margins, particularly for integrated players who cannot fully pass these costs downstream. Conversely, a renewed drop in polysilicon prices could trigger inventory write-downs.

2. Project Commencement Delays:
   The realization of revenue for equipment manufacturers and EPC contractors depends on the timely commencement and completion of downstream projects. Delays in project approvals, land acquisition, grid connection permits, or financing can push revenue recognition into future periods. The new competitive bidding mechanisms in provinces like Heilongjiang and Ningxia may introduce additional administrative lead times as market participants adapt to the new rules.

3. Intensifying Trade Frictions:
   The global trade environment for Chinese PV products remains fraught with tension. Potential increases in tariffs, anti-dumping duties, or non-tariff barriers in key export markets (such as the US, EU, and India) could restrict access to high-margin overseas markets. This would force greater reliance on the domestic market, where competition is fiercer and margins are thinner. Companies with limited geographic diversification are particularly exposed to this risk.

4. Technology Iteration Risks:
   The rapid transition from P-type to N-type technologies (TOPCon, HJT) and the emerging potential of perovskite cells create a risk of technological obsolescence. Companies that fail to keep pace with these transitions may find their existing production lines becoming stranded assets. Capital expenditure requirements for upgrading facilities are substantial, posing a financial burden on highly leveraged firms.

5. Policy Execution Uncertainty:
   While the policy direction is clear, the actual implementation details—such as the specific allocation of mechanism electricity volumes in Ningxia or the sufficiency thresholds in Heilongjiang—may vary. Deviations from expected policy outcomes could impact project Internal Rates of Return (IRR) and developer willingness to invest.

Rating / Sector Outlook

Sector Rating: Overweight (Positive)

We maintain a Positive outlook on the Photovoltaic sector. Our rating is defined as an expectation that the industry index will outperform the market index by more than 5% over the next six months.

Rationale for Rating:
1. Valuation Bottom: The sector has undergone a significant correction, valuing many leading companies at historically low multiples. The current price levels largely reflect the worst-case scenarios regarding overcapacity and margin compression.
2. Price Stabilization: The week-on-week stability in polysilicon, wafer, cell, and module prices suggests that the supply-demand imbalance is being managed through production adjustments and demand growth. This removes a major overhang on earnings visibility.
3. Policy Support: The detailed policy frameworks in Ningxia and Heilongjiang provide a structured path for growth. The emphasis on market-oriented pricing with protective floors ensures sustainable development rather than boom-bust cycles. The approval of large offshore projects in Hebei demonstrates continued government commitment to renewable energy infrastructure.
4. Technological Alpha: The shift towards N-type technologies and innovations like perovskite offers opportunities for differentiated returns. Companies leading in these areas can command premium pricing and capture market share from laggards.

Investment View

Based on the current market dynamics, policy environment, and industry trends, we recommend the following investment strategies for institutional investors:

1. Focus on N-Type Technology Leaders

The industry is in the midst of a definitive technology transition from P-type PERC to N-type (TOPCon and HJT). N-type modules offer higher efficiency, better temperature coefficients, and lower degradation rates, making them increasingly preferred in competitive bidding environments like Ningxia’s, where LCOE is the key determinant.
* Strategy: Prioritize companies with high proportions of N-type production capacity and strong R&D capabilities. These firms are better positioned to maintain margins and secure orders in a price-sensitive market.
* Key Metrics to Watch: N-type shipment ratios, conversion efficiency records, and non-silicon cost reductions.

2. Bet on Next-Generation Technology (Perovskite)

While crystalline silicon dominates today, perovskite technology represents the next frontier in PV efficiency. Early movers in perovskite R&D and pilot production lines are likely to enjoy significant valuation premiums as the technology approaches commercial viability.
* Strategy: Allocate a portion of the portfolio to companies with leading perovskite layouts. These investments are higher risk but offer asymmetric upside potential as the technology matures.
* Catalysts: Breakthroughs in stability and large-area module efficiency, announcement of GW-scale pilot lines.

3. Selective Exposure to Equipment Manufacturers

The stabilization of module prices and the ongoing technology upgrade cycle benefit upstream equipment manufacturers. As developers replace older lines with N-type compatible equipment, demand for advanced deposition, printing, and automation tools remains robust.
* Strategy: Consider companies like Jingsheng Electromechanical and Autowell, which showed strong stock performance this week. These companies are critical enablers of the industry’s technological upgrade and often have visibility into future capex plans before module makers report earnings.

4. Monitor Offshore PV Supply Chain

The approval of the 2GW Qinhuangdao offshore project highlights the emerging offshore PV segment. This niche requires specialized materials resistant to harsh marine environments.
* Strategy: Identify suppliers of high-durability glass, corrosion-resistant frames, and specialized floating mounting systems. While the market is currently smaller than land-based PV, it offers higher barriers to entry and potentially better margins.

Conclusion

The Photovoltaic sector is navigating a complex transition from a period of chaotic expansion to one of structured, quality-driven growth. The stabilization of prices and the introduction of sophisticated market mechanisms in key provinces are positive signs of maturation. Investors should look beyond the headline volatility and focus on companies that are technologically superior, financially resilient, and well-positioned to benefit from the next wave of policy-driven demand. The current bottoming process offers an attractive entry point for long-term capital willing to tolerate short-term fluctuations in exchange for exposure to the global energy transition.

Disclaimer: This report is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult with financial advisors before making investment decisions. The views expressed herein are subject to change without notice.