Sunfars Tech's Hu Shunquan: New energy and grid are complementary and coordinated

By Wang Lining & Xia Xin | China Business Journal

The New Grid: Hardware, Technology, Real-World Scenarios, and Full Absorption

"New-type power grids are built on hard equipment, real technology, practical scenarios, and full absorption," said Hu Shunquan, Director and General Manager of Sunfars Technology (688663.SH), during the recent Shanghai Stock Exchange Forum: Hard Technology & Hard Science Season 3, Episode 2, titled "New Grids: The Awakening of Computing Power."

Hu noted that the accelerated development of renewable energy, the continuous expansion of energy storage, and the rapid growth of new loads such as AI computing power are driving the power system into a new development phase.

The rising share of renewable energy brings absorption pressure, while the growth of AI computing power and other new loads imposes higher demands on power supply stability. Amid these shifts on both the supply and demand sides, new-type power grids are evolving toward renewable energy absorption, source-grid-load-storage coordination, and efficient power supply for new loads.

For Sunfars, a company with over 20 years of experience in power electronics equipment, this transformation is now reaching the industrial level. From mature products such as low-voltage Static Var Generators (SVG) to energy storage and grid-forming equipment, and further to Solid-State Transformers (SST) for computing-power coordination, the company's product portfolio continues to extend into new application scenarios. Its business model is also expanding from equipment sales to system solutions and full-lifecycle services.

From "Complementing" to "Coordinating"

Over the past few years, the construction of new-type power grids has accelerated. Hu believes that the dominant role of renewable energy has been largely established, the ultra-high voltage (UHV) main grid continues to improve, and the capacity for renewable energy grid integration and absorption is steadily increasing. As a result, the structure of the power system is undergoing change.

Wind and solar power are characterized by randomness, intermittency, and volatility. As the share of renewable energy rises, the power system must not only ensure electricity availability but also address stable grid integration and effective supply-demand matching. This is precisely where power electronics equipment companies enter the industrial chain.

Take SVG as an example. Sunfars has been deeply involved in high-voltage cascading technology for over 20 years. Its high-voltage SVG improves power quality and provides reactive power support, earning the company the title of National Manufacturing单项冠军 (Single Champion). The company has deployed over 10,000 sets of high-voltage SVG globally, covering scenarios such as photovoltaics, wind power, metallurgy, mining, and data centers.

In Hu's view, the relationship between renewable energy and the grid is not simply one of "replacement," but rather a process of continuous complementation and coordination. "New players serve the development of renewable energy. Overall, the grid remains the dominant entity, and it is more accurate to say that others complement it."

This perspective explains Sunfars' technological path over the past two decades: the company has not sought independent "windfall opportunities" separate from the grid. Instead, it has continuously adjusted its equipment to match real-world scenarios as renewable energy enters different development stages.

In 2020, Sunfars was an early mover in source-grid-load-storage integration demonstrations, combining rooftop photovoltaics, charging piles, and energy storage. Hu explained that the company configured a 2,000 kWh energy storage system. "Storing 2,000 kWh at night was sufficient for daytime use." When temporary power supply shortages occurred in 2022, the company's own electricity consumption remained unaffected.

According to Hu, true technological competitiveness does not lie in laboratory parameters but must be repeatedly validated in real-world scenarios.

Computing Power Opens New Scenarios for Power Electronics

If renewable energy absorption is a key challenge for new-type grid construction, the rapid development of AI computing power has introduced new electricity demand.

"First, energy independence—China must develop renewable energy. Second, renewable energy absorption and grid integration—this is a practical driver. Third, AI—this is computing-power driven," Hu said. He believes that energy independence, renewable energy absorption, and AI computing power are interconnected, while energy storage serves as the link between power sources and loads, balancing generation and consumption timing.

Hu likens the new-type grid to the human body: energy storage functions like an "organ," responsible for storing and releasing energy; digitalization acts as the "nervous system," handling communication and control; and computing-power coordination represents the energy system's ultimate output to industrial and economic activities. In the energy storage sector, Sunfars has been increasing its investment in recent years. Its 100 MW-level high-voltage cascaded energy storage has achieved large-scale deployment and has been extended to emergency power supply scenarios in coal mines.

With the rapid growth of new loads such as computing centers and artificial intelligence, these facilities demand higher power supply stability, power quality, and energy efficiency. There is also room for optimization between traditional AC power supply architectures and the increasing DC loads. Against this backdrop, SST has entered the industrial application horizon. Leveraging its high-voltage cascading technology and combining CHB (Cascaded H-Bridge) and DAB (Dual Active Bridge) technologies, Sunfars has developed SST products. Earlier this year, the company's SST products achieved deployment, with some now in the demonstration phase. According to company materials, a 2.5 MW SST product has been rolled off the production line and is being used in a demonstration project at a smart computing center.

In Hu's view, the value of SST goes beyond simply upgrading transformer technology. By further integrating power electronics technology, energy storage, and multi-port energy management, SST has the potential to handle more complex energy distribution functions. "The combination of power electronics and energy storage can form a future 'energy router.'"

"The energy router is a key device for future smart grids," Hu predicts. He believes that grid-forming technology has the highest certainty and is expected to become a standard feature of new-type power systems within the next three to five years.

As the share of renewable energy increases, traditional synchronous units face new requirements for rotational inertia and voltage support. Grid-forming converters and grid-forming energy storage can provide the necessary support. Therefore, Hu argues that future power electronics equipment must not only be capable of "grid connection" but also possess "grid-forming" capabilities.

From Selling Equipment to Selling Solutions

Alongside technological shifts, the business models of power electronics equipment companies are also changing. In the past, equipment companies primarily focused on product sales, with customers or other entities handling operations after delivery. However, as application scenarios such as renewable energy, energy storage, and computing-power coordination become increasingly complex, customer demands are shifting from "providing a device" to "solving a problem."

Hu stated that Sunfars will not only sell equipment in the future but also solutions, and will further advance operational digitalization and full-lifecycle management. However, this does not mean the company should transform from a "hardware company" into a purely software or services firm.

"In the past, we sold equipment in one-off transactions, and other companies or the grid handled operations," Hu said. However, in his view, the foundation of solutions and services remains hardware equipment. "Building a strong energy nation and achieving energy independence cannot be done without hardware equipment. It is the entry point and the cornerstone."

Nevertheless, moving from "selling equipment" to "selling solutions and providing services" does not mean the new business model is already mature. Whether solutions and digital services can generate stable revenue depends on the improvement of the electricity market mechanism. Currently, the deployment of related businesses still relies on policies and electricity pricing mechanisms, with digital services primarily playing a value-added and enabling role. As mechanisms such as virtual power plants and demand response mature further, the value of digital services is expected to gradually translate into more stable commercial returns.

To balance resource allocation between current performance and future growth, Sunfars has adopted an "H1, H2, H3" business framework. H1 represents mature products that generate current revenue and profit. H2 covers growth-stage products that require ongoing R&D investment and are expected to become profitable within the next two to three years. H3 encompasses emerging technologies and products with a three-to-five-year horizon.

Under this approach, approximately 70% of Sunfars' resources are allocated to mature H1 products, while the remainder is directed toward growth-stage and forward-looking businesses.

"A real enterprise must be supported by products," Hu said. Focusing on current performance does not mean abandoning long-term R&D. Similarly, companies cannot only talk about the future while neglecting immediate operations.

From China's Scenarios to Global Markets

The complex application scenarios in China's domestic market also serve as an important foundation for the continuous technological iteration of Chinese power electronics equipment companies. Hu noted that China's regional power environments vary significantly: the western plateau, the eastern high-load areas, the southern high-humidity regions, and the southwestern areas with frequent thunderstorms all impose different requirements on equipment. "What kind of equipment can adapt? Only through generation after generation of progress."

Sunfars' SVG products have undergone multiple iterations, with voltage levels expanding from 10 kV to 35 kV and 66 kV, and further developing into specialized products such as high-altitude versions and grid-forming types.

In Hu's view, diverse application scenarios drive technological iteration, while a complete industrial chain supports product scaling and cost optimization, providing a foundation for Chinese power electronics equipment to go global.

However, "going global" does not automatically mean achieving global brand premium. Hu acknowledged that Chinese companies already have certain product competitiveness in overseas markets, but there is still a gap between equipment exports and brand and standard output. The competitive logic also varies across markets. In emerging markets, Chinese equipment is competitive due to its performance and cost advantages. In high-end markets such as Europe and the United States, factors such as brand recognition, certification systems, standards, and geopolitical and policy environments impose higher requirements for further market expansion.

In Hu's view, the next phase of "going global" for Chinese companies should not focus solely on product exports. Instead, it should gradually move from product and service output to brand, technology, and standard output, and actively participate in international standard-setting. This process cannot be achieved overnight. It requires steps such as standard mutual recognition, participation in international standard development, and overseas demonstration applications, gradually enhancing the influence of Chinese companies in the global industrial chain.

From SVG to energy storage, from grid-forming equipment to SST, and from complex domestic scenarios to overseas markets, Sunfars is no longer facing competition based on a single product. For power electronics equipment companies, technological iteration, scenario accumulation, and commercialization capabilities remain key to navigating industrial cycles.