Storage Power Conversion Systems (PCS)

What it is

A battery stores direct current (DC); the grid runs on alternating current (AC). The power conversion system, or PCS (储能变流器), is the bidirectional converter between them: it charges the battery from the grid and discharges it back. Sineng Electric describes it as the part that directly affects a storage system's conversion efficiency, how storage units are configured, and so the system's economics (Sineng 2026 interim report, p. 10). The switching inside is done by power semiconductors such as IGBTs, and StarPower lists storage among the markets driving its demand (StarPower 2026 interim report, p. 10).

Units are getting larger. Kehua now sells 3.15 MW and 3.5 MW liquid-cooled PCS and 6.25 MW to 6.9 MW units that combine the converter with a step-up transformer (Kehua 2026 interim report, p. 13). Sungrow launched a modular range covering 3.45 MW to 12.5 MW (Sungrow 2026 interim report, p. 30). A newer requirement is "grid-forming" control, in which the converter helps hold grid voltage and frequency rather than just following it; Kehua, Sineng and HyperStrong all say they have it.

Why it matters for the chain

The PCS sits between the battery cells and the grid, so every storage system needs one. Integrators either buy them or design their own: HyperStrong lists PCS among its main purchased materials (2026 interim report, p. 30), while Sungrow builds its own converters into its storage cabinets (Sungrow p. 15). Kehua names both CATL and HyperStrong among its customers (Kehua p. 14).

Where China stands

The main Chinese suppliers are solar inverter makers that applied the same power electronics to storage:

• Kehua Data (科华数据, 002335.SZ) says it led China's storage PCS shipments for three years, and citing S&P Global, that it ranked first worldwide for PCS above 500 kW (Kehua pp. 14, 17).
• Sineng Electric (上能电气, 300827.SZ), citing CNESA, says it ranked in China's top two every year from 2021 to 2025, and fifth worldwide in 2024 by S&P Global (Sineng p. 18).
• Sungrow (阳光电源, 300274.SZ) sells most of its storage as complete systems with its own PCS inside, so its PCS volumes are not reported separately.

The rankings come from different sources and size classes, so they do not contradict each other, but none is a full market share figure.

Economics

• Sineng's storage PCS and system integration products earned a 27.05% gross margin in the first half of 2026, on revenue of ¥598.7m, up 6.88% (Sineng p. 21).
• Kehua's new energy segment, which includes solar inverters, earned 21.81%, up 4.30 points (Kehua p. 18).
• Selling abroad pays: Kehua's overseas revenue earned 36.37% against 19.89% at home (Kehua p. 18).

For comparison, the integrated systems that Sungrow sells, with cells and its own PCS inside, earned 32.43% (Sungrow p. 34).

What to watch

• China's market rules. From early 2026 independent storage can earn capacity payments and new solar and wind projects no longer have to install storage, which shifts demand from mandated projects to those that earn money in power markets (Sineng p. 18). Our view: that favours converters with proven grid-forming and trading performance over the cheapest unit.
• Overseas growth. Kehua's overseas revenue rose 135.15% in the half (Kehua p. 18).
• Larger units. Converter sizes are rising with cabin sizes; watch whether the makers that are not also integrators keep their place as integrators design their own.