Emerging Trends in Energy Transition: The Role of Energy Storage Inverters as Smart Solutions

Key Insights: The energy storage inverter is a critical component of energy storage systems, responsible for bidirectional energy conversion. As the global share of wind and solar power increases and the demand for flexibility in power systems surges, the market is experiencing rapid growth.

1. In 2023, global shipments of energy storage Power Conversion Systems (PCS) exceeded 150 GW, with China accounting for over 60%. The market is expected to surpass 100 billion yuan by 2025.

2. In terms of technological advancements, integrated solar storage, high-voltage cascaded systems, and grid-forming solutions have become industry focal points, driving the evolution of PCS from a simple inverter function to that of a “smart grid regulator.”

3. Consequently, the energy storage inverter industry chain can be broadly divided into upstream, midstream, and downstream segments, each interconnected and collectively advancing the development of the energy storage sector.

4. Currently, companies such as Qianfan Wing Digital Energy, Huazhi Energy, and Shengyun Energy have made significant achievements in the energy storage inverter field, securing multiple rounds of financing.

Industry Definition: Energy storage inverters (PCS) are the core devices of energy storage systems, playing a crucial role in bidirectional energy conversion. During charging, they convert alternating current (AC) from the grid or renewable energy generation into direct current (DC) for battery storage. During discharging, they invert DC back into AC for load usage. As the “bridge” connecting storage batteries with the grid or loads, the performance of PCS directly influences the efficiency, stability, and economic viability of energy storage systems.

With the increasing share of renewable energy sources and the rising demand for flexibility in the power system, the energy storage inverter market is witnessing explosive growth. According to GGII data, global shipments of energy storage PCS surpassed 150 GW in 2023, with China accounting for over 60%. The market is projected to exceed 100 billion yuan by 2025. Technological innovations such as integrated solar storage, high-voltage cascaded systems, and grid-forming solutions are becoming industry focal points, transitioning PCS from a single inverter function to a “smart grid regulator.”

Energy storage inverters connect storage devices with the grid and loads. Their technological evolution primarily focuses on topology structure, control strategies, and application scenarios. Based on connection methods, energy storage inverters are generally categorized into grid-tied, off-grid, and DC types. Grid-tied inverters are commonly used on the grid side or in commercial and industrial settings, requiring functionalities such as grid connection switching and frequency regulation. Off-grid inverters are suitable for microgrids or island operation environments, demanding independent voltage and frequency support. DC inverters primarily serve solar storage DC systems or DC microgrids, achieving voltage matching and energy regulation through DC/DC conversion.

In terms of topology structure, energy storage inverters are evolving from traditional unidirectional structures to high-efficiency, high-density bidirectional topologies. Common structures include bidirectional Buck-Boost, full-bridge, and dual-active bridge (DAB), with DAB being particularly prevalent in medium to high-power scenarios due to its strong bidirectional power transfer capability and support for high-frequency isolation. Additionally, multi-port inverters are gradually emerging to enable multi-source collaboration and system integration, especially playing a key role in integrated solar storage systems.

Regarding control strategies, early systems primarily employed current or voltage control methods, such as PI control and current-loop voltage-loop control. As system complexities increased, more advanced techniques like Model Predictive Control (MPC), Virtual Synchronous Generator (VSG) control, and AI-based adaptive control algorithms have been gradually introduced, enhancing the system’s dynamic response capabilities and intelligence.

Energy storage inverters, which are vital for safe and efficient operation, are currently undergoing rapid development and structural upgrades. In application, energy storage inverters are increasingly serving diverse scenarios, such as grid frequency regulation, peak shaving and valley filling for commercial and industrial use, and integrated solar storage generation, demanding faster response times and multi-mode operational capabilities. Particularly in solar storage systems, inverters not only need to facilitate bidirectional energy flow but also must coordinate photovoltaic output with energy storage charge and discharge strategies to enhance overall system economy and stability.

The energy storage inverter industry chain can be divided into upstream, midstream, and downstream segments, with each segment interlinked and contributing to the overall advancement of the energy storage industry. The upstream segment focuses on the supply of core components and raw materials, including power semiconductors (such as IGBT and SiC MOSFET), magnetic components, capacitors, inductors, control chips, and circuit boards. With the maturation of wide bandgap semiconductor materials like silicon carbide (SiC) and gallium nitride (GaN), their advantages in high-voltage, high-frequency, and high-efficiency applications are becoming increasingly evident, gradually replacing traditional silicon-based devices and driving the high-performance evolution of inverters.

Moreover, the localization of control chips and driver circuits is currently a key area of technological advancement, directly impacting the response speed and control precision of inverter systems. The midstream segment encompasses the design, manufacturing, and system integration of energy storage inverters, which represents the core value of the entire industry chain. Companies in this phase are primarily responsible for inverter structural design, circuit topology selection, control algorithm development, and hardware-software system integration, which presents a relatively high technical barrier. Currently, several domestic companies possess independent research and development capabilities, offering a variety of energy storage inverter products suitable for different application scenarios, such as high-voltage, high-power inverters for the grid side and modular multifunctional units for commercial and residential use.

As market demands for high efficiency, high power density, and intelligent control continue to grow, midstream companies are also optimizing designs by adopting new materials, improving thermal management solutions, and developing more complex energy management systems to enhance product stability and adaptability. The downstream segment includes energy storage system integrators, power investors, commercial and industrial users, and grid operators. This segment represents the ultimate application scene for inverters, directly determining their product forms and technical requirements. With the advancement of new power system construction, energy storage is gradually transitioning from an auxiliary regulation role to a core power resource, expanding its application scenarios from traditional grid frequency regulation to peak shaving, integrated solar storage, virtual power plants, microgrids, and even vehicle-to-grid interactions for electric vehicles.

Different scenarios present varying performance requirements for inverters. For instance, grid-side energy storage emphasizes response speed and grid connection capabilities, while household systems prioritize efficiency, size, and cost-effectiveness. This variability drives continuous upgrades and integrations of inverter functionalities and intelligence in downstream applications.

Overall, the upstream, midstream, and downstream segments of the energy storage inverter industry are tightly interconnected, with technological innovation primarily concentrated in the midstream. However, the release of development potential is highly dependent on breakthroughs in upstream core components and ongoing expansion of downstream application scenarios. Driven by the dual-carbon context and energy transition trends, energy storage inverters are becoming essential support for energy storage systems.

In April 2021, the National Development and Reform Commission and the National Energy Administration jointly issued the “Guiding Opinions on Accelerating the Development of New Energy Storage” (draft for consultation), outlining that China’s new energy storage “14th Five-Year Plan” aims for an installed capacity exceeding 30 GW by 2025. In February 2025, to promote high-quality development of the new energy storage manufacturing industry, eight departments, including the Ministry of Industry and Information Technology, jointly issued the “Action Plan for High-Quality Development of the New Energy Storage Manufacturing Industry.”

Recent analysis of financing situations for relevant companies shows a trend where financing events in the energy storage inverter sector peaked at 30 in 2021, followed by a gradual decline, with only five events projected for 2024. Financing amounts reached a high point in 2023, but also saw a sharp decline in 2024, indicating a possible investment frenzy from 2021 to 2023, followed by a cooling off or market reshuffling post-2023.

Key Companies:

Qianfan Wing Digital Energy was founded in December 2022 as a provider of core power equipment and solutions for energy storage systems. Their business spans energy storage inverters, power quality management, and intelligent energy monitoring systems, applicable across various scenarios including renewable energy integration, power frequency regulation, demand-side response, microgrids, and commercial and residential applications. The core team comprises seasoned experts from the power supply industry, with the founder previously involved in the development of Huawei’s first UPS inverter algorithm and holding a technical leadership role in a leading charging pile company. Qianfan Wing has established a comprehensive product matrix, including standardized PCS modules ranging from 50 kW to 215 kW, as well as supporting products like intelligent STS and DC/DC converters. The products are currently undergoing international certification processes, including CGC, CE, and TUV. Their flagship product, a 130 kW PCS utilizing a full silicon carbide design, achieved a conversion efficiency of 99.16%, setting a new industry benchmark and being the first to receive the new national standard certification.

In February 2025, Qianfan Wing secured tens of millions in Series A financing, led by Yongzhou Capital, which will primarily support overseas certification, new product development, and market expansion.

Huazhi Energy, established in June 2022, focuses on the research, production, and system integration of core new energy equipment. They aim to innovate energy storage solutions, with a team possessing over a decade of experience in energy storage, photovoltaics, wind power, charging piles, and artificial intelligence. Their energy storage products are deployed in various countries, playing a crucial role in renewable energy integration, demand-side response, and microgrids. Huazhi Energy emphasizes the commercial energy storage market and has developed the ZhiHui Energy Storage Treasure, featuring a patented vertical cooling design that optimizes energy density per unit area and meets installation and maintenance needs. In 2023, they launched the industry’s first 125 kW energy storage system with 280Ah cells, enhancing system capacity to 250 kWh, while maintaining stability and reducing costs. In January 2025, Huazhi completed over 100 million in Series A+ financing, led by October Capital, with follow-on investments from Dongping Capital and Hefei Innovation Investment. In July 2024, they completed Pre-A+ financing exclusively from Fenghe Capital, followed by tens of millions in Series A financing from Chaowei Group.

Shengyun Energy was founded in April 2014, focusing on new energy storage technology research and product development. As an integrated service provider, Shengyun collaborates deeply with upstream and downstream partners to deliver efficient energy storage station development, design, construction, and operational solutions. Shengyun is concentrating on developing various models of energy storage inverters to meet the increasingly diverse demands from both the source-grid and user sides. Their innovative products aim to provide reliable energy storage and scheduling solutions, supporting users in enhancing energy efficiency while contributing to clean energy goals. In November 2024, Shengyun secured nearly 100 million in Series A financing, with undisclosed investors. The funds will be allocated to building production facilities for energy storage equipment, in-depth R&D of PCS devices, and multi-model development for large-scale and commercial energy storage, accelerating strategic planning and technology upgrades in the energy storage sector.

Recent Developments:

In March 2025, the first mixed-grid energy storage project in China successfully went online. On March 6, the “Lithium Battery + Supercapacitor” hybrid energy storage project at the Ningdong Photovoltaic Base of the State Energy Group commenced operation. This project is recognized as the first hybrid-grid energy storage project in China.

In February 2025, Tesla’s Shanghai energy storage super factory officially commenced production, marking a new phase in Tesla’s operations in the Chinese market with the rollout of the first large-scale commercial electrochemical energy storage system, Megapack.

In January 2025, the State Grid Xinjiang Electric Power Research Institute released the first national group standard for grid-forming energy storage systems, filling an industry gap.

In December 2024, Envision Energy’s 5.X MW energy storage inverter officially entered mass production, marking the world’s largest single-unit power storage inverter, designed for standard 20-foot containers with enhanced reliability and power density.

In April 2024, Huawei launched the world’s first wind-liquid intelligent cooling commercial energy storage product, showcasing significant innovations in safety, thermal management, and supply capabilities.

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