Sealand Securities Co., Ltd. has released a research report forecasting that the electrical and new energy industry will see a multi-sector cyclical upswing in the second half of 2026. Key drivers include sustained high demand for lithium batteries with a confirmed inflection point in material price increases, the expansion of AI data center computing power driving a restructuring of power supply architectures towards HVDC/SST, a solidifying market-based profitability logic for energy storage with a reversal in supply-demand dynamics, and a turning point for wind power driven by the implementation of the 15th Five-Year Plan and a surge in tenders. Improvements across multiple links in the industrial chain are supporting positive fundamentals, with leading companies poised to benefit. The firm maintains a "recommended" rating for the power equipment and new energy industry.
Key perspectives from Sealand Securities include:
Lithium battery demand highs are confirmed, material price inflection point has arrived
According to the China Automotive Power Battery Industry Innovation Alliance, sales of power and energy storage batteries in China in the first half of 2026 increased by 48.6% year-on-year, with full-year projections reaching 3 TWh. The implementation of a consumption tax policy, effective from September 1, 2026, will levy a consumption tax on lithium batteries. This will have a short-term impact of about 1% on energy storage and almost no impact on power applications, with leading companies demonstrating strong resilience. The competitive landscape for batteries is expected to become further concentrated. The lithium battery materials sector is generally showing a supply-shortage trend, with the second half of 2026 expected to enter an upward cycle. Prices for electrolytes, separators, and copper foil have already begun to recover. In terms of new technologies, sodium-ion batteries and lithium iron manganese phosphate are accelerating their volume production, while industry standards for solid-state batteries are being fast-tracked. After a significant correction, lithium battery sector valuations are at a relatively low level, and a shift to high景气度 (high sentiment/prosperity) is expected in the third quarter, with strong fundamentals likely to support a sector rebound or reversal.
AI data center computing power continues to expand, marking a year of restructuring for power supply architecture
Overseas tech giants are continuously increasing their AI infrastructure investments. Google and Amazon have raised their capital expenditure guidance, while Microsoft's downward revision due to accounting policy changes does not alter its investment expectations. Meta maintains high-intensity spending. The combined 2026 capital expenditure of the four major CSPs (Cloud Service Providers) exceeds $700 billion, gradually alleviating concerns about computing power oversupply. Domestically, cloud providers like Alibaba and Tencent have fully shifted their capital expenditure towards expansion. The AI bottleneck is shifting from chip supply to electricity and cooling, with GPU computing power and power consumption growing rapidly in tandem. The power per rack for Rubin Ultra could exceed 1 MW. HVDC may be the standardised power supply and distribution solution for next-generation AI data centres. DGD Think Tank estimates the global market size will reach 7.3 billion yuan in 2026 and climb to 114.8 billion yuan by 2030. The commercial inflection point for SST has arrived, with companies like Delta Electronics, Sungrow Power Supply, and NR Electric accelerating product launches and capacity building. Traditional self-built power supply solutions are facing supply bottlenecks, while SOFC precisely fills the gap with its delivery speed. Bloom Energy signed a procurement agreement with Oracle for up to 2.8 GW, marking the first large-scale commercial application in the United States.
Energy storage demand logic undergoes qualitative change, supply-demand dynamics reverse
In the first half of 2026, the driving force for the energy storage industry shifted decisively from "mandatory allocation" to the market-based profitability model established by Document No. 114. According to data from ICC Xinnuo Information, global energy storage system shipments in the first half of 2026 increased by 87.9% year-on-year, while energy storage battery shipments surged by 97.5% year-on-year. The industry chain has transitioned from capacity oversupply in 2025 to a comprehensive shortage in the first half of 2026. Energy storage battery capacity utilisation rates have reached 92% to 98%, inventory cycles have compressed to 0.36 months, and the spot market is experiencing a supply shortage. The price of mainstream 314Ah cells has risen from 0.32 yuan/Wh at the start of the year to 0.365 yuan/Wh in July. The competitive landscape is accelerating its differentiation, with the global dominance of Chinese companies further solidifying, and the focus of competition shifting from a "price war" to a "value war." The second half of 2026 will focus on three main directions: power trading operations, the integration of computing and storage, and overseas residential storage deployment. According to a forecast from a new energy public account, global new energy storage installations are expected to reach 438 GWh in 2026, a year-on-year increase of 62%.
Wind power policy implementation and tender surge point to a turning point for the sector
Domestic wind power installations in the first half of 2026 reached 38.62 GW, a 25% year-on-year decrease, primarily due to the high base effect from the "531" rush-to-install in 2025. Full-year installations for 2026 are expected to be around 120 GW (including 6-8 GW of offshore wind), with the third quarter expected to enter a peak shipping period. The implementation of the "Renewable Energy 15th Five-Year Plan" in July provided a more positive-than-expected policy stance on offshore wind, adding a target of starting 100 GW of construction during the 15th Five-Year Plan period. July saw a record single-month high of 21.66 GW in onshore wind tenders, while offshore wind tenders reached 861 MW, with project owner wait-and-see sentiment easing. In the first half of 2027, mechanism electricity prices and volumes are expected to recover. Results from bidding rounds in four provinces showed that wind power mechanism electricity prices generally recovered by 10% to 25%, potentially improving project returns. Provincial 15th Five-Year offshore wind plans are gradually being implemented, with Guangdong launching 11.2 GW of competitive allocation, officially starting the 15th Five-Year offshore wind cycle.
Power equipment overseas expansion is timely, with a stable domestic base
Demand for overseas power equipment remains robust. AI power infrastructure construction is spreading from a single focus on the United States to global computing hubs in the Middle East, Southeast Asia, Europe, and India. Replacement demand in Europe and the US, combined with new construction in emerging markets, represents a more long-term and stable demand driver. The shortage of high-voltage equipment is expected to persist until 2028-2030, with manufacturing capacity for large power transformers difficult to expand rapidly. The market for small and medium-sized power transformers faces relatively fewer constraints, leading to a divergence in profitability. Excess returns will be concentrated among customers requiring high voltage levels and high entry barriers. In the first half of 2026, exports of large-capacity transformers surged by 169% year-on-year. Domestically, the pace of main grid equipment tenders accelerated, with the combined bidding amount for ultra-high voltage and transmission/distribution projects increasing by 38% year-on-year. Distribution network price mechanisms are being repaired and concentration is improving, with the number of winning bidders nearly halving after regional joint procurement. Smart meter bidding volumes have recovered rapidly, with a total of 49.2 million units tendered in the first half of the year, approaching the total for the entire previous year.