[Huatai Electric & New Energy] PV Supply-Side Reform Policy Intensified, Focus on Fundamental Bottom-Up Opportunities - 260730

English summary

Both the 'standard' and the 'ruler' have landed. The PV supply-side reform toolkit is expected to accelerate industry survival of the fittest. Ruler: On July 27, the group standard for cost accounting in the PV industry was officially released (led by the PV Industry Association, under the guidance of SAMR and MIIT), which for the first time clarified the cost accounting methodology across the industry, providing a technical ruler for the provision in the Bidding and Tendering Law that 'bids below cost should be rejected.' This strengthens anti-involution efforts in PV, making regulation clearer and more manageable. Standard: On July 21, the final draft of three mandatory national standards for PV energy consumption/efficiency was published, raising the clearing bar again. We estimate that under the new national standards, after formal implementation in 2027, the silicon material/cell segments could clear over 50% / 15%-31% of existing capacity. Consumption tax: On July 17, the Ministry of Finance and other two ministries issued an adjustment to the consumption tax policy for some batteries (PV batteries will be subject to 2% from April 2027 and 4% from April 2028, with phased tax exemptions for next-generation PV technologies such as perovskite, tandem, and gallium arsenide), marking the formal end of the consumption tax exemption for traditional crystalline silicon PV batteries that has lasted over a decade. ...