The term "space-based solar" has rapidly become a buzzword in capital markets heading into 2026. Industry giants like SpaceX and Google, along with China's Zhejiang Lab, are intensifying their investment in space-based computing satellites, with the solar cells deployed on their wings serving as the core power source. As traditional terrestrial solar companies remain mired in overcapacity, price wars, and overseas tariff barriers, this new frontier has opened a fresh avenue of imagination, extending the application of photovoltaics from the earth's surface to low Earth orbit for the first time.

On one hand, the industry continues its "anti-involution" battle amid persistent price fluctuations across polysilicon, wafers, and modules. On the other, breakthroughs in technologies like perovskite and space-based solar are constantly emerging. This leaves many investors puzzled: does the solar sector present more opportunity or more risk? After years of significant volatility, is this track still worth attention? Are the endless new technology narratives merely short-term speculation, or do they represent tangible industrial growth?

Ground-Based Solar: From Rapid Expansion to Supply-Side Rebalancing

Over the past decade, ground-based solar has transitioned from policy-driven growth to grid parity, with Chinese companies capturing the vast majority of global production capacity. However, this rapid expansion has inevitably led to a period of adjustment. The most obvious symptoms are "overcapacity" and "price wars." All four major segments of the domestic supply chain—polysilicon, wafers, cells, and modules—have undergone massive capacity expansion, with output outpacing global demand growth and triggering sustained price competition. This has driven down prices across the value chain, leaving many companies struggling with rising revenue but falling profits.

Simultaneously, overseas trade barriers have intensified, with the US imposing various tariff policies that create multiple hurdles for Chinese solar products and challenge the international operations of domestic firms. However, to simply label the industry as a "hopeless, involutionary sector" would ignore the resilience of its underlying demand. The global commitment to carbon neutrality remains unchanged, and the long-term trend of new solar installations is still upward. Emerging markets across Europe, the Middle East, Southeast Asia, and Latin America are showing robust demand growth, and even with significant US barriers, other global markets continue to provide strong demand signals.

More importantly, the industry is undergoing a spontaneous supply-side restructuring. Inefficient and outdated capacity is being phased out, with the competitive focus shifting from sheer scale and low prices to technological yield, global channel development, and supply chain management. Leading companies, armed with capital, R&D, and first-mover advantages overseas, are better positioned to weather the bottom of the cycle, while smaller players lacking technological barriers are gradually being eliminated. This is a classic industry shakeout, and once completed, the landscape is expected to evolve towards a healthier, more consolidated equilibrium.

Investors often fall into a binary mindset when assessing solar—either extremely optimistic, viewing it as a perpetual high-growth track, or deeply pessimistic, dismissing it entirely. The reality is that solar remains a cornerstone of the global energy transition, but the era where "every company wins together" is over, and the industry has entered a phase of sharp differentiation. Only leading firms with core technology, cost control, and global capabilities can consistently deliver profits through the cycle.

Beyond Space: Multiple Technological Shifts Reshaping the Industry's Boundaries

The recent surge of interest in space-based solar often overlooks its practical constraints. This concept involves deploying solar cells on satellites or space stations to power space-based computing, communication payloads, and spacecraft. Currently, it relies on gallium arsenide cells, which offer high efficiency but at a prohibitive cost—hundreds or even thousands of yuan per watt—making large-scale commercialization a distant prospect. While it offers long-term imaginative potential, its contribution to listed companies' near-term earnings is limited and should not be viewed as an immediate performance driver.

Nevertheless, it highlights a significant trend: the growth boundaries of the solar industry are expanding from traditional ground stations to diverse scenarios like space, near-space, and mobile energy. The more realistic transformations are focused in several key areas:

First, the industrialization of perovskite cells. Perovskite is recognized as a leading candidate for the next generation of solar technology due to its high efficiency and low-cost production potential. It is currently transitioning from the lab to pilot and small-scale production lines, with major equipment and cell manufacturers ramping up R&D. If breakthroughs in mass production yield and long-term stability are achieved, it could create substantial demand for equipment upgrades across the industry. However, this new path is fraught with uncertainty, including yield ramp-up challenges and long-term reliability verification.

Second, structural growth in overseas markets. Demand for solar installations in the Middle East, Southeast Asia, South America, and emerging European markets remains strong. Leading domestic companies are accelerating factory construction abroad to circumvent trade barriers and capitalize on localized growth, with international expansion becoming a vital second growth curve for many top players.

Third, the deep integration of "solar plus storage." Given the intermittent nature of solar power, pairing it with energy storage significantly enhances supply stability. Integrated solar-storage projects are being deployed on a large scale globally, and the two have become an inseparable energy solution.

In summary, traditional ground-based solar is the core business but faces cyclical pressure from overcapacity and trade issues. Technologies like perovskite and space-based solar represent future potential but have limited near-term earnings. The real opportunity lies in the dynamic interplay of "legacy consolidation, technological iteration, and overseas growth."

The Hidden Challenges of Investing in Solar

While the industry's prospects are grand, betting on individual stocks carries significant risk for average investors. First, the capacity cycle is extremely difficult to predict. The solar industry's recurring cycle of expansion, price cuts, and capacity reduction involves the expansion plans and demand shifts of dozens of global companies. It's nearly impossible for individual investors to grasp all the information, making it easy to misjudge the cycle's turning points.

Second, betting on new technology routes is risky. With parallel developments in perovskite, HJT, and BC cells, it's highly uncertain which company or technology will ultimately prevail. Heavily concentrating on a single company can lead to violent stock price swings if its technology fails to meet expectations.

Third, geopolitical policy risk is ever-present. Tariffs and trade policies can change at any time, directly impacting companies' overseas revenue—external variables that are difficult to anticipate.

Fourth, differentiation among stocks is intensifying. Even within the solar sector, the profitability of polysilicon, wafers, cells, modules, equipment, and inverters varies drastically. Strong overall industry demand doesn't guarantee profits for every company. Many investors lament that while they are bullish on the long-term energy transition, the high probability of picking a "loser" stock and their limited research capacity make it hard to identify companies that can truly navigate the cycle.

For those unwilling to deeply speculate on individual solar stocks' cycles and technology bets, index-based tools offer a more balanced approach. The ChiNext New Energy Index holds about 28% of its weight in solar stocks, focusing on leaders in inverters and equipment like Sungrow Power, Maxwell Technologies, and Jing Sheng Machinery. This emphasizes high-R&D, high-barrier manufacturing segments. Concurrently, the index allocates nearly half its weight to the lithium battery sector and a small portion to wind power, ensuring diversified exposure across solar, lithium, and wind tracks rather than concentrating risk in a single industry or segment.

The ChiNext New Energy ETF (159076) closely tracks this index, offering a one-stop investment in a basket of leading companies across solar, lithium, and wind energy on the ChiNext board. Without needing to bet on which perovskite company will succeed or predict when polysilicon prices will bottom out, the index's regular rebalancing mechanism automatically eliminates weaker components based on R&D spending, revenue scale, and liquidity, allowing investors to participate in the long-term growth of the new energy industry with less effort. It's worth noting this ETF has a daily price fluctuation limit of 20%, offering potentially greater upside when the market rallies.

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