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Daniel Ren

Themis Qi

Beijing has put a freeze on new approvals of production facilities for energy-storage batteries amid worries about excess supply and vicious price competition, according to industry officials.
Companies had not been allowed to add new capacity since May, as key regulators like the Ministry of Industry and Information Technology (MIIT) stepped in to curb a construction spree that risked creating severe overcapacity despite rising demand from renewable-energy projects around the world, the sources said.
The temporary ban could be lifted if the supply-demand balance changed, they added.
“The decision to suspend construction of new ESS [energy-storage system] battery factories was made because dozens of new projects in the pipeline sparked policymakers’ fears about redundancies,” said Ivan Li, a researcher at Loyal Wealth Management in Shanghai.
“The ministry-level authorities apparently looked to take pre-emptive measures so that sustainable growth could be achieved.”
Energy-storage systems, comprising batteries along with battery management, power conversion and control equipment, store excess energy generated from renewable sources like solar and wind farms while providing backup power during outages and helping stabilise electricity grids.
The MIIT, which is mainland China’s top economic planning agency, the National Development and Reform Commission and provincial-level regional governments are jointly responsible for drafting policies about ESS projects.
An official with an advisory firm that serves some of the battery firms said the suspension was seen as “window guidance”, and new approvals would be granted if additional manufacturing capacity was needed.
Window guidance is used by Chinese authorities to deliver verbal or written instructions to companies or local authorities on government policies. This form of guidance is not officially announced or published and can be adjusted swiftly.
The MIIT did not respond to a request for comment on Friday.
Data from the China Industrial Association of Power Sources, a government-backed industry syndicate, showed that more than 100 battery factories passed through all relevant approval procedures in the first seven months of this year. These facilities could churn out a combined 2,600 gigawatt-hours (GWh) of batteries a year and required a total investment of 447 billion yuan (US$66.65 billion).
The planned production capacity between January and July represented a 48 per cent increase from the total output of 1,755GWh by Chinese manufacturer in 2025.
Technically, 2,600GWh of ESS batteries could be used to support renewable energy projects with an installed capacity of 1,300 gigawatts (GW). One GW of capacity can supply around 750,000 households for a year.

The boom in artificial intelligence has been driving demand for renewable energy, and the ESS infrastructure supporting these projects created huge demand for batteries. Chinese battery companies also revved up new plant building after the global energy shock arising from the Iran war further spurred demand for alternative energy.
China dominates the global ESS battery industry, with mainland companies accounting for more than 80 per cent of the market. According to Seoul-based SNE Research, global ESS battery demand rose 79 per cent year on year to 550GWh in 2025.
The regulators aimed to avoid “involution” in the ESS battery sector, according to the sources. The term refers to intense price ­competition that erodes sustainable growth and makes profits elusive.


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‘Dozens of new projects in the pipeline sparked policymakers’ fears about redundancies,’ analyst says


‘Dozens of new projects in the pipeline sparked policymakers’ fears about redundancies,’ analyst says.


.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}‘Dozens of new projects in the pipeline sparked policymakers’ fears about redundancies,’ analyst says

‘Dozens of new projects in the pipeline sparked policymakers’ fears about redundancies,’ analyst says