Sealand: Emerging markets and offshore production capacity have become the core incremental growth drivers in the photovoltaic market. Seize the opportunity of technological iteration.

Sealand issued a research report stating that the demand for photovoltaics is expected to grow rapidly in 2024, with the addition of new installations expected to exceed 600GWdc, an increase of +34% year-on-year. It is expected that the growth rate of the photovoltaic industry will continue to decline in 2025, with a global growth rate of +10%. Emerging markets and offshore capacity will be the core increments. High energy consumption matched with cheap and clean energy sources is driving demand in emerging markets, with component demand growing faster than traditional markets in the past two years. In terms of technological iteration, the replacement of N-type cells with P-type cells has been completed, but overcapacity due to rapid expansion of homogeneous production capacity has become a prominent issue. The efficiency and cost competition among TOPCon, HJT, and XBC technologies will determine the direction of the next round of technological iteration. The three types of technology have comparable efficiency limits, and the cost and difficulty of improving efficiency will be crucial in predicting the future. Sealand's main points are as follows: Demand: Industry growth rate is declining, with emerging markets and offshore capacity being the core increments Global: In 2024, the demand for photovoltaics is expected to grow rapidly, with new installations expected to exceed 600GWdc, an increase of +34%. In 2025, the industry growth rate is expected to continue to decline, with a global growth rate of +10%, and emerging markets and offshore capacity will be the core increments. Domestic: In 2024, despite pressure from expectations in power market trading and difficulties in local consumption, installations are still growing rapidly. In 2025, the addition of new installations is expected to remain stable. United States: In 2024, new installations are expected to reach 41GWdc, an increase of +25% year-on-year, with a strong pipeline of centralized projects and clear long-term growth prospects in the US market. Following the implementation of the double anti-measure, cells in regions not subject to double anti-tariffs may have profit elasticity in the short term, with the US market becoming a battleground for excess profits in the long term, with local manufacturing plants as the optimal solution. Emerging markets: High energy consumption matched with cheap and clean energy sources is driving demand in emerging markets, with component demand growing faster than traditional markets in the past two years. With gradually improving supporting policies and clear installation planning, emerging markets are expected to continue growing rapidly. As installation capacity expands, offshore capacity may become a necessity. Supply and demand cycle: Policy expectations are reversing, and industry supply and demand are returning to a positive trend In 2024, non-US market components have fallen into deep losses, with profits at various stages of the main and auxiliary materials supply chain hitting bottom and leading companies facing pressure. In October, supply-side reforms including price limits, self-regulation, and energy consumption were implemented, reversing market expectations and leading the industry's supply and demand back to a positive trend. Silicon Materials: The silicon materials segment may become the core lever to alleviate overcapacity, with short-term industry self-regulation and production cuts boosting prices, especially in the upstream silicon materials segment, leading the industry chain price increase; in the medium term, the high differentiation in energy consumption between companies will help promote energy consumption restrictions and the long-term clearance of excess capacity. Glass: After hitting bottom in profits, additional cold repair capacity is rapidly increasing, and the industry has begun to market-clear excess capacity. Leading companies have significant cost advantages, and after the supply and demand situation improves, profits are expected to rebound. Tracking systems/Inverters: Both benefiting from the structural opportunities in the booming emerging market demand, tracking systems have excellent industry layout advantages and offshore capacity advantages, and are expected to continue benefiting from the rapid increase in ground-based solar power plants in emerging markets; inverters have two growth curves in the solar and storage markets, with a double increase in demand in the emerging markets, and also can expect a gradual recovery in European demand. Technological iteration: Breaking the long-term cycle of stagnation, seizing opportunities for technological iteration The replacement of N-type cells with P-type cells has been completed, but overcapacity due to rapid expansion of homogeneous production capacity has become a prominent issue. The efficiency and cost competition among TOPCon, HJT, and XBC technologies will determine the direction of the next round of technological iteration. The efficiency limits of the three types of technology are approaching each other, and the cost and difficulty of improving efficiency will be crucial in predicting the future. HJT: In 2024, there have been significant breakthroughs in cost reduction and efficiency improvement, and in 2025, efficiency improvements may enter the fast lane, while waiting for leading companies to expand production while continuously realizing the logic of going offshore. XBC: The back contact structure will keep the front efficiency of BC cells leading, with production expansion under the leadership of leading companies showing certainty. In 2025, it is expected that cost reduction will be realized, while also paying attention to the impact of bifacial rate on actual power generation. TOPCon: In 2024, cost reduction was completed in times of stagnation, and the efficiency improvement slowed down after LECO, with subsequent core focus on whether there will be breakthroughs in front passivation. "Black technology": Black technologies that cannot be proven or have huge space for development will affect the pace of cost reduction and efficiency improvement in the three types of technology, with a focus on important nodes such as the mass production verification of copper slurry and stacking grid rate in 2025. Investment recommendations: Industry growth rate is expected to decline in 2025, and it is recommended to actively seek structural opportunities along the two main lines of supply-side reforms and differentiation in the market, which aim to improve supply and demand and technological iteration. 1) Recommendations along the supply and demand improvement line focus on the core lever of silicon materials in supply-side reform: Tongwei Co.,Ltd(600438.SH)GCL TECH(03800); profits hitting bottom, industry capacity accelerating market-clearing for glass backsheet: Flat Glass Group(601865.SH)Hangzhou First Applied Material(603806.SH); structural opportunities in the US solar and storage, tracking systems, and inverters benefiting from offshore capacity: CSI Solar Co., Ltd.(688472.SH)Arctech Solar Holding(688408.SH)Ningbo Deye Technology(605117.SH). 2) Recommendations along the technological iteration line focus on the leading companies in BC and HJT equipment benefiting from high-efficiency technology expansion: Wuhan DR Laser Technology Corp.,(300776.SZ)Suzhou Maxwell Technologies(300751.SZ)LAPLACE Renewable Energy Technology(688726.SH); high-efficiency battery components that earn excess profits from surplus premiums: Shanghai Aiko Solar Energy(600732.SH)LONGi Green Energy Technology(601012.SH)Leascend Technology(300051.SZ)RiseEnergy(300118.SZ); Short-term unverifiable, potentially high-growth "black technology": Changzhou Fusion New Material(688503.SH), Changzhou Shichuang Energy(688429.SH), Jiangsu Boqian New Materials Stock(605376.SH).Risk alert: slow growth in demand for the photovoltaic industry, strengthening international trade frictions and barriers, lower-than-expected progress in new technologies, limited grid integration capacity, focus on the uncertain future performance of the company, discrepancies between forecast and actual results, and continued vicious competition in the industry.