CITIC SEC released a research report stating that the cancellation of the value-added tax (VAT) export rebate for products like solar panels, effective from April, will, in the short term, directly increase export costs and put pressure on the profitability of solar and energy storage enterprises. It is anticipated that module shipments will surge rapidly during the window period before the policy takes effect. According to SMM's calculations, solar module exports may decline by 5%-10% after the export rebate cancellation becomes effective. In the long run, the report suggests that the "involution" in the solar industry, previously driven by low-price, disorderly competition, is expected to ease. Technological innovation, iteration, and brand building are likely to become the primary focus, accelerating the phase-out of obsolete capacity. Leading companies are expected to further increase their market share, potentially ushering the solar industry into a new phase of high-quality development. The report recommends investment opportunities in solar and energy storage. CITIC SEC's main views are as follows:
Event: On January 9, 2026, the Ministry of Finance and the State Taxation Administration issued an "Announcement on Adjusting the Export Tax Rebate Policy for Photovoltaic and Other Products," stipulating that: 1) From April 1, 2026, the VAT export rebate for photovoltaic and other products will be cancelled; 2) From April 1, 2026, to December 31, 2026, the VAT export rebate rate for battery products will be reduced from 9% to 6%; from January 1, 2027, the VAT export rebate for battery products will be cancelled.
Short-term Impact: Overseas module exports are expected to surge rapidly during the window period, leading to a short-term recovery in industry demand. In the short term, the cancellation of the export rebate directly increases the export costs for solar module manufacturers. According to SMM estimates, leading companies are expected to see an annual reduction in tax rebates of 10-20 billion yuan, corresponding to a profit reduction of 46-51 yuan per 210R module exported. The report anticipates that before the official implementation of the rebate cancellation in April, overseas end-users will rapidly increase order demand during this window, likely causing a sharp spike in module exports. Increased module production scheduling is expected to drive short-term growth in industry demand.
Long-term Impact: The pace of eliminating obsolete capacity is expected to accelerate, with brand building and technological innovation becoming the primary directions. According to SMM calculations, the implementation of the export rebate cancellation will lead to a 5%-10% decline in solar module exports. This will reduce corporate profitability and increase cash flow pressure, inevitably leading to a period of adjustment. However, in the long run, the report expects the cancellation to rapidly push up global solar module prices, diminishing the cost advantage of Chinese modules, particularly impacting small and medium-sized enterprises more significantly. Against this backdrop, technological innovation and brand building will become key focuses. High-efficiency modules like BC and TOPCon 3.0 are expected to command higher premiums and become mainstream choices for future exports. The phase-out of obsolete domestic capacity will accelerate. Leading companies, leveraging their brand and technological advantages, are poised to further expand their market share, potentially leading to a significant improvement in the industry's previous state of cutthroat competition.
Energy Storage: The profit impact is expected to be limited, and leading companies are likely to face little difficulty in raising prices. Under an extreme scenario assuming no ability to pass on costs, with a battery cost of 0.35 yuan/Wh, the report calculates an impact on profit per watt-hour of 0.8/3 fen for 2026 and beyond 2027, respectively. Considering that overseas price transmission mechanisms are generally effective, and noting that high-barrier markets like the US and Australia have low price sensitivity, with products from companies like Tesla commanding significant premiums over those from Sungrow, the report judges that leading companies will face little difficulty in passing on price increases. The core intent of the policy is to cancel subsidies, optimize supply, and raise the barrier for international expansion, benefiting industry leaders with overseas production capacity and accelerating the exit of weaker players. Long-term, this is expected to help optimize the supply landscape. High overseas demand for energy storage continues, with the market showing broad-based growth since 2025. Order spillover to leading companies confirms robust demand. The report forecasts global new energy storage additions of 255/407/538 GWh for 2025-2027, with a CAGR of 45.3% from 2025 to 2027. Against the backdrop of global electricity shortages, the advantages of China's energy storage supply chain are prominent. The report is optimistic about leading companies capitalizing on the high demand and profitability in overseas energy storage markets.
Investment Strategy: The report suggests focusing on solar industry investment opportunities along three main themes: 1) Focus on leading large-scale storage companies benefiting from international expansion and strong domestic demand, as well as residential & commercial & industrial (C&I) storage players poised to benefit from demand surges in markets like Australia and Ukraine and a potential industry turnaround. 2) The report expects leading companies across the industrial chain to maintain their lead due to scale and technological advantages, with the pace of obsolete capacity exit likely accelerating. It recommends focusing on leading companies in the main产业链 and auxiliary materials. 3) New technology remains the driving force for the medium to long-term development of the solar industry. Companies pioneering new technologies are expected to lead the industry out of its downturn. The report recommends focusing on high-efficiency cell/module upgrades, directions enabling large-scale substitution of base metal pastes amid rapidly rising silver prices, and the perovskite cell direction, which is expected to achieve commercialization breakthroughs from 0 to 1.
Risk Factors: Solar installation growth falling short of expectations; intensifying market competition; policy implementation falling short of expectations; rising overseas trade barriers; slower-than-expected progress in industry capacity exit.
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