GTHT has released a research report stating that from 2020 to 2026, after experiencing a period of rapid growth and capacity expansion, the solar industry is now in a consolidation phase. As anti-involution efforts advance and outdated capacity is eliminated, high-quality enterprises will survive the downturn, demand-side growth potential remains substantial, and the sector will usher in a new round of growth. Currently, fund holdings and share prices are both at bottom levels, with some segments recovering first. Considering that market performance typically precedes fundamental improvement, current levels deserve close attention. The main views of GTHT are as follows:
Demand Side: From "Subsidies" and "Subsidy Removal" to "Market-Based Electricity Pricing," Solar Awaits the Next Wave of Growth
From 2000 to 2012, the market was in its early development stage, with growth primarily driven by subsidy policies. Europe's share of global installations rose from 39% in 2002 to 74% in 2011, becoming the core market. Starting in 2013, distributed solar in China began to develop rapidly, with domestic new installations reaching 44.26GW in 2018, accounting for 42% of global capacity and becoming a significant incremental contributor to global installations. Beginning in 2020, "carbon neutrality" led a new round of domestic growth, and under grid parity conditions, solar demand broke free from its past excessive reliance on policy. In 2025, demand entered a phase of periodic adjustment, and the industry is expected to resume growth in 2027. In the long term, solar installation potential remains enormous.
Supply Side: From Rapid Expansion to Comprehensive Oversupply, Supply Continues to Contract Starting in 2025
From 2020 to 2022, prices surged amid tight supply in the supply chain, which simultaneously stimulated supply expansion. As supply expanded rapidly, periodic overcapacity emerged in 2024, with the industry broadly posting losses. In 2025, anti-involution and capacity reduction entered a substantive phase, and new standards will be fully implemented and enforced on January 1, 2027, which is expected to eliminate outdated capacity.
From 2020 to 2026, Share Prices Experienced Three Phases: High Growth, Valuation Contraction, and Bottom Recovery
From 2020 to Q3 2022, carbon neutrality supported the industry's long-term development, geopolitical conflicts heightened the urgency of energy transition, supply-demand relationships returned to a healthy state, and both earnings and industry valuations rose. LONGi Green Energy Technology Co., Ltd. saw its PE (earnings forecast) rise from 16.1 times in January 2020 to 46.7 times in October 2021, as the market awarded a growth premium. From Q4 2022 to Q3 2024, the market anticipated a reversal in supply-demand relationships, supply tightness began to ease, and share prices trended downward. The solar index peaked in Q3 2022, then generally declined from Q4 2022 to Q3 2024, with the solar index falling 24.18% in 2023 and 19.88% in 2024. Some companies such as Sungrow Power Supply Co., Ltd. maintained normal earnings but were dragged down by the overall industry, with PE (earnings forecast) valuations falling back to the 10-20 times range. Starting from Q4 2024, the industry began supply-side clearing and anti-involution efforts. In June 2025, the revised Anti-Unfair Competition Law explicitly prohibited below-cost dumping. The emergence of anti-involution and second growth curves brought some structural improvements in holdings. Some companies such as Deye Co., Ltd. had earnings support, and their share prices showed upward continuity, with PE (earnings forecast) generally fluctuating in the 10-30 times range.
Risk Warnings: Industry policy fluctuation risk; intensifying competition risk; new technology substitution risk; product price fluctuation risk; demand falling short of expectations risk.