Beijing freezes plant approvals for energy-storage batteries amid overcapacity fears

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.