EU Energy Storage Push Boosts China ESS Integrators; OW Maintained on Sungrow and Deye

Overview

This report comments on the rise in share prices of Chinese ESS integrators driven by EU energy storage policy support. The report notes that the EU emphasized the critical role of storage in the energy transition and in reducing and stabilizing energy prices, prompting the market to re-rate Chinese companies with European ESS revenue exposure. Among the covered names, both Sungrow and Deye are viewed as beneficiaries, and their OW ratings are reiterated.

Core views

The core views are: first, energy storage is being upgraded from a supporting tool for renewable energy into critical infrastructure for stabilizing electricity prices and easing power tightness; second, Sungrow has about 15% revenue exposure to Europe and trades at a meaningful discount to global peers in the AIDC ESS theme; third, Deye has about 35% revenue exposure to Europe and enjoys a first-mover advantage in distributed generation ESS in emerging markets; fourth, compared with diesel generators, ESS is lower-carbon and quieter in backup power scenarios, helping improve social license issues for power-intensive facilities such as data centers.

Analysis framework

The report combines an event-driven approach with fundamental mapping: it first identifies the sentiment catalyst brought by the EU energy storage agreement and policy wording, then maps this to the covered companies' European revenue exposure, relative valuation positioning, and emerging-market growth opportunities, while also using intraday load fluctuations in New England in the US and New South Wales in Australia to illustrate the mechanism through which ESS shifts load, shaves peaks, fills valleys, and stabilizes electricity prices.

Methodology notes

• Policy catalystEU energy storage push

  Energy storage is regarded as a key missing link in the energy transition

  The EU signed its first trilateral agreement to promote energy storage development and emphasized the role of storage in reducing and stabilizing energy prices, becoming the direct catalyst for the rise in Chinese ESS integrator share prices.

• Power system mechanismTime shifting and peak shaving/filling valleys

  Charge during off-peak periods and discharge during peak periods

  ESS can charge during low-demand periods and discharge during peak periods, helping alleviate supply tightness and suppressing spikes in peak electricity prices in spot power markets.

• Company mappingRevenue exposure and thematic valuation comparison

  European ESS exposure, AIDC ESS theme, and FY27E P/E peer comparison

  The report evaluates the relative attractiveness of Sungrow and Deye through their share of revenue from European markets, relevance to the AIDC ESS theme, and FY27E P/E based on Bloomberg consensus estimates.

• Social impactSocial license and backup power substitution

  ESS has zero-carbon and low-noise advantages versus diesel generators

  In backup power scenarios such as data centers, ESS performs better than diesel generators in terms of carbon emissions and noise, helping alleviate community concerns over noise pollution and the pass-through of energy costs.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sungrow - A (300274.SZ)

  A China A-share ESS integrator, with about 15% of revenue from the European market, and linked in the report to the AIDC ESS theme.

  Strengths

  Benefits from the EU energy storage push; trades at a meaningful discount to global peers in the AIDC ESS theme; covered rating is OW.

  Weaknesses

  European revenue exposure is lower than Deye's, and the report does not provide a new target price or detailed valuation model in the summary materials.

  Comparison

  Compared with Deye, Sungrow has lower European exposure, but the report places more emphasis on its valuation discount versus global peers and its benefit from the AIDC ESS theme.

  Risks

  Policy implementation pace, ESS order delivery, peer valuation re-rating, global storage competition, and changes in data center power demand could all affect the investment thesis.

• Deye - A (605117.SS)

  A China A-share ESS integrator, with about 35% of revenue from the European market, and also a pioneer in the distributed generation ESS market in emerging markets.

  Strengths

  Higher European exposure; benefits from high growth in emerging-market DG ESS; covered rating is OW.

  Weaknesses

  The growth thesis is highly dependent on delivery of emerging-market DG ESS demand, and the report does not disclose a target price in the summary materials.

  Comparison

  Compared with Sungrow, Deye has higher European exposure and benefits more directly from distributed storage demand in emerging markets.

  Risks

  Growth in emerging-market demand, competition in distributed storage, exchange rates, and changes in overseas policy could affect revenue growth and valuation.

• HK/China-listed ESS integrators

  An asset group benefiting from EU energy storage policy and global demand for power system flexibility.

  Strengths

  Have long-term thematic value through participation in electricity price stabilization, renewable energy dispatch, and data center power supply solutions.

  Weaknesses

  Different companies have widely varying European exposure, product structures, and valuations, so benefits cannot be assumed to be equal.

  Comparison

  The report notes that the sector rose 4%-10% that day, clearly outperforming HSCEI/SHCOMP by about 1%-2%.

  Risks

  Short-term share prices may already reflect the policy catalyst; follow-through still requires validation from orders, margins, and policy execution.

Key data

• Share price performance of Hong Kong/China-listed ESS integratorsUp 4%-10%Performance on June 29, 2026, outperforming HSCEI/SHCOMP by about 1%-2%.
• Sungrow revenue exposure to the European marketAbout 15%The report says it also benefits from the AIDC ESS theme and trades at a meaningful discount to global peers.
• Deye revenue exposure to the European marketAbout 35%The report says it also has a first-mover advantage in distributed generation ESS in emerging markets.
• Emerging-market DG ESS growth forecast2025E-2027E CAGR of about 100%-200%BNEF expects several emerging-market regions to reach this growth range.
• Typical daily load fluctuation in ISO New EnglandPeak 13,746MW; trough 8,972MW; fluctuation equals 53.2% of troughUsed to illustrate that intraday load fluctuations can create supply-demand tightness during peak hours.
• Typical daily load fluctuation in NSWPeak 8,177MW; trough 5,575MW; fluctuation equals 46.7% of troughUsed to illustrate the potential value of ESS for time-shifting dispatch in developed power markets.
• Prices and ratings of covered companiesDeye - A Rmb104.27/OW; Sungrow - A Rmb155.64/OWPrices are as of the close on June 29, 2026.

Impact & implications

The investment implication of the report is that the EU's upgraded positioning of energy storage may lead the market to place greater value on ESS's system value in electricity price stabilization, renewable energy integration, and data center power constraints. For Chinese ESS integrators, European revenue exposure, distributed storage growth in emerging markets, and relative valuation discounts may become key variables for continued share price performance.

Risks

• The EU energy storage agreement and policy language may not immediately translate into specific orders or revenue.
• The actual degree of benefit to Sungrow and Deye depends on European market demand, product competitiveness, and delivery capability.
• The high-growth forecast for emerging-market DG ESS is subject to uncertainty in realization.
• Changes in spot power prices, the pace of data center construction, and grid reform policies may alter the ESS demand curve.
• The report summary materials do not provide a new target price or a complete valuation model, so company-specific reports are needed to verify valuation and risks.

What to watch

• Detailed follow-up implementation rules and project tendering pace after the EU energy storage agreement.
• Changes in ESS orders, revenue mix, and margins in Europe for Sungrow and Deye.
• Whether installation growth of distributed generation ESS in emerging markets approaches the range forecast by BNEF.
• Whether the FY27E P/E discount versus global ESS manufacturers narrows.
• Data center power tightness, FERC grid queue reform, and the issue of passing residential electricity costs through.
• Intraday load fluctuations and peak electricity price performance in power markets such as New England and NSW.