New Photovoltaic Policy Implemented: Can Graded and Classified Module Standards Become the “Turning Anchor” of the Policy Mix?

```

This approval draft divides photovoltaic modules into four levels: A+/A/B/C. This administrative and market-oriented classification aims to forcibly raise market entry costs by adopting an “efficiency threshold” as an asymmetric tool. For different technology routes such as TOPCon, HJT, BC, the mandatory increase in minimum efficiency (e.g., TOPCon 23.4%, etc.) means “low-efficiency capacity not only cannot be sold, but will also face punitive costs of being completely marginalized by the market.”

Based on calculations of mainstream and champion products, a total of 327.6GW/153.6GW of capacity could be eliminated, with clearing rates of 33%/15%. On the demand side, there are also turning signals: the 2026 forecast for new PV installations in China has been raised from 200GW at the beginning of the year to 235GW, implying year-on-year growth of over 30% in the second half. From the perspective of the industrial chain conduction, leading battery and module companies, as direct beneficiaries of the efficiency threshold, will be the first to experience profit recovery. Paste enterprises (copper-clad silver, copper electroplating) are also expected to see increased processing fee margins amid accelerated adoption of base metals.

I. What happened? New policy implementation

In June 2026, the MIIT released the industrial standard for photovoltaic module grading and categorization, significantly raising the efficiency threshold for A+ modules. This marks that the regulation of China’s PV industry has officially shifted from "flexible self-discipline" to "rigid access thresholds + grading value system." Compared with former national mandatory standards, the A+ TOPCon module efficiency requirement is sharply raised from the national standard Level 1 of 23.6% to ≥25%, and BC module from 24.8% to ≥25.2%, far exceeding market expectations. The underlying logic of this adjustment is shifting from passive compliance of “meeting the minimum” to active competition for “achieving A+ grade”—non-compliant modules can still circulate, but core channels such as central state-owned enterprise centralized procurement will endorse only grade A and above, significantly compressing the price room for low-end modules.

Currently, the average pullback for the PV sector is 36%. With a combination of dense policy actions, rising demand expectations, and improved competitive dynamics, the PV industry may be welcoming a critical window for bottom consolidation.

In 2026, the supply-demand imbalance in the photovoltaic industry has reached a survival threshold for the sector. By Q1 2026, the entire industry faced severe overcapacity: polysilicon capacity exceeded 3.5 million tons, whereas global demand was only about 1.2 million tons; wafer, cell, and module capacity each surpassed 1000GW, while global new installations are only expected to be 550-600GW, with a supply-demand ratio over 2:1 and average industry operating rate below 40%. In Q1 2026, 22 listed PV companies incurred a total loss of RMB 10.554 billion, with the main industry chain suffering losses for ten consecutive quarters—the longest loss cycle in PV history.

Given this supply-demand mismatch, capacity control and standards upgrade have become definite policy directions to push for market clearing. The Electronics Department of MIIT clearly positioned 2026 as a key year for PV industry governance, aiming to promote the orderly exit of outdated capacity through market and legal measures.

Compared to the consultation draft of previous mandatory national standards, the efficiency threshold in this MIIT approval draft has seen a comprehensive and significant increase. The minimum A+ level efficiency for TOPCon modules jumps from 23.6% to 25%, an increase of 1.4 percentage points; HJT A+ goes from 23.9% to 24.8%; BC A+ from 24.8% to 25.2%.

The deeper implication of the threshold surge is the shift from “just meeting the standard” to “graded pricing.” Bifaciality is included in the grading requirement—minimum 75% for TOPCon, 85% for HJT, 70% for BC—further raising production line and equipment requirements. Unlike the previous "one-size-fits-all" regulatory approach, the grading standard breaks the deadlock of homogenized product evaluation, supporting quality capacity with rigid standards and clearing out outdated, inefficient capacity.

II. Why is it important? Reshaping the landscape

① Supply-side clearing estimates: Increased concentration among leading players

According to the approval draft, based on mainstream product power and line retrofitting potential, the estimated cleanable capacity for TOPCon/HJT/BC is 317.5/10.2/0GW, with clearing rates of 38%, 19%, and 0% respectively, totaling 327.6GW and a 33% clearing rate. If battery and module companies continue to iterate technology and products reach current champion efficiency levels post-standard implementation, the total clearable capacity is 153.6GW, a 15% clearing rate. TOPCon is the tech route with the highest absolute cleared capacity.

Of note, for BC technology, cleared capacity is 0GW in both calculations, representing the current most efficient module tech and suggesting a clear first-mover advantage under the new standard. The raised standard may pressure TOPCon firms to speed up upgrades, with many efficiency-boosting methods—multiple busbars, backside power increase, high-purity homogeneous silicon, broad-spectrum anti-reflection structures, full-area passivation processes—likely to be adopted at scale.

SMM analysis notes that domestic module production lines currently have an operation rate of around 35%, with nearly 40% of capacity in long-term suspension, mainly outdated lines. The pace of capacity clearing at the industry’s bottom is a key forward-looking indicator of an inflection point.

② First-mover advantage of leading companies under the new standard

By 2025, the global PV module market was highly concentrated. Jinko Solar (86.8GW) and LONGi Green Energy (86.58GW) were tied for first globally, JA Solar (69.56GW) and Trina Solar (67GW+) tied for second, with Tongwei (43.25GW) in fifth. The top 10 firms shipped over 536GW combined, with the top four between 60–90GW and 5–10th places between 20–43GW, showing clear stratification. China’s module capacity accounted for over 80% of global share.

Under the grading system, leading firms’ first-mover advantage comes in three ways: BC technology’s cleared capacity is 0GW, meaning companies like LONGi and Aikosolar with deep BC portfolios are unaffected at the threshold, and can boost A+ shipments; Top-tier TOPCon companies already possess TOPCON 3.0+ technology able to break the 25% threshold; with the industry rushing to adopt multiple busbars, backside power, and other efficiency enhancements, R&D-invested leaders will obtain first-mover advantages as new technologies are adopted en masse.

③ PV demand inflection point: Goldman Sachs raises China’s 2026 installation forecast to 235GW

The most notable demand-side factor is Goldman Sachs’ repricing of China’s PV demand. The latest GS report indicates several manufacturers expect 2026 installations in China to be revised up from 200GW to 220–240GW (GS estimates 235GW), implying a >30% year-on-year increase in the latter half. This momentum is credited to the impact of “Document 136” being milder than expected and improved economics driving higher distributed PV demand.

On a micro level, Goldman’s demand rebound forecast is supported by two structural factors: first, the new distributed PV policy resolves core grid-connection bottlenecks; new models (green power direct connection, storage integration, etc.) ease absorption pressures; second, though new domestic installations fell in Q1, Q1 module exports surged 122.81% quarter-on-quarter, with hot export orders acting as a buffer for softening domestic demand.

In the next 12 months, the market will see a marked “scissors gap” in gross margins. Leading firms with BC, TOPCon 3.0, and HJT technology will see negotiating power strengthen as A+/A grades rise in proportion; second-tier players unable to cover R&D will fall into a negative cycle of “shrinking R&D → falling performance → shrinking bids → cash flow depletion.”

III. What to watch next? Understanding short, medium, and long-term rhythm

① Leading battery/module companies: Direct efficiency threshold beneficiaries

As the new standard drives the industry’s transition to “efficiency upgrade + profit recovery,” leaders able to meet A+ efficiency out of the gate and scale shipments will directly benefit from enhanced product premium and rising market share.

② Paste/base metal industry chain: Amplifiers of cost-reduction trends

Silver-clad copper and copper electroplating tech are main cost-reduction avenues for 2026 PV. With silver prices high and PV demand rising, the sector is now in full consensus to accelerate adoption of copper-based technologies. Leading paste firms are set to benefit first in this cost-down cycle, growing fee margins.

Competition in PV is shifting from power output races to scenario definition and technology platform extension. The energy consumption threshold across the chain keeps rising. Auxiliary material segments like paste face pressing need for tech iteration and product upgrade as well, but those with cost and technological advantages will clinch more secure downstream orders and greater pricing power.

③ Perovskite/BIPV: Structural breakthrough in long-term space

With efficiency thresholds sharply raised, perovskite/tandem technologies as the next-generation efficiency breakthrough paths are entering accelerated industrialization. Meanwhile, BIPV (building-integrated photovoltaics) scenarios—under new distributed policies—are opening new demand space, providing a differentiated value growth point for leading companies beyond efficiency upgrades.

Summary & industry judgment—

Judgment 1: The substantial efficiency-raising of MIIT’s module grading standard marks the shift in domestic PV regulation from “market self-discipline + verbal persuasion” toward “rigid tech access threshold + precise grading value system.” Policy tools are likely to accelerate capacity clearing, favoring high-efficiency cells like BC/HJT/TOPCon 3.0, while technologically lagging or underfunded 2nd/3rd-tier companies will likely be cleared out.

Judgment 2: The PV sector’s “price–volume–profit” triple inflection points are approaching simultaneously. Price: Premium advantages for high-power modules will continue, and BC/TOPCon price spreads are widening; Volume: Goldman’s 2026 new installation raise to 235GW implies >30% H2 growth; Profit: With standards implemented, low-efficiency capacity clearing and leader shipment gains will drive bottom-line repair.

Judgment 3: The current PV sector’s average market pullback is 36%, near a three-year low. Focus on three lines: module leaders benefiting directly from efficiency thresholds; paste/base metal chains at the cost/volume inflection; and tech-prepared companies in long-term growth segments like perovskite/BIPV.

Risk Disclosure and DisclaimerThe market has risks, investment should be cautious. This article does not constitute personal investment advice and does not consider individuals' special investment objectives, financial situations, or needs. Investors should consider whether the views/opinions/conclusions herein fit their personal circumstances. Investments based on this article are at your own risk. ```