HUNGF and JKS: Market Pricing Cuts Utility Solar Demand

In August 2026, Huaneng Power International (HUNGF) and JinkoSolar (JKS) described the same shift from opposite ends of China's solar value chain: market-based renewable power pricing is reducing realized tariffs for operating assets and removing some utility-scale projects from module demand.[1][2]

---

Each project must clear its return threshold again

A utility-scale solar developer estimates future electricity revenue before deciding whether a project can meet its required return. When electricity prices move from an administered tariff to market formation, developers can no longer rely on a relatively predictable price for long-term cash-flow calculations. If expected prices fall or become less certain, projects that previously worked may be deferred, with module purchases affected first.

The change then moves upstream. Fewer projects weaken module orders and reduce demand for wafer and polysilicon production. Operating generators face a related pressure: as nationwide renewable capacity keeps expanding, more power is available during the same periods, which can reduce realized settlement prices. Generation volume can therefore rise while profit falls.

---

Higher output is arriving with lower prices, profit, and demand

Huaneng's solar business already shows a divergence among volume, price, and profit. In the first half of 2026, solar power sold to the grid reached about 7.65 billion kWh, up 40%. The average solar tariff fell 5.32% to RMB 370.44 per MWh, while solar net profit declined RMB 594 million, or 35.84%, to about RMB 1.06 billion.[1] Wind tariffs also fell 3.48%, and wind net profit declined 20.5%, so the pressure was not limited to one generation technology.[1]

JinkoSolar confirmed the transmission from the equipment-demand side. Management said China's installation demand had slowed because of the market-based renewable pricing mechanism and the pace of project investment. It estimated that China's 2026 demand was 30% to 40% below the prior year.[2] The important split is that the lost demand was concentrated in utility projects, while distributed demand remained robust in the first half.[2] The evidence therefore supports a utility-project pullback, not a contraction in every category of solar demand.

---

Project returns are becoming the order-control point

The controlling question is shifting from how much capacity is planned to whether a project still earns an adequate return under market pricing. For generators, added capacity no longer guarantees profit growth in the same direction. For module and upstream-material suppliers, orders depend on whether projects still pass investment review. Huaneng's volume-price-profit divergence and JinkoSolar's utility-demand disclosure support this mechanism, but neither company quantified how many projects will be permanently canceled.[1][2]

Supply reductions could also cushion the upstream impact. Daqo New Energy said regulators were promoting a shift away from price competition toward value-based differentiation. The company was operating at 57% utilization with average selling prices below cash cost.[3] If inefficient capacity exits, polysilicon pricing could improve, so lower utility demand need not translate proportionally into lower profit for every upstream producer. The useful follow-up measures are separate utility and distributed installation data, generators' realized tariffs, module orders, and polysilicon utilization and pricing.

---

Company exposed to the same mechanism

• Daqo New Energy (DQ): Daqo produces polysilicon upstream of solar modules. Lower utility-module demand could reduce wafer and polysilicon operating rates, while regulatory pressure on inefficient capacity could improve industry supply. Utilization and selling prices are needed to determine the net effect.[3]

---

Sources

[1] Drillr · Huaneng Power International (HUNGF) · 2026-08-19 · 2026 interim earnings call

[2] Drillr · JinkoSolar (JKS) · 2026-08-26 · Fiscal 2026 second-quarter earnings call

in China, you will find out that mainly the demand disappears from the utility market, but the distribution markets are still strong or robust during the first half.

[3] Drillr · Daqo New Energy (DQ) · 2026-08-20 · Fiscal 2026 second-quarter earnings call

This material identifies potentially overlooked industry changes and companies. It is not a stock recommendation.