China has temporarily stopped approving new battery manufacturing projects for energy storage as authorities review the country’s existing and planned production capacity.
The pause affects new factories, with particular attention on battery cell production. The move comes amid rising concerns about overcapacity in the energy storage sector, even as demand continues to grow for batteries used to balance power grids and provide backup electricity.
Projects that have not yet started construction will remain on hold for now. However, factories already under construction will not be affected. The policy could also be changed at a later stage, according to industry sources.
China is the world’s largest manufacturer of batteries used for energy storage. The country’s energy storage industry has grown rapidly alongside its expansion of renewable energy.
However, manufacturers are facing increasing pressure from intense competition and falling prices. Similar challenges have affected other major industries in China, including solar panel and electric vehicle manufacturing.
Leading solar manufacturers in the country have also expanded into battery energy storage. They are looking for new growth opportunities as shrinking profits and overcapacity continue to pressure the solar panel industry.
China has taken additional measures to bring more balance to the market. These include introducing a consumption tax on lithium-ion batteries and solar cells.
The temporary halt on new project approvals comes as authorities assess energy storage production capacity and consider the risks linked to continued expansion.
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