Shenwan Hongyuan Group: Policies accelerate the contraction of photovoltaic supply, and the industry landscape is expected to improve.

Shenwan Hongyuan Group released a research report stating that the core logic of this policy benefit lies not in "restricting capacity expansion," but in accelerating supply contraction through administrative regulatory means, enabling leaders with existing advanced capacity to achieve a steeper profit recovery slope once demand stabilizes. In the polysilicon segment, the substantial elevation of electricity and water consumption thresholds for new projects has narrowed the expansion window for overseas and second- and third-tier players, reducing forward competitive pressure on polysilicon enterprises with green power supporting facilities and cost advantages, and providing additional support for the sustainability of their profit centers. In the cell and module segment, although TOPCon and xBC manufacturing processes fall under the restricted category of technology export controls, domestic capacity expansion is not constrained by these regulatory conditions; enterprises that have already achieved large-scale mass production of N-type high-efficiency products and maintain disciplined payment terms will see expanded relative advantages in accessing the announced list and securing orders. The main viewpoints of Shenwan Hongyuan Group are as follows: Event On October 16, 2026, the Electronic Information Department of the Ministry of Industry and Information Technology solicited public comments on the "Photovoltaic Manufacturing Industry Regulatory Conditions (2026 Edition)" and the announcement management measures, with feedback due by November 15. Core changes: comprehensive deletion of polysilicon and P-type technology entries, with efficiency thresholds listed separately by N-type TOPCon/HJT/xBC; new-build cell efficiency raised to 26.0%26.6%, modules raised to 24.0%24.4%; comprehensive electricity consumption for new polysilicon capacity compressed to 37/15 kWh/kg by process route, with water consumption changed to direct limits; minimum capital ratio for new and expanded projects set at 30%; industry self-discipline results become a substantive reference for entry into the regulatory announcement list for the first time. Technology entries "switch tracks" rather than "fine-tune," with P-type systematically removed at the regulatory level The overall deletion of polysilicon wafers, polysilicon and P-type cell and module entries in this revision represents the most significant structural switch among all previous revisions. Its meaning lies not in shutting down existing P-type capacity overnight, but in revoking the "compliance identity" of P-type assets within the policy resource allocation systemsubsequent reliance on the regulatory announcement list for credit, energy factors, and central and state-owned enterprise tender access will form a gradual squeeze-out of P-type capacity. At the same time, within N-type there is no "one-size-fits-all" approach: the new-build TOPCon threshold of 26.2% and xBC of 26.6% directly benchmark current leading mass-production levels, and second- and third-tier enterprises lacking N-type scale track records may be phased out. The "stacked constraints" of energy consumption, water consumption and capital ratio form strong restrictions on new capacity New polysilicon electricity consumption is compressed to 37 kWh/kg for the trichlorosilane route and 15 kWh/kg for granular silicon, water consumption is changed from indirect assessment via water reuse rate to a direct limit of 30 cubic meters/ton, and the recycled water utilization rate is uniformly raised to 50%. Combined with the 30% minimum capital ratio, this means new polysilicon or cell projects must simultaneously clear three thresholds: technological compliance, energy consumption compliance, and sufficient own funds. At a time when industry cash flow is generally tight, entities capable of meeting all three conditions simultaneously are extremely limited, and the expansion model of simply replicating capacity in low-electricity-price regions is institutionally blocked. Incorporating self-discipline into the system is a new change in this revision Explicitly making industry association self-discipline results an important reference for the announcement list, and for the first time requiring enterprises not to maliciously delay payment to suppliers, essentially embeds supply chain credit and payment term discipline into the industry access framework. The past cycle of "grabbing orders at low pricesoccupying upstream fundsthen expanding capacity" is marked as non-compliant at the regulatory level. This constitutes an implicit institutional dividend for leading enterprises with standardized governance and healthy payment terms, while forming precise constraints on enterprises that rely on occupying supply chain funds to maintain turnover. Risk warnings: The risk that the official draft substantially weakens efficiency or energy consumption indicators compared with the consultation draft; the risk that policy enforcement is insufficient and the actual constraints of regulatory conditions on outdated capacity fall below expectations; the risk that global photovoltaic demand continues to face pressure and the speed of supply clearance is offset by demand decline.