Emerging Field: Energy Storage Inverters, the Smart Heart of Energy Transition

The Energy Storage Inverter (PCS, Power Conversion System) is a critical component of energy storage systems, playing a vital role in the bidirectional conversion of electrical energy. During the charging process, it converts alternating current (AC) from the grid or renewable energy sources into direct current (DC) for storage in batteries. Conversely, during discharging, it inverts the DC back to AC for use by loads. As a bridge connecting energy storage batteries to the grid or loads, the performance of PCS directly impacts the efficiency, stability, and economic viability of energy storage systems.

With the global share of wind and solar power increasing and the demand for flexibility in power systems rising, the energy storage inverter market is witnessing rapid growth. According to GGII data, the global shipment of energy storage PCS exceeded 150 GW in 2023, with China accounting for over 60% of this figure. The market is expected to surpass 100 billion yuan by 2025.

In terms of technological advancements, integrated photovoltaic-storage systems, high-voltage cascaded designs, and grid-forming solutions are becoming the focus of the industry, shifting PCS from a mere inverter function to an “intelligent grid regulator.” The technological evolution of energy storage inverters primarily revolves around advancements in topology, control strategies, and application scenarios. Based on connection methods, energy storage inverters can be categorized into grid-connected, off-grid, and DC types.

Grid-connected inverters are commonly used on the grid side or in commercial and industrial settings, requiring features like grid connection/disconnection capability and frequency/voltage regulation. Off-grid inverters are suited for microgrid or island operation environments, necessitating independent voltage and frequency support. DC inverters are mainly utilized in photovoltaic-storage DC systems or DC microgrids, achieving voltage matching and energy regulation through DC/DC conversion.

In terms of topology, energy storage inverters are transitioning from traditional unidirectional structures to high-efficiency, high-density bidirectional topologies. Common structures include bidirectional Buck-Boost, full bridges, and dual active bridges (DAB). DAB is particularly popular in mid- to high-power applications due to its strong bidirectional power transfer capabilities and high-frequency isolation. Additionally, multi-port inverters are emerging, playing a crucial role in integrated photovoltaic-storage systems to achieve multi-source collaboration and system integration.

Regarding control strategies, early systems primarily employed current or voltage control methods such as PI control and current-loop/voltage-loop control. As system complexity has increased, more advanced 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 and intelligence.

The energy storage inverter is a key device for safe and efficient operation, currently experiencing rapid development and structural upgrades. It is being utilized in a growing range of applications, including grid frequency regulation, peak shaving and valley filling in commercial and industrial sectors, and integrated photovoltaic-storage generation. This expansion demands quick response and multi-mode operational capabilities from inverters, particularly in photovoltaic-storage systems, where inverters must facilitate bidirectional energy flow and coordinate photovoltaic output with energy storage charging and discharging strategies to enhance overall system economics and stability.

The energy storage inverter industry chain can be broadly divided into upstream, midstream, and downstream segments, with each segment interconnected to collectively drive the development of the energy storage industry. The upstream focuses on supplying core components and raw materials, including power semiconductors (such as IGBT and SiC MOSFET), magnetic components, capacitors, inductors, as well as control chips and circuit boards. With the gradual 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 acting as a key driver for high-performance inverters. Additionally, the localization of control chips and driver circuits is currently a focal point of technological breakthroughs, 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, representing the core value of the entire industry chain. Companies in this phase are responsible for inverter structure design, circuit topology selection, control algorithm development, and the integration of hardware and software systems, with relatively high technical barriers. Presently, several domestic companies possess independent R&D capabilities, offering a variety of energy storage inverter products across different power ratings suitable for various application scenarios, such as high-voltage, high-power inverters for the grid side, and modular, multifunctional integrated machines for commercial and residential use. As market demand for high efficiency, high power density, and intelligent control increases, midstream companies are continuously optimizing designs, adopting new materials, improving cooling 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 final application scenarios for inverters, directly determining their product forms and technical requirements. With the advancement of new power system construction, energy storage has gradually transitioned from an auxiliary regulatory role to a more central role in power resources. Application scenarios have expanded from traditional grid frequency regulation to include peak shaving and valley filling, integrated photovoltaic-storage systems, virtual power plants, microgrids, and even vehicle-grid interactions for electric vehicles. Different scenarios have varying performance requirements for inverters; for instance, grid-side energy storage emphasizes response speed and grid-connection capability, while residential systems prioritize efficiency, size, and cost-effectiveness. This drives continuous pressure for functional integration and intelligence upgrades in downstream applications.

Overall, the upstream, midstream, and downstream segments of energy storage inverters are closely linked, with technological innovation concentrated in the midstream. However, the release of development potential heavily relies on breakthroughs in upstream core components and the ongoing expansion of downstream application scenarios. Under the backdrop of the “dual carbon” initiative and the trend of energy transition, energy storage inverters are pivotal in supporting energy storage systems.

In April 2021, the National Development and Reform Commission and the National Energy Administration jointly issued a guiding opinion on accelerating the development of new energy storage, outlining that China’s new energy storage “14th Five-Year Plan” aims to exceed 30 GW of installed capacity by 2025. In February 2025, to promote the 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 analyses of funding activities for related companies reveal that from 2020 to 2024, financing events in the energy storage inverter sector showed an overall trend of rising and then declining. The number of financing events peaked at 30 in 2021, followed by a yearly decrease, with only 5 events predicted for 2024, indicating a significant drop. In terms of financing amounts, the highest point was reached in 2023, but a sharp decline is also expected in 2024. This reflects that the energy storage inverter market may have experienced an investment boom from 2021 to 2023, but by 2023, capital enthusiasm quickly waned, leading to a more cautious market or potential realignment.

Highlighted Companies:

• Qianfan Wing Digital Energy was established in December 2022 and specializes in providing core power equipment and solutions for energy storage systems. Their offerings include energy storage inverters, power quality management, and smart energy monitoring systems, applicable across various scenarios such as auxiliary renewable grid connections, power frequency regulation, demand-side response, microgrids, and commercial and residential uses. The core team comprises seasoned experts from the power supply industry, with the founder having participated in the R&D of Huawei’s first-generation UPS inverter algorithm and served as the technical lead at a leading charging pile company. They have comprehensive experience in the entire development process from the nascent stage to large-scale production of charging piles, with expertise in delivering millions of power electronics products. As a technology-driven enterprise, Qianfan Wing has developed a complete product matrix, covering standardized PCS modules ranging from 50 kW to 215 kW, along with supporting products like smart STS and DC/DC converters. Currently, they are applying for international certifications such as CGC, CE, and TUV. Their flagship product features a four-bridge arm topology combined with silicon carbide devices and a string centralized design, covering a power range from 50 kW to 2.5 MW, suitable for various applications including commercial energy storage and large-scale grid-side storage.

• Huazhi Energy was established in June 2022 and focuses on the R&D, production, and system integration of core equipment for new energy. Their offerings include energy storage core device development, production, sales, service, and productization of solutions. The team has over a decade of experience in R&D for energy storage, photovoltaics, wind power, charging piles, and artificial intelligence, with their products widely applied globally in auxiliary renewable grid connections, demand-side response, and microgrids. Huazhi Energy targets the commercial energy storage market, creating the Zhihui Energy Storage Treasure based on self-developed commercial-specific PCS, featuring a patented vertical cooling design that achieves optimal energy density in a limited area, catering to scenarios that require wall-mounted installations, flexible deployment, and easy maintenance. In 2023, they launched the industry’s first 125 kW energy storage system, equipped with 280 Ah battery cells, enhancing system energy capacity to 250 kWh while maintaining product stability and continuously leading the industry in cost reduction.

• Shengyun Energy, founded in April 2014, specializes in researching new energy storage technology and developing related products. They integrate energy storage equipment, system integration, and services, collaborating deeply with upstream and downstream partners to provide users with safe and efficient solutions for energy storage station development, design, construction, and operation. Shengyun Energy focuses on developing various models of energy storage inverters to meet the increasingly diverse demands of power sources and users. With flexible designs and optimized control systems, they aim to deliver more efficient and stable energy storage support, providing reliable solutions for energy storage and dispatch across different scenarios, thus helping users enhance energy efficiency while supporting clean energy goals.

In March 2025, the first hybrid grid-forming energy storage project in China was successfully connected to the grid. This project, named “Research and Demonstration of Key Technologies for Lithium Battery + Supercapacitor Hybrid Energy Storage,” is a major technology initiative by the State Energy Group, developed in collaboration with the New Energy Institute and Ningxia Electric Power. It was implemented at the first energy storage station in Ningxia.

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

In January 2025, the State Grid Xinjiang Electric Power Research Institute released the country’s first group standards for grid-forming energy storage systems, filling an industry gap. A technical team from the institute embarked on a journey from Urumqi, Xinjiang, to Lhasa, Tibet, to conduct testing and support for grid-forming energy storage stations, guided by the newly established standards.

In December 2024, Envision Energy announced the official mass production of the world’s largest power liquid-cooled energy storage inverter, with a capacity of 5.X MW. This inverter, produced in Jiangyin, is designed for high reliability, robust protection, and high power density. It can be complemented with Envision’s next-generation system-level grid technology, GenGrid, which has been validated through extensive testing.

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 power supply architectures.