China ESS Integrators and PCS Makers: Takeaways from Recent Visits; Entry Point for Sungrow Emerges as Negatives Are Priced In
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J.P. Morgan recently conducted due diligence visits with five Chinese energy storage system integrators and power conversion system manufacturers. The feedback was generally positive but nuanced, as supportive policies are being partially offset by upstream price increases. Average battery duration for newly installed storage reached 2.85 hours in 2025, a 14% increase that exceeded expectations. Utilization rates are also improving, with national average utilization hours climbing nearly 300 to 1,195 hours.
A key topic was rising lithium carbonate prices. While some manufacturers remain optimistic about demand resilience, others warn that prices reaching 120,000 yuan per ton could disrupt demand, with severe impacts at 170,000 yuan. A new national capacity tariff framework provides local governments flexibility to incentivize reliable storage capacity.
Despite these tailwinds, Sungrow has seen its shares decline 26% from November 2025 highs, significantly underperforming the broader market. J.P. Morgan believes this pullback has sufficiently priced in negative sentiment and potential margin risks from upstream inflation. The firm views anticipated data center energy storage orders as a strong near-term catalyst. Maintaining an Overweight rating, J.P. Morgan argues that an attractive entry point has emerged for Sungrow as fundamental demand drivers remain intact and policy support continues to strengthen installation economics.