SNEC Insights: Strong Energy Storage, Weak Solar; Top Picks: Deye and Hongfa

Overview

This report is based on field research conducted at the 2026 SNEC Photovoltaic Exhibition. Its core conclusion is that ‘energy storage is strong, while photovoltaics are weak.’ The report finds residential energy storage business far more buoyant than expected, whereas the ground-mounted photovoltaic supply chain faces dual pressures of sluggish demand and intensifying competition. In terms of stock selection, the firm prefers companies benefiting from residential storage exports and high-voltage DC technology, while expressing caution about the near-term commercial viability of certain cutting-edge technologies.

Core views

The energy storage sector presents clear structural opportunities, particularly robust performance in residential storage. Data shows that China’s lithium battery exports to its top ten markets increased by 29% year-on-year in the first four months of 2026, with exports to Australia surging 190%, driven primarily by local subsidy programs. With the UK’s Warm Homes Scheme set to take effect by the end of 2026, and with many countries worldwide seeing renewable penetration rates approaching double digits—leading to grid bottlenecks—the policy focus across nations is shifting from merely encouraging PV development to promoting energy storage deployment. Deye, as the global leader in residential storage inverters (with approximately 24% market share in 2024), is seen as a key beneficiary of this trend. By contrast, the outlook for the ground-mounted photovoltaic supply chain appears dimmer. Following China’s transition from fixed feed-in tariffs to market-based pricing in June 2025, PV supply chain demand is expected to weaken in 2026. Meanwhile, non-traditional players—such as BOE and Sungrow—have entered the module manufacturing space, further intensifying competition. On the large-scale storage front, the European Commission banned EU-funded renewable projects using Chinese inverters in April 2026, a move estimated to impact roughly 20% of Europe’s large-scale PV and storage markets, negatively affecting major suppliers like Sungrow but having relatively limited effects on commercial and industrial storage (around 5%). Regarding emerging technologies, the report adopts a cautiously optimistic stance. Although several companies showcased space-grade perovskite batteries at SNEC, given the lengthy validation period required for space environments, practical applications may be slow. Instead, BIPV and smart lock products designed for low-light conditions on Earth are likely to see earlier adoption. Similarly, solid-state transformers (SSTs), due to concerns over grid safety and stability, will likely see gradual rollout; by contrast, the more mature 800V high-voltage DC (HVDC) technology is poised for faster adoption in data centers and other sectors, benefiting Hongfa, which holds approximately 40% of the global HVDC relay market.

Analysis framework

The report employs an analytical framework combining ‘exhibition fieldwork plus macro-policy mapping.’ First, on-site visits to SNEC provide insights into companies’ latest product developments and management feedback, forming a micro-level understanding. Subsequently, these micro observations are linked to broader global energy policy cycles—for example, analyzing how national renewable penetration rates and subsidy policies evolve (from net metering to net billing, from PV subsidies to storage subsidies)—to deduce shifts in industry demand priorities. For technological assessments, the firm applies standard analytical principles of ‘technology maturity and validation timelines,’ distinguishing between conceptual demonstrations and actual commercialization, thereby stratifying investment value across different tech pathways.

Methodology notes

• Industry Analysis FrameworkPenetration Rate S-Curve

  Relationship between renewable penetration rates and energy storage demand

  The report notes that when a country’s renewable penetration rate approaches double digits, grid absorption bottlenecks compel policymakers to shift focus toward energy storage. This represents a typical pattern in the S-curve of new energy development: during early stages, attention is on component installations; once penetration reaches medium-to-high levels, system flexibility resources—namely, energy storage—become the primary growth driver.

• Industry Analysis Framework

  Analysis of Technology Maturity vs. Validation Timelines

  When evaluating perovskite and solid-state transformers, the report did not rely solely on technical specifications but instead emphasized factors such as ‘accumulated spaceflight data duration’ and ‘grid safety validation periods’—non-technical barriers. This approach reminds investors that prototypes displayed in labs or at exhibitions often face significant time lags before scaling up for commercial use, necessitating differentiation between short-term themes and medium-term earnings realization.

• Valuation MethodologyDCF Cash Flow Discounting

  Target price derivation based on long-term cash flow assumptions

  For all covered stocks, the report employed a DCF valuation model, providing detailed disclosures on WACC, future capital expenditures, and terminal growth rates. This reflects the institution’s preference for assessing growth-oriented manufacturing firms based on their ability to generate free cash flow throughout their lifecycle, rather than focusing solely on short-term P/E fluctuations.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Deye (605117.SS)

  Global leader in residential storage inverters, directly benefiting from the global policy pivot toward energy storage and surging overseas demand

  Strengths

  Approximately 24% global market share in residential storage inverters in 2024; launched sixth-generation SiC inverter and a new 125kW model

  Comparison

  Compared to pure PV companies, its business structure aligns better with the current booming energy storage market

  Risks

  Unfavorable changes in overseas residential storage policies; weaker-than-expected PV demand; rising raw material costs; intensifying competition

• Hongfa (code not listed, mentioned in the report)

  With 800V HVDC technology more mature than SSTs, favorable demand for data center power upgrades boosts its relay business

  Strengths

  Approximately 40% global market share in HVDC relays; highly predictable technological path

  Comparison

  Compared to solid-state transformer concept stocks, its earnings realization is more certain

• EVE Energy (300014.SS)

  Among the world’s top three energy storage battery suppliers, aggressive capacity expansion could drive market share gains

  Strengths

  12% global ESS battery market share in 2025; released 628Ah/702Ah high-capacity cells and sodium-ion batteries

  Comparison

  More aggressive capacity expansion than most peers

  Risks

  Profit margins squeezed by competition; potential weakness in lithium battery demand; equity dilution; underperformance in power battery sales; U.S. tariff hikes

• Sungrow (300274.SS)

  Second-largest global energy storage integrator, though its large-scale storage business faces impacts from the EU funding ban

  Strengths

  14% global ESS integrator shipment market share in 2025; launched iSolar software and 5S smart modules

  Weaknesses

  Negative impact of the EU funding ban on its large-scale storage business outweighs its commercial storage strengths

  Comparison

  Compared to companies focused exclusively on residential storage, it has greater exposure to geopolitical risks

  Risks

  Weaker-than-expected global PV/storage demand; intensified integrator competition; rising expenses from expanding sales networks; U.S. tariff hikes

• Siyuan Electric (002028.SS)

  Core player in electrical equipment, benefiting from grid investments and overseas business expansion

  Risks

  Underperforming grid distribution, ultra-high voltage, and new energy investments; raw material inflation; uncertainties in overseas operations

Key data

• China Lithium Battery Export Growth RateYear-on-Year +29%Growth rate of exports to the top ten markets in the first four months of 2026
• Deye Residential Storage Inverter Market ShareApproximately 24%Global market share in 2024
• Proportion of EU Large-Scale Storage Market AffectedApproximately 20%Share of utility-scale PV and storage markets impacted by the EU funding ban
• Hongfa HVDC Relay Market ShareApproximately 40%Global market share of high-voltage DC relays
• EVE Energy Planned New Capacity ExpansionApproximately 260 GWhLFP battery capacity expansion plan

Impact & implications

For the energy storage supply chain, the global policy shift reinforces the logic of exporting residential storage, with companies possessing overseas distribution channels and established brand reputations continuing to benefit. For the photovoltaic manufacturing side, domestic market-based pricing reforms coupled with cross-industry competition may accelerate industry consolidation, increasing survival pressures on second- and third-tier manufacturers. In the grid equipment sector, technological evolution does not happen overnight; solutions with higher maturity and lower retrofit costs—such as HVDC—are likely to appear in financial reports sooner than disruptive innovations like SSTs. Additionally, escalating EU trade barriers require Chinese enterprises to expedite overseas localization efforts or explore non-sensitive markets.

Risks

• Unfavorable changes in overseas residential storage support policies
• Lower-than-expected global PV or energy storage demand
• Sharp increases in raw material costs eroding profit margins
• Intensified industry competition leading to declining profitability
• Trade barriers such as EU funding bans and U.S. tariff hikes
• Delays in commercializing new technologies (perovskite/SST)

What to watch

• Specific implementation details of the UK’s Warm Home Plan by the end of 2026
• Actual impact of the EU funding ban on Chinese companies’ European large-scale storage orders
• Rate of 800V HVDC penetration in data center applications
• Pace of transitions from net metering to net billing across major countries