Summary of Key Points
Longi Green Energy was originally focused on its core business in photovoltaics (PV). However, due to the gradual reduction of government subsidies for the PV industry, increased restrictions on power generation from unused solar energy, and intense price competition, the company suffered consecutive losses from 2025 to the first quarter of 2026 (a loss of 6.4 billion yuan in 2025 and 1.9 billion yuan in Q1 2026). Previously, Longi took a wait-and-see approach to energy storage and bet on hydrogen energy. Under the pressure from its core business and the competitive moves of its peers in energy storage, it hastily acquired Suzhou Jingkong Energy at the end of 2025, acquiring 62% of its voting rights, and designated energy storage as its second growth driver with the goal of creating another "Longi" within five years. After the acquisition, Longi adopted a strategy of focusing on overseas markets, not developing its own battery cells, and integrating the two companies' operations. Nevertheless, it faces challenges such as a highly competitive market, entrenched competition, and supply chain risks.
Why Did Longi's PV Business Suffer Such Heavy Losses?
The profitability of the PV industry once relied on government subsidies and technological advantages, but both have diminished:
- Exposed inherent weaknesses: The electricity generated by PV systems is intermittent (available during the day but not at night). Subsidies initially masked the issue of difficulty in storing excess energy, but with the reduction of subsidies, power grids cannot absorb the surplus, making it increasingly difficult for PV projects to be profitable.
- Exhaustion of technological advantages: Companies like Longi have improved efficiency (e.g., using monocrystalline silicon and diamond wire cutting) to reduce costs, but these measures only provide temporary solutions and do not address the fundamental issue of lack of power at night.
- Intense price competition: In 2025, 15 PV companies collectively incurred a loss of 56 billion yuan, with all five leading component manufacturers in the red. Longi's gross profit margin for that year was only 0.81% (even -5.3% for its silicon wafer business), meaning it earned only 0.80 yuan for every 100 yuan of product sold; without transformation, the company would not be able to survive.
Why Did Longi Change Its Mind About Energy Storage?
In 2024, Longi stated that it lacked the necessary capabilities for energy storage, but a year later, it rushed to make the acquisition due to practical reasons:
- Need for new revenue sources: With continuous losses in its PV business and growing pessimism from the market, Longi needed to quickly find a second growth driver.
- Pressure from customers: Customers building PV power plants now require integrated energy storage solutions; otherwise, the power grid will not allow them to connect. If Longi cannot offer such solutions, they may turn to competitors like Jinko and Trina Solar, which have already invested in energy storage.
- Competitive landscape: Companies like Sungrow Power saw a 49% increase in energy storage revenue in 2025, and Canadian Solar achieved profitability through this segment. Failing to enter the energy storage market would mean being left behind by industry leaders.
The Acquisition of Suzhou Jingkong Energy: A Quick Start for Longi?
Longi's choice of Jingkong Energy was not arbitrary; it can help solve three critical issues:
- Technological and capacity supplementation: Jingkong is the world's fifth-largest energy storage integrator with 31 GWh of production capacity and core technologies such as liquid cooling systems and power management, allowing Longi to avoid reinventing the wheel.
- Leveraging existing resources: Longi has many energy storage project approvals in the northern regions of China. By acquiring Jingkong, it can convert these into profitable power generation opportunities.
- Accelerating catch-up: Its peers have been in the energy storage market for years; through this acquisition, Longi can quickly gain access to a mature team and market share.
Is Longi's Energy Storage Strategy Smart or a Risky Move?
As a latecomer, Longi has adopted three differentiated strategies, but these come with risks:
- Focusing on overseas markets: While the domestic energy storage market is highly competitive (with price wars and long payment terms), overseas markets offer higher prices (e.g., Europe). However, Longi must navigate geopolitical challenges and the need for localized services.
- Not developing its own battery cells: Energy storage battery technology is still evolving, and developing them in-house would be costly and time-consuming. Longi has chosen to partner with leading battery manufacturers to save resources. The risk is that if orders are low, upstream suppliers may not prioritize supply.
- Deep integration: Longi has appointed executives from Jingkong to manage the merged company, focusing on expanding its overseas business (e.g., establishing service centers in Europe and signing supply agreements). The success of this integration will significantly impact efficiency.
Can Longi Realize Its Energy Storage Goals?
Longi's ambition is to create another "Longi" within five years, but the task is challenging:
- Competitive market: Giants like Sungrow Power, CATL, and Trina Solar have already established strong positions in energy storage.
- Unproven strategies: Expanding into overseas markets takes time, and not developing its own battery cells could create supply chain vulnerabilities.
- Success depends on integration: Whether Longi can effectively combine Jingkong's technologies and capacity with its existing PV channels, as well as whether its overseas business can grow rapidly, will determine the success of its energy storage strategy.
In summary, Longi's shift to energy storage was driven by necessity. Although it has chosen a relatively smart approach, whether it can succeed depends on how well these strategies are implemented and how the market evolves.