Executive summary
Beijing has temporarily suspended approvals for new battery storage factory projects as authorities review existing and planned production capacity, with a focus on battery cells. Projects that have not broken ground are paused, while those already under construction will not be affected. The move comes amid growing concerns about overcapacity risks in the energy storage sector, despite rising demand for batteries used to balance grids and provide backup power.
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China has temporarily suspended approvals for new battery storage manufacturing factories. China is the world's largest manufacturer of batteries for energy storage. The suspension applies specifically to projects that have not yet broken ground, while factories already under construction will not be affected.
The pause comes as Chinese authorities conduct a review of existing and planned energy storage production capacity, with particular attention to battery cell manufacturing. The move comes amid growing concerns about overcapacity risks in the sector, even as demand continues to rise for batteries used to balance power grids and provide backup power.
China's energy storage manufacturing sector expanded rapidly alongside the country's renewable energy build-out, but battery makers have faced intense competition and falling prices. Leading Chinese solar manufacturers have also expanded into battery energy storage as shrinking profits and overcapacity in the solar panel sector push them to seek new growth opportunities.
China's new-type energy storage market also recorded slower additions in the first half of 2026. According to the China Energy Storage Alliance, newly commissioned capacity reached 21.81 GW/58.60 GWh, down 18% in power terms and 16% in energy terms from a year earlier.
China remains a major global battery manufacturing hub. CATL, the country's largest battery maker and the world's largest battery manufacturer, expects energy storage to account for half of its global sales by 2030, up from about 25% currently and 2% five years ago. CATL's Kevin Tang, director of energy storage systems for Europe, said the increasing need to complement intermittent renewable generation is driving demand for storage batteries.
The reported factory approval pause follows other measures aimed at addressing competition and capacity in China's battery industry. In November 2025, China's Ministry of Industry and Information Technology said it would accelerate measures to curb “irrational competition” in the power battery and energy storage battery sectors and strengthen capacity monitoring and regulation.
In July 2026, China's Ministry of Finance, General Administration of Customs and State Taxation Administration announced changes to battery consumption tax policy. From September 1, 2026, lithium-ion batteries and several other battery categories became subject to a 2% consumption tax, while photovoltaic cells are scheduled to be subject to the tax from April 2027.