J.P. Morgan China Utilities & Renewables: CPIA Sees Solar Decline; Grid Capex and Offshore Wind Expansion
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The China Photovoltaic Industry Association (CPIA) expects domestic solar installations to drop from 315GW in 2025 to a range of 180-240GW in 2026. However, J.P. Morgan projects a more moderate decline to 265GW. The solar industry's central themes remain anti-involution policies and emerging market expansion, supporting Overweight ratings on Daqo New Energy (DQ US, target $38.0), GCL Technology (3800 HK, target HK$1.7), and Arctech Solar (688408 CH, target RMB67.0).
Fujian province announced 10 offshore wind projects totaling 5.9GW for 2026. J.P. Morgan anticipates national offshore wind installations will reach 15GW, benefiting specialized manufacturers like Orient Cable (603606 CH, Overweight, target RMB68.0), which holds high entry barriers in submarine cable manufacturing.
State Grid's 2026 capital expenditure is projected to grow at least 10% to RMB 720-780 billion. Investment priorities include over RMB 100 billion annually in ultra-high-voltage (UHV) transmission. State Grid is also pushing anti-involution procurement practices, likely driving equipment price rebounds of 5-30%. Energy storage investment is slated to exceed RMB 60 billion, focusing on grid-forming technologies. Key product localization for converter valves, IGBTs, and tap changers will accelerate. Industry top picks include Nari Technology, Sieyuan Electric, and Huaming Power Equipment. Conversely, Tongwei and Longi maintain Underweight ratings due to prolonged polysilicon downcycles and intensifying competition.