Solar PV valuation bottoming and supply-demand improvement create selective opportunities, while energy storage and nuclear power trends remain positive

Overview

The report comprehensively assesses recent developments in China’s solar PV, energy storage, nuclear power, and data center power equipment sectors. The solar PV sector rebounded on regulatory expectations, corporate earnings guidance, and low valuations. J.P. Morgan believes that seasonal demand recovery in H2 2026, partial production suspensions, and price compliance regulation may improve solar glass supply-demand. Although energy storage installed capacity data contain statistical contradictions, tender growth and higher utilization hours support a demand recovery in the second half. Nuclear power approvals continue to accelerate, benefiting operators’ capacity expansion. The 800V DC architecture for data centers is viewed as an incremental configuration rather than a full replacement of traditional AC systems.

Core views

The solar PV industry has not yet fully emerged from fundamental pressure, and the actual impact of anti-involution measures is also below previous expectations; therefore, it is more suitable to select companies bottom-up with valuations at the bottom and clearer supply-demand inflection points. In energy storage, differences between data from the National Energy Administration and the China Electricity Council may stem from coverage scope, commissioning confirmation standards, and statistical timing; tender volume of 248GWh indicates that potential demand has not disappeared, but is waiting for local policies and revenue mechanisms to become clear. Faster nuclear power approvals and construction are consistent with carbon neutrality goals and will enhance operators’ earnings through installed capacity expansion and improved electricity pricing mechanisms. The 800V DC architecture will not overturn demand for low-voltage electrical equipment in the short term, but may change part of the product mix and foster opportunities in new power electronics equipment.

Analysis framework

The report combines industry supply-demand analysis, policy event tracking, cross-source statistical methodology checks, relative valuation and rating comparisons, and interviews on technology roadmaps. Solar PV judgments focus on installations, production suspensions, regulation, and valuation; energy storage judgments compare installed capacity and tender data from the National Energy Administration, the China Electricity Council, and BJX; nuclear power judgments are based on approval numbers, investment scale, and the benefit path for operators; 800V DC judgments are derived from exchanges with industrial companies and assessments of commercialization progress.

Methodology notes

• Industry analysisSupply-demand and cycle analysis

  Identify industry inflection points through demand recovery, supply contraction, and changes in inventories or prices.

  The report combines seasonal recovery in solar PV demand in H2 2026 with production pauses, judging that solar glass supply-demand is expected to improve sequentially, although overall industry pressure has not fully dissipated.

• Data analysisCross-source methodology reconciliation

  Compare data coverage, confirmation standards, and statistical timing across different institutions to avoid directly interpreting surface-level differences as trend reversals.

  The report notes that the discrepancy between the National Energy Administration’s 45GWh and the China Electricity Council’s 60GWh energy storage data may result from sample scope, grid-connection and commissioning confirmation, and reporting lags, and uses tender volume to help assess true demand.

• Valuation analysisRelative valuation and cycle inflection point

  During periods of industry weakness, combine historically low valuations with medium-term earnings reversal to screen targets.

  The average share price of covered solar PV companies fell by about 30%, significantly underperforming the Shanghai Composite Index’s decline of about 4%; based on this, the report selectively upgrades solar glass companies rather than turning broadly bullish on the sector.

• Policy analysisPolicy transmission analysis

  Assess how regulation, compensation mechanisms, and approval systems affect prices, project starts, and corporate earnings.

  The report analyzes the impact of price compliance guidance, energy storage capacity compensation standards, and nuclear power project approvals on solar PV price stabilization, conversion of energy storage projects, and nuclear installed capacity growth.

• Technical analysisTechnology substitution and incremental market assessment

  Distinguish the substitution effect of new technologies on existing architectures from the new product demand they create.

  800V DC is judged to be an edge configuration for data centers and will not fully replace AC backbone systems, but it may promote commercialization of next-generation products such as solid-state transformers.

Asset mapping & comparison

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

• Xinyi Solar (0968.HK) and Flat Glass (6865.HK)

  Beneficiaries in solar glass, upgraded to Overweight.

  Strengths

  Valuations are at low levels, supply-demand is expected to improve sequentially in H2 2026, and there is earnings reversal potential in 2027–2028.

  Weaknesses

  Current industry fundamentals remain under pressure, and demand recovery and production suspension discipline still need to be verified.

  Comparison

  Compared with other solar PV companies with higher valuations or weaker fundamentals, the risk-reward is more attractive.

  Risks

  Solar PV installations below expectations, insufficient capacity exits, continued price competition, and limited effectiveness of regulatory measures.

• Daqo (DQ) and GCL Tech (3800.HK)

  Preferred targets in the polysilicon segment, maintained at Overweight.

  Strengths

  A polysilicon price recovery and expectations of regulatory intervention can improve market sentiment, and valuations are attractive.

  Weaknesses

  The industry still faces oversupply and earnings pressure.

  Comparison

  The report’s view on the two is more positive than on peers such as Tongwei, whose valuation appeal is insufficient.

  Risks

  Unsustainable price rebound, weaker-than-expected regulatory implementation, and renewed deterioration in supply-demand.

• LONGi Green (601012.SS) and Shenzhen SC (300724.SZ)

  Upgraded from Underweight to Neutral.

  Strengths

  Share prices and valuations have adjusted significantly, and further downside has narrowed.

  Weaknesses

  There is still a lack of a clear earnings inflection point sufficient to support an Overweight rating.

  Comparison

  Ratings have improved, but investment appeal remains below preferred solar glass and polysilicon targets rated Overweight.

  Risks

  Industry competition, weak equipment demand, and slower-than-expected margin recovery.

• Tongwei (600438.SS) and Maxwell (300751.SZ)

  Maintained at Underweight.

  Strengths

  They have industry positions or technological foundations.

  Weaknesses

  Current valuations lack appeal and do not fully reflect industry pressure.

  Comparison

  Risk-reward is weaker compared with Daqo, GCL Tech, and solar glass companies.

  Risks

  Valuation derating, downward revisions to earnings expectations, and continued industry overcapacity.

• Sungrow (300274.SZ) and Deye (605117.SS)

  Preferred energy storage targets, maintained at Overweight.

  Strengths

  Sungrow’s valuation is pressured by geopolitical concerns, while Deye benefits from energy storage growth in emerging markets; both can benefit from a recovery in China’s energy storage demand.

  Weaknesses

  Installed capacity data are divergent, and project starts are affected by policy and revenue mechanisms.

  Comparison

  Against the backdrop of sufficient energy storage project reserves and higher utilization hours, they offer greater flexibility than targets purely dependent on short-term installed capacity data.

  Risks

  Delays in local policies, overseas market volatility, geopolitics, and tenders failing to convert into revenue in a timely manner.

• CGN Power (1816.HK)

  Core beneficiary of nuclear power expansion, maintained at Overweight.

  Strengths

  Benefits from long-term installed capacity growth driven by carbon neutrality and improvement in the nuclear power tariff mechanism, with relatively high visibility in earnings growth.

  Weaknesses

  Nuclear power projects have long construction cycles and require large capital investment.

  Comparison

  Compared with more cyclical solar PV manufacturing companies, its growth is mainly driven by approvals, installed capacity, and the tariff mechanism.

  Risks

  Project delays, capital expenditure overruns, changes in the approval pace, and less-than-expected tariff improvements.

• Data center power equipment and solid-state transformer value chain

  Potential incremental opportunities brought by the 800V DC architecture.

  Strengths

  Some Chinese suppliers have already provided prototypes to U.S. cloud service providers, and next-generation power equipment may form a new growth curve.

  Weaknesses

  Commercialization is expected only in late 2027 or 2028, with limited short-term revenue contribution.

  Comparison

  800V DC is more likely to supplement rather than fully replace the traditional AC backbone architecture, so demand for traditional low-voltage electrical equipment does not need to be completely dismissed.

  Risks

  Changes in technology roadmap, failed customer validation, delayed commercialization, and overseas supply chain restrictions.

Key data

• One-day gain in polysilicon futuresAbout 9%August 3, 2026.
• Average share price gain of polysilicon and solar glass companiesAbout 10%The Shanghai Composite Index and Hang Seng China Enterprises Index were broadly flat over the same period.
• Average decline of covered solar PV companiesAbout 30%Compared with a decline of about 4% in the Shanghai Composite Index, valuations of many companies are close to the cyclical bottom.
• New energy storage installed capacity in H1 2026 according to the National Energy Administration45GWh, down 17% year-on-yearThe statistical scope is more comprehensive, confirmation standards may be stricter, and reporting lags may also exist.
• Electrochemical energy storage installed capacity in H1 2026 according to the China Electricity Council60GWh, up 78% year-on-yearMainly covers 24 corporate member units of the National Power Safety Production Committee.
• New tenders for energy storage systems and EPC in H1 2026248GWh, up 40% year-on-yearStrong tenders indicate sufficient project reserves, but some projects are still waiting for local implementation rules and revenue models to be clarified.
• Change in equivalent utilization hours for energy storageUp 9 hours year-on-year in State Grid areas and up 41 hours year-on-year in China Southern Power Grid areasHigher dispatch frequency is expected to improve cash flow for energy storage power stations.
• Local energy storage capacity compensation standardsRMB165–370/kW per yearImplementation progress and standards vary significantly by province, increasing uncertainty over project returns.
• New nuclear power project approvals4 projects, 8 unitsApproved by China’s State Council on July 31, 2026.
• Estimated investment in new nuclear power projectsMore than RMB170 billionThe projects involve CNNC, CGN, and SPIC, and will use technologies such as Hualong One 2.0 and Guohe One.
• Expected commercialization timing for 800V DC-related productsLate 2027 or 2028Some Chinese suppliers have already provided prototype products to U.S. cloud service providers.

Impact & implications

Investment implications show clear structural divergence. The short-term rebound in the solar PV sector does not equate to a full industry recovery; solar glass and polysilicon companies with low valuations and earnings reversal potential in 2027–2028 are more attractive. The speed at which energy storage tenders convert into installed capacity depends on local policies, capacity compensation, and project revenue mechanisms, but project reserves and utilization improvements support medium-term demand. Increased nuclear power approvals provide operators with highly visible long-term capacity growth. In power equipment, expectations for traditional businesses do not need to be comprehensively lowered due to the 800V DC architecture, while attention should be paid to incremental opportunities from solid-state transformers and new DC equipment.

Risks

• The effects of anti-involution and price compliance regulation in solar PV are below expectations, with continued oversupply and price competition.
• Solar PV demand recovery in H2 2026 is weaker than seasonal expectations, delaying improvement in solar glass supply-demand.
• Inconsistent energy storage statistical methodologies between the National Energy Administration and the China Electricity Council may lead to bias in trend judgments.
• Local energy storage implementation rules and capacity compensation mechanisms remain unclear, preventing tendered projects from starting construction or connecting to the grid in a timely manner.
• Nuclear power projects face risks related to approvals, construction progress, capital expenditure, and changes in tariff mechanisms.
• Geopolitical factors affect overseas business and valuations of companies such as Sungrow.
• Customer validation or commercialization timing for 800V DC-related products is later than the 2027–2028 expectation.
• J.P. Morgan has market-making, client service, or other commercial relationships with some covered companies; investors should assess potential conflicts of interest together with the disclosures.

What to watch

• Subsequent enforcement of solar PV price compliance regulation, capacity standards, and cost accounting discipline.
• China’s new solar PV installations, module prices, and solar glass production suspensions in H2 2026.
• Latest guidance from Xinyi Solar and Flat Glass on second-half recovery and the 2027–2028 earnings reversal.
• Subsequent revisions to energy storage data from the National Energy Administration and the China Electricity Council, and explanations of statistical methodologies.
• The speed at which 248GWh of energy storage tenders convert into actual construction starts, grid connection, and revenue recognition.
• Implementation progress of provincial energy storage capacity compensation standards, revenue mechanisms, and Doc 114 rules.
• Construction start pace, equipment procurement, and changes in installed capacity and tariffs for CGN Power related to new nuclear units.
• Cloud service provider validation progress for 800V DC prototype products and the 2027–2028 commercialization timetable.