Heron Power is turning a piece of the battery storage supply chain into its own factory story. The California startup has selected Morgan Hill for its first large-scale U.S. manufacturing site, where it plans to build medium-voltage power conversion systems for battery storage, solar, and data-center power projects. The company says Heron Factory One will occupy a former 286,000 square foot distribution warehouse and receive more than $100 million of investment. At full output, the site is expected to produce up to 10,000 Heron Link units per year , enough for about 40 GW of annual power conversion capacity. AI-generated image Heron Factory One puts power electronics, not cells, at the center of a U.S. storage manufacturing story. 40 GW planned annual capacity 10,000 Heron Links per year $100M+ factory investment 2027 target for production Why power conversion is suddenly strategic Battery storage headlines usually focus on cell chemistry, pack prices, gigawatt-hours, and mineral supply. Heron's announcement points to a quieter constraint. Every grid battery needs equipment that can move electricity between direct-current battery racks and the alternating-current grid. Large solar and storage projects also need transformers, switchgear, controls, protection equipment, and grid-code compliance. Those pieces can delay projects even when battery containers are available. The Heron Link is described as a 5 MW medium-voltage power conversion system that combines bidirectional inverter technology with solid-state transformer functions. In plain terms, it is meant to sit between storage or generation assets and the grid, converting, conditioning, and controlling power at project scale. That makes it relevant to utility batteries, solar-plus-storage plants, and the power systems being built around AI data centers. The factory decision also reflects a wider U.S. sourcing problem. Domestic battery cell factories are being built, paused, repurposed, and refinanced. Grid equipment has its own bottlenecks, especially transformers and advanced power electronics. If storage developers cannot get the electrical balance-of-system equipment they need, cheaper batteries do not translate into faster interconnection. AI-generated image Power conversion systems can decide whether a battery project is shippable, connectable, and bankable. The Baglino connection Heron Power was founded by Drew Baglino, the former Tesla executive who helped lead powertrain, battery, and energy engineering work before leaving the automaker in 2024. That background matters because Heron's target market sits at the intersection of batteries, manufacturing discipline, and grid software. The company is not trying to make another cell. It is trying to modernize the equipment that lets large batteries interact with the grid. The Morgan Hill site keeps the first factory close to Heron's Scotts Valley engineering base and the Bay Area talent pool. That choice is more expensive than many lower-cost manufacturing regions, but it shortens the loop between product engineering, factory launch, supplier qualification, and quality fixes. For a new hardware company, those first production cycles matter more than the ribbon cutting. Heron says site preparation will begin immediately, with commercial production targeted for late 2027. That gives the company roughly a year to turn a warehouse into a production line, qualify suppliers, build test procedures, hire operators, and convince developers that its equipment is ready for projects with real grid penalties attached. The execution test A 40 GW nameplate target is useful only if the product clears utility requirements, interconnection studies, customer due diligence, and repeatable factory testing. What this means for storage developers For developers, a domestic power-conversion factory could reduce one source of project risk. Battery energy storage systems are sold as modular infrastructure, but the project still depends on grid-facing equipment, controls integration, site commissioning, and long-term service support. A domestic supplier with capacity and engineering access can be valuable when schedules are tight and utility requirements change. The timing is important. Large U.S. storage projects are being pulled by data-center demand, renewable portfolio needs, resource adequacy programs, and capacity markets. At the same time, interconnection queues and transformer lead times can stretch project schedules. Heron's bet is that faster, more integrated medium-voltage equipment can help developers compress part of that timeline. That does not remove the hard parts. Storage projects still need permits, land, grid studies, financing, battery supply, fire safety review, market access, and offtake contracts. Power conversion is one layer in the stack. The reason it matters is that a failure at that layer can strand the rest of the project. A battery that cannot reliably export, import, and respond to grid commands is expensive inventory. AI-generated image Battery storage growth is exposing the importance of inverters, transformers, controls, and serviceable electrical equipment. AI power demand raises the stakes Heron's announcement lands in the middle of a data-center power scramble. AI campuses are pushing developers toward faster grid connections, behind-the-meter generation, long-duration storage, and power electronics that can handle demanding loads. Data centers do not just need energy. They need reliable power quality, fast response, and equipment that can coordinate with batteries, renewables, backup systems, and the utility grid. That is why power conversion companies are becoming part of the AI infrastructure discussion. A data center may buy clean power through a virtual agreement, build dedicated generation nearby, or contract for storage. In all cases, the site still needs electrical equipment that can support uptime, safety, and grid coordination. Heron is trying to enter the market at a moment when those requirements are becoming more visible. Crusoe, which develops data-center infrastructure and has become a visible power buyer, is among the names tied to interest in next-generation grid equipment. The broader signal is that storage hardware, data-center power, and domestic grid manufacturing are no longer separate conversations. They are converging around the same bottleneck: how quickly the U.S. can add controllable electrical capacity. The domestic manufacturing angle The U.S. battery conversation has spent years around cell plants, cathode materials, lithium refining, and recycling. Heron's factory expands that lens to the electrical hardware around storage. If the country wants more grid batteries, it needs the equipment that lets those batteries connect, dispatch, ride through faults, and meet local utility rules. The planned Morgan Hill site is expected to create more than 600 jobs, according to the company's announcement. Those jobs are not just an economic-development talking point. In power electronics, manufacturing quality, testing discipline, and field feedback can determine whether equipment survives heat, switching stress, fault conditions, and round-the-clock operation. A domestic factory close to engineering may help Heron improve that loop. There is also a policy undertone. Domestic-content rules, tariffs, supply-chain security concerns, and utility preferences can all favor U.S.-made equipment. A power-conversion product built in California will still rely on a supply chain, but final assembly, testing, and service presence can matter to buyers trying to reduce import exposure. AI-generated image The next proof point is not the factory announcement. It is validated equipment leaving the line and connecting to real projects. What to watch next The first marker is factory conversion. Turning a distribution warehouse into an advanced manufacturing site requires power, test infrastructure, material flow, safety procedures, and