Solar PV and energy storage are entering a new cycle.
In this cycle, we see companies like Sungrow and Canadian Solar, representing “integrated solar and storage solutions,” becoming the most sought-after targets in the capital market.
After years of “hard work,” solar PV and energy storage technologies have continuously improved, and costs have continued to decline. The proportion of “technical costs” is decreasing, while the proportion of “non-technical costs” is increasing, and the importance of the market and application scenarios is growing.
The old era is gone, and a new era has arrived.
In this new era, the old models are no longer sustainable, and new models are emerging. The solar and energy storage industry is calling for a new order, and the competitive landscape and core competencies are quietly shifting.
In such a vast market, which companies will be more competitive?
01 The Life-or-Death Race on the Supply Side
Sungrow has built a moat with its “SKU” strategy. Sungrow (300274.SZ), established 27 years ago, has focused on only one thing – converting DC power to AC power – but it has become the global leader in this field. Its inverters cover a power range of 0.45-9600kW, from residential micro-inverters to desert-based centralized systems, with over 300 SKUs and a shortest delivery time of 7 days. Its 2024 financial report shows a global market share of 27% for solar inverters, with gross profit margins rising for three consecutive quarters to 35.4%, relying on its “ultimate product matrix” to transform technological premium into scale premium.
Why the need for excellence?
Only by achieving excellence can companies achieve rapid response, low-cost production, and fast delivery. These are “soft skills,” and the differences between companies are significant.
Easier said than done.
The closer to the downstream end-users, the more crucial the need for exceptional product capabilities.
02 The Long-Tail War on the Demand Side
Deye Technology has turned “niche markets” into profit generators. Deye Technology (605117.SH) originally manufactured sheet metal parts for air conditioner manufacturers, and only entered the energy storage inverter market in 2016. It avoided the mainstream European and American markets, first targeting the “three poor markets” of India, Brazil, and South Africa, and then expanding to 110 long-tail countries such as Myanmar, Benin, and Honduras, establishing 48 overseas warehouses and 230 local after-sales service points. In the first half of 2025, its energy storage inverter business generated 78% of its revenue from overseas markets. Gross profit margins in the African and Latin American markets reached as high as 42%, a full 18 percentage points higher than in the domestic market. While competitors were still struggling in the highly competitive European 15kW residential energy storage market, Deye was selling 50kW off-grid systems in Nigeria, with the net profit from one unit equivalent to that of three units sold elsewhere.
This capability transcends reliance on resource endowments or specific dependencies in a few regions, allowing for replication in any part of the world – if one market is weak, another will be strong.
In fact, this global market capability is not only evident in solar energy storage but also in many other industries, such as electric vehicles, and this will be the main theme for Chinese enterprises in the coming years.
Exceptional product development capabilities combined with exceptional market expansion capabilities are becoming increasingly important differentiating competitive advantages in today’s highly competitive environment, ultimately translating into higher gross profit margins and profitability.
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03 Two-Way Street in an Era of Oversupply
Canadian Solar’s “One Body, Two Wings” model: Canadian Solar (CSIQ.US/688472.SH) has been among the top five global solar module suppliers for 12 consecutive years, and in 2024, it separately listed its energy storage business (Canadian Solar Energy, CSIQ Energy). Its strategy is “cost reduction through technology on one hand, and market expansion through diverse applications on the other”: its 10GWh energy storage factory in Suqian, Jiangsu, has a battery cell procurement price of 0.32 yuan/Wh, 8% lower than the industry average; simultaneously, it secured 2.6GWh of long-term service contracts in the United States and Canada, linking community solar + energy storage projects with a 15-year contract term and an IRR locked in at over 12%. With solar modules and energy storage driving growth, its comprehensive gross profit margin in Q3 2025 reached 28.7%, 6 percentage points higher than that of pure module manufacturers.
04 Non-Technical Cost Breakthrough
Channels, after-sales service, and financing are all indispensable. When technical costs only account for 45% of the total cost, the remaining 55% is consumed by land, grid connection, financing, and after-sales service. Whoever can help customers reduce this 55% to 45% will be able to command a premium. Sungrow Power Supply has launched a “Smart Operation and Maintenance Insurance for Solar and Energy Storage Systems,” with an annualized premium of 0.3%, providing full compensation for fault losses; Deye has established its own operation and maintenance fleet in South Africa, providing 24-hour on-site service with an average fault repair time of less than 6 hours; Canadian Solar, in collaboration with Citibank and HSBC, has launched “zero down payment” energy storage financing leases, increasing customer IRR by 2.4 percentage points. Products are merely the entry ticket; system solutions are the source of premium value.
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05 Rules of the Next Round of Elimination
When one door closes, another opens; global replication is the ultimate capability. The compound annual growth rate of demand for solar + energy storage is 20%, but the capacity growth rate is 40%. Whoever can modify an off-grid model proven in Africa to meet the German VDE-AR-N-4110 certification within three days will be able to use the profits from long-tail markets to subsidize price reductions in mainstream markets. Extreme development × extreme expansion, essentially, is “transforming regional advantages into global cash flow.”
Oversupply is not the end, but a turning point. The previous cycle was about who had the most production capacity; this cycle is about who can sell their capacity to the places with the highest profit margins. Sungrow uses SKU depth, Deye uses market breadth, and Canadian Solar uses integrated thickness, all arriving at the same answer: in the “post-technology” era of solar and energy storage, extremity is the moat, without exception.
