Chinese energy firms warn policy volatility complicates long-term expansion abroad

Chinese energy firms are warning that policy instability in overseas markets is complicating their long-term expansion plans, as they face growing geopolitical risks. Sungrow Power Supply and EVE Energy, two prominent companies, expressed the need for policy stability during a BloombergNEF event in Hong Kong. Both firms have recently encountered pressure in the US market.

Sungrow, the world's second-largest energy storage system maker, faced a US import ban on foreign-made inverters, while EVE, a leading EV battery supplier globally, is under investigation by the US International Trade Commission over a patent dispute with South Korea's LG Energy Solution. Sungrow's general manager, Cai Zhuang, highlighted the irrationality of geopolitics and the lack of understanding surrounding their privately-owned company, denying allegations that their inverters could be used as spyware.

The European Union and the US imposed bans on foreign-made grid equipment in May and July, citing national security and supply chain concerns. Sungrow's shares have dropped more than 40% since media reports about the US ban emerged in late June. EVE's senior vice-president, Yuan Huagang, emphasized the importance of policy consistency for local markets, citing the 20-year depreciation period required for overseas investments.

The companies plan to strengthen their compliance measures to navigate shifting policies. Energy security concerns have heightened globally, driving the importance of the energy transition, with clustering, or consumers imitating neighbors' renewable energy adoption, playing a significant role. Near-term uncertainties, such as the potential reopening of the Strait of Hormuz and doubts about the profitability of AI, could dampen investor interest in commodities like oil and copper.