Detailed Breakdown: A Complete Overview of Investment Logic in the Core New Energy Sector

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(1) Energy Storage: Overseas Policy Restart Drives Demand Revival, While Domestic Utility-Scale and Industrial & Commercial Storage Co-Build Growth

Residential storage: Early on, directly driven by overseas policy subsidies, new installed capacity in 2021-2023 showed rapid growth. By the end of 2023 through 2024, subsidies began to be phased out, and after that terminal demand started to decline. In 2025, residential storage continues to de-stock, and inventories have already returned to normal.

Recently, several overseas countries have successively issued relevant subsidy policies. For example: the UK government announced the “Warm Homes Plan,” with 15 billion pounds sterling, providing upgrades to the energy facilities of up to 5 million households in the form of grants and loans. The gradual cancellation of net metering tariffs in the Netherlands is expected to encourage more citizens to install home battery energy storage systems. In Australia, in December 2025, the government announced that over the next 4 years it will significantly increase the residential storage subsidy budget from the previously estimated AUD 2.3 billion to AUD 7.2 billion.

With structural drivers combined with energy security, residential storage in 2026 is expected to maintain steady growth.

Industrial & commercial storage: Overseas industrial & commercial energy storage—especially in Europe—benefits from lower supply-chain costs and the promotion of dynamic electricity pricing. The market scale is growing rapidly. In 2024-2025, European countries rolled out multiple new policies in quick succession. With tax exemptions, subsidies, pricing mechanisms, and streamlined processes all working together, these opened policy support windows for industrial & commercial storage. As countries implement dynamic electricity pricing, it expands arbitrage space and increases storage profitability, thereby driving development of industrial & commercial storage. This year, industrial & commercial storage in Europe is expected to gradually come online, and the number of projects is expected to grow rapidly.

Domestically, for now, industrial & commercial storage has relatively higher initial costs and relatively lower utilization rates, so demand is comparatively limited. Going forward, as electricity market liberalization continues to advance, application scenarios such as virtual power plants and distributed PV paired with storage are expected to open up growth space for domestic industrial & commercial storage.

Utility-scale storage: Similarly, rising energy prices are expected to keep pushing the market to continuously seek alternative energy sources. By 2025, the share of wind and solar power in Europe has already reached 30%+. Equipping with utility-scale storage helps smooth spot-cost fluctuations on the generation side and reduce curtailment rates. In the U.S., the first batch of OBBB implementations is unaffected by negative factors; projects that were already signed contracts or had begun construction last year are also not impacted. Meanwhile, the short-term lapse of fentanyl and equivalent tariffs issues provides some marginal positive news, which is beneficial for stabilizing U.S. storage sentiment. In addition, the explosive demand for AI data centers in the U.S. means that U.S. electricity still faces a clear shortfall. Orders for AI data center storage and power provisioning in North America are expected to be gradually released. Last week, there was already a company announcement saying it has obtained data-center storage and power orders, which is also a strong confidence boost for the sector. Emerging markets, such as the Middle East, South America, Australia, and Southeast Asia, are driven by weak grid infrastructure + power shortages + growth in demand from the development of new energy, and domestic players are also competing to go overseas.

Domestically, after new energy has fully entered the market, electricity prices decline, the peak-to-valley price spread widens. Through self-generation paired with storage, returns are expected to improve. In addition, capacity electricity price policies across various provinces have been introduced, along with corresponding subsidies, improving project IRR levels. Further, the nodes for pairing storage in each province are relatively limited, so it is essentially a first-come, first-served situation. As a result, overall investment enthusiasm domestically remains high, which could catalyze the utility-scale storage market.

To sum up at the end: Overall, the energy storage sector is broadly positive. Residential storage has completed de-stocking. Multiple countries overseas have restarted subsidies, and steady growth is expected in 2026. European industrial & commercial storage may rapidly scale up thanks to electricity-price and policy dividends. In utility-scale storage, demand in both Europe, the U.S., and emerging markets remains solid. Domestically, supported by policy backing for capacity electricity prices, investment enthusiasm is high, and the overall market has clear catalysts.

(2) Lithium Batteries: Downstream Demand Resilience Becomes Evident, Supporting Industry Upside in Battery Production Scheduling

Downstream demand mainly comes from two areas: one is energy storage, which we mentioned earlier also has solid demand; the other is power—batteries used in new energy vehicles.

In China: Sales of electric vehicles are expected to bottom out and stabilize, and the amount of battery power per vehicle has increased significantly. In February, China’s average battery charge per new energy vehicle rose 52.6% year over year and 27.5% month over month. On the one hand, this is because the MIIT has stipulated that starting in 2026, plug-in hybrids and pure electric vehicles must exceed 100 km of range to be eligible for purchase-tax exemptions, so automakers have increased battery capacity per vehicle. On the other hand, for 2026, the “old-for-new” subsidy is changing from a fixed amount to a subsidy based on a proportion of the vehicle price, so subsidy declines for low-priced vehicles are significant. Domestic lithium battery demand still has a certain level of resilience.

Overseas: Regional differentiation is fairly clear. Nordic countries, supported by early policy backing and market acceptance, have become core highlands for EV penetration rates and sales share. In major markets such as the UK, Germany, and France, subsidy policies continue to be increased and implemented, and local EV consumption demand is expected to be released quickly. From domestic auto export data, in January and February automobile exports grew nearly 70% year over year, outperforming expectations. At the same time, due to energy security concerns, the cost-effectiveness of new energy vehicles is also improving continuously, and export space is expected to open up.

Returning to the lithium battery industry chain, in March, both battery production scheduling and shipments achieved solid growth year over year, and monthly production reached a historical high. In April, production scheduling is expected to move marginally higher, and sustained demand is expected to gradually dispel market concerns. Some upstream segments with relatively better industry structure may see renewed expectations of price increases. Specifically, at the current point in time, the separator segment may be relatively better, because unit profits are at a cyclical low and the industry structure is also still relatively sound, with no companies making moves to expand capacity.

Overall, the lithium battery industry’s demand has resilience. Downstream is mainly driven by both energy storage and power: in China, sales of new energy vehicles are expected to bottom out and stabilize; overseas, there is clear regional differentiation, with Nordic penetration leading, and subsidies in the UK, Germany, France, and others being increased—overseas demand is expected to continue to be released. Battery-side production scheduling remains favorable: March saw a large year-over-year and month-over-month increase, and April is expected to continue improving. Some upstream segments with a relatively better industry structure may again start pricing-in expectations of higher prices. Among them, the separator segment has a better structure and profits are at a low level, giving it a certain relative advantage.

(3) Solid-State Batteries: Industrialization Accelerates, and Space Applications Open Long-Term Potential

As a next-generation battery technology, solid-state batteries are expected to improve safety, energy density, and application scenarios, thereby triggering an industry revolution. On the policy side, it is still the most core driving force for the industrialization of solid-state batteries. Multiple national departments have proposed giving key support to the development of solid-state batteries. Currently, the technology is still focused on sulfide-based all-solid-state solutions, aiming at 27-year vehicle demonstration operations.

Looking back at 2025, under strong national support, solid-state batteries saw top companies and the industrial chain continuously step up efforts. Breakthroughs occurred on both the equipment and materials sides, and pilot lines have been gradually implemented, with mass production progress better than previously expected. The market is showing a state of comprehensive expansion and diffusion, and it has further spilled over to traditional lithium battery equipment manufacturers and material manufacturers.

Looking ahead to 2026, at the beginning of the year, mid-term reviews at the cell level will begin. If things go smoothly, it will move into pack-level testing, and vehicle road-test validation will be conducted; in the second half of the year, GWh-level mass production lines are expected to be completed. We believe the key catalysts in 2026 lie in the tendering of GWh-level mass production lines and road testing of solid-state-related vehicle models. Recently, leading battery manufacturers have successively initiated tenders, indicating that the industrialization of solid-state batteries has entered an acceleration phase. At the same time, the industrial side is steadily advancing as well—multiple battery companies and automakers are also accelerating product line validation work.

In addition, space is further opening up imagination space for solid-state batteries. During satellite operation, satellites enter the Earth’s shadow region and require an energy storage system to provide power. Low Earth Orbit satellites need to experience “polar night” for 30 minutes every 90 minutes. Those 30 minutes rely on demand for high-energy-density batteries. If the battery’s energy density is insufficient, the satellite will be very heavy, causing launch costs to skyrocket. Moreover, the space system features vacuum, extreme temperature differences, and high radiation. Solid-state batteries have advantages such as a wide operating temperature range, high safety (low risk of catching fire), resistance to radiation without outgassing and swelling, and high energy density—so they naturally fit complex space environments better. Currently, countries around the world are accelerating validation and development. Nissan and the U.S. NASA are jointly developing solid-state batteries, aiming for deployment and use in 2028.

From an investment perspective: In equipment, as “shovels,” it is expected to fully benefit from the start of the new technology cycle. The equipment’s key changes are concentrated in the front-end and mid-end process steps. In front-end steps, new processes such as dry mixing, fiberization, and roll-to-roll film formation are widely adopted, and equipment value has increased substantially. Mid-end steps involve new key processes such as isostatic pressing, where both technical difficulty and value have risen clearly. Back-end steps require relatively smaller equipment changes, mainly imposing higher requirements on existing equipment. In materials, technology solutions gradually converge, and the sulfide route remains the most common choice. As of now, the industrialization progress of sulfide electrolytes is clearly accelerating, and low-cost solutions are emerging. Competition has intensified somewhat, but future space and flexibility will be greater.

In summary, solid-state batteries may enter an accelerated industrialization period in 2026, with relatively dense catalysts: in 2025 the industrial chain has already achieved breakthroughs on both materials and equipment sides, and pilot lines have been put into operation; in 2026, the focus may be on advancing cell validation, vehicle road tests, and the tendering of GWh-level mass production lines, accelerating the pace of industrialization. At the same time, solid-state batteries—thanks to advantages such as high safety, high energy density, and wide temperature range—are suitable for space scenarios like low Earth orbit satellites, opening up new growth space. The equipment segment, as “shovels,” will fully benefit from the start of the new technology cycle.

(4) Photovoltaics: Terminal Demand Is Relatively Weak; Overseas Incremental Orders Are the Core Highlight

In the photovoltaics sector: Upstream prices are falling, while downstream quotes lack support. Recently, the market activity of silicon feedstock has stayed at a low level, and transaction prices have continued to decline further. For cells, some are supported in the short term by export tax rebates, which helps prop up current prices. However, even where some cells have relatively stable domestic and overseas orders, their prices still follow the decline of the cost line. For modules, recent domestic market prices have remained stable. But from the perspective of market demand, overall terminal demand is still running at a low level, and the market lacks clear incremental momentum.

The biggest current highlight in the photovoltaics sector is still the team led by Elon Musk. On March 21, Musk officially announced the launch of the TERAFAB project jointly with SpaceX, Tesla, and xAI—starting a massive chip manufacturing facility targeting 1 terawatt (1TW) of annual computing capacity. The plan is to integrate logic chips, memory chips, and advanced packaging in the same factory. Eighty percent of the capacity will directly serve space missions, while 20% will focus on the ground. In addition, Musk emphasized that most of the computing power exceeding 1TW every year must go to space. Terafab is a crucial “supporting and enhancement” link in the space computing power chain. As space computing gradually moves toward engineering, photovoltaics are a core supporting component.

Musk proposed that SpaceX and Tesla plan to build a total of 200GW of photovoltaic capacity in the U.S. within the next three years. Tesla and SpaceX are expected to build 100GW each: Tesla focuses on ground photovoltaics, while SpaceX focuses on space photovoltaics. The two teams may each conduct plant inspections in their respective domains. Considering maturity and cost-effectiveness, Tesla may be more inclined to TOPCon batteries, while SpaceX may focus in the short to medium term on P-type HJT heterojunction batteries, and gradually shift in the long term toward silicon-crystal–perovskite tandem batteries.

At present, Tesla’s ground photovoltaics team has purchased domestic PV equipment. The 10GW order for Phase I has been finalized, and the pace for a 40GW order is accelerating. SpaceX’s space photovoltaics team has also entered the batch procurement stage, and certainty in order delivery has been gradually increasing. The spillover value of later plans is worth continued tracking.

To sum up again: Current terminal demand for photovoltaics remains relatively weak. The sector’s core focus is Musk’s team: the TERAFAB space computing project is taking shape, and photovoltaics are one of its key supporting components. Tesla and SpaceX plan to build 200GW of photovoltaic capacity over three years, have already purchased equipment domestically, and orders are accelerating their delivery—bringing clear incremental momentum and catalysts to the industry.

(5) Wind Power: Clear Policy Targets and High Certainty of Offshore Wind Capacity Drive a Basic-Fundamentals Recovery

Overseas: In 2022, affected by the Russia-Ukraine conflict, Europe’s awareness of energy security independence gradually increased, and it actively promoted offshore wind power project installation. In 2023, countries faced unfavorable factors such as rising interest rates and inflation globally. At the same time, offshore wind turbine prices increased due to higher supply-chain costs, leading to higher offshore wind construction costs. Some offshore wind projects experienced halts in construction. As a result, offshore wind project installations in 2023-2025 had not yet taken off.

To address offshore wind cost issues, European countries are gradually beginning to explore tendering projects with subsidies and joint cross-border offshore wind development. Recently, the UK government announced it would remove tariffs on 33 industrial products used in offshore wind power manufacturing. The new tariff policy will take effect on April 1. This step aims to reduce costs for UK manufacturers. It is expected to save millions of pounds per year for UK manufacturers, accelerating the country’s clean energy transition. The UK government’s tariff reductions, to a certain extent, reflect a softening stance toward wind power imports, while strengthening support for domestic manufacturing. They are expected to benefit some companies that have capacity layout plans in the UK.

Domestically: Actually, during the 14th Five-Year Plan period, domestic offshore wind development was relatively sluggish. The average annual newly added grid-connected capacity in 2022-2025 was only about 5.4GW, which is far opposite to the sharp growth seen in the photovoltaics and onshore wind sectors. Therefore, during the 15th Five-Year Plan period, offshore wind has relatively larger potential for growth. Meanwhile, on March 13, the “15th Five-Year Plan Outline” was released. It proposes, for offshore wind power, building offshore wind power bases in the Bohai, Yellow, East China, and South China Sea areas, and advancing deepwater offshore wind power development in a standardized and orderly manner. Offshore wind power should achieve cumulative grid-connected installed capacity of 100 million kilowatts or more. According to data from the National Energy Administration, as of December 2025, the country’s offshore wind power cumulative grid-connected capacity was 0.47 billion kilowatts. That means there is still more than half the space left to meet the planned target, indicating that the average annual installed capacity during the “15th Five-Year Plan” period will be at least 10GW.

Overall: Wind power’s fundamentals will be much better than photovoltaics. On the one hand, wind power generation is more consistent than solar power, and many power operators now prefer to allocate wind power. On the other hand, wind power companies’ profitability is also much better than photovoltaics. The delivery ratio of domestic onshore wind price-increase orders has been rising. Combined with the increasing share of offshore wind and overseas projects, it is expected to support a recovery in profitability for turbine manufacturers.

Cycle prosperity turning upward—focus on the ChiNext New Energy ETF(159387) for layout: 20cm up/down range coverage of all-in-one for wind/solar/storage/lithium—up to 2026-03-13. In the ChiNext New Energy Index, the energy storage content is 48%, and the solid-state battery content is 44%. The index composition is relatively comprehensive. Investors interested are welcome to consider and arrange the layout.

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