Shen Wan Hongyuan: Policies accelerate PV supply contraction, and the industry pattern is expected to improve
The Zhitong Finance App learned that Shen Wan Hongyuan released a research report saying that the core logic of this favorable policy is not to “limit production expansion,” but rather to use administrative regulations to accelerate supply contraction, so that leaders with advanced production capacity in stock can obtain a steeper profit recovery slope after demand stabilizes. In the silicon sector, the sharp rise in electricity consumption and water consumption thresholds for new construction has narrowed the overseas and second- and third-tier production expansion windows. The long-term competitive pressure faced by silicon companies with green power support and cost advantages has declined, and the sustainability of profit centers has received additional support. In the battery module sector, although TopCon and xBC preparation processes fall within the scope of export controls for restricted technologies, domestic production expansion is not bound by the conditions of this regulation. Enterprises that have mass-produced N-type high-efficiency products on a large scale and have standardized account period management have expanded their comparative advantage in entering the announcement list and obtaining orders.
Shen Wan Hongyuan's main views are as follows:
incident
On October 16, 2026, the Electronic Information Department of the Ministry of Industry and Information Technology solicited comments on the “PV Manufacturing Industry Specification Conditions (2026 Edition)” and the announcement management measures. The feedback deadline was November 15. Core changes: Polycrystalline and P-type technology entries were completely removed, and efficiency thresholds were classified according to N-type TopCon/HJT/xBC; the efficiency of newly built batteries was raised to 26.0% — 26.6%, and components were raised to 24.0% — 24.4%; the overall power consumption of polycrystalline silicon construction was reduced to 37/15 kWh/kg according to the process route, and the water consumption was changed to a direct limit; the minimum capital ratio for construction and renovation was 30%; industry self-regulation results became a substantive reference for the first time to enter the regulatory announcement list.
The technical entry was “track changed” rather than “fine-tuned”, and the P type was systematically removed from the list at the regulatory level
The total removal of entries for polycrystalline silicon wafers, polycrystalline and P-type battery modules in this revision is the most intense structural switch in the past revisions. The meaning is not that P-type stock production capacity will be shut down the next day, but rather that the “compliance status” of P-type assets in the policy resource allocation system will be cancelled — the reliance on regulatory announcements in processes such as follow-up credit, energy factors, and central state-owned enterprise recruitment standards will form a gradual crowding out of P-type production capacity. At the same time, the N-type interior is also not “one-size-fits-all”: the threshold for new TopCon construction is 26.2% and xBC 26.6%, which directly targets the current level of mass production of leading companies. Second- and third-tier companies that lack large-scale N-type performance may be cleared.
The “superposition constraint” of energy consumption and water consumption and capital capital forms a strong constraint on new production capacity
The new electricity consumption pressure for polycrystalline silicon was 37 kwh/kg and granular silicon was 15 kwh/kg. The water consumption was changed from an indirect assessment of the water reuse rate to a direct limit of 30 m3/ton, and the usage rate of recycled water was uniformly raised to 50%. Adding 30% minimum capital means that new polysilicon or battery projects must simultaneously cross the three thresholds of technical compliance, energy consumption compliance, and sufficient own capital. At a time when cash flow in the industry is generally tight, entities that can meet the three conditions at the same time are extremely limited, and the production expansion model that simply relies on replicating production capacity in regions with low electricity prices has been blocked institutionally.
The self-regulation system is a new change in this revision
The self-regulation results of industry associations were clarified as an important reference for the announcement list, and for the first time, enterprises were required not to maliciously default on payment to suppliers. Essentially, supply chain credit and account period discipline was embedded in the industry entry framework. In the past, the cycle of “grabbing orders at low prices — taking up upstream capital — then expanding production” was marked as an act of non-compliance at the regulatory level. This poses hidden institutional dividends for leading companies with standardized governance and healthy accounts, and creates precise restrictions on enterprises that rely on supply chain accounts to maintain turnover.
Risk warning: The risk that the official draft will significantly weaken efficiency or energy consumption indicators compared to the draft solicitation of comments; the risk that policy implementation is insufficient and that actual restrictions on backward production capacity are lower than expected by regulatory conditions; the risk that global PV demand continues to be under pressure, and the speed of supply clearance will be hedged by a decline in demand.