China halts new battery storage factory approvals amid overcapacity

China temporarily suspends new battery storage factory approvals: Report

Beijing, September 7

As per the Reuters report, the move comes "amid growing concerns about overcapacity risks in the ​energy storage sector" despite a sharp increase in demand for batteries used for grid balancing and backup power.

"The pause comes as authorities conduct a review of existing and planned energy storage production capacity, ​with a focus on battery cells," it said, citing Cailianshe.

At the same time, projects that have not yet broken ground will be put on hold for the time being.

"Projects that have not broken ground ​will not move forward for the moment but ​those already under construction will not be affected,"Reuters noted, ⁠adding the policy could be adjusted later.

China's energy storage industry has expanded rapidly alongside the country's renewable energy build-out. However, much like the solar panel and electric vehicle manufacturing sectors, battery makers have come under growing pressure from fierce competition and falling prices.

At the same time, leading Chinese solar manufacturers have been expanding aggressively into battery energy storage as shrinking margins and overcapacity in the solar panel market push them to seek new avenues for growth.

China, the world's largest manufacturer of energy storage batteries, has taken other steps to rationalise the market, including imposing a consumption tax on lithium-ion batteries and solar cells.

Earlier in June, Reuters reported, China's Contemporary Amperex Technology Co. (CATL), said it expects energy storage to account for half of its global sales by 2030, up from about 25% currently.

"Energy storage has already jumped from ​only 2% of battery sales five years ago," Kevin Tang, CATL's director of ⁠energy storage systems for Europe, said, adding "increasing need ​to complement intermittent renewables is driving demand for batteries for storage."

CATL mines lithium in southern China, giving it greater control over its battery supply chain. The company also operates the world's largest battery recycling plant, where raw materials used in batteries are recovered, Tang said, reported Reuters.

— ANI