China, which is the biggest producer of batteries in the world for energy storage, has temporarily ceased approving new factories, Chinese financial news outlet Cailianshe said on September 5, 2026.

Industry sources have told Reuters the pause came as officials evaluated current and planned energy storage capacity for battery cells production in particular. The move comes in the face of increasing worries over excess capacity risks within the energy storage sector, the report said.

Even so, demand is soaring for batteries used to stabilize the grids and supply back-up power.

Those projects that have not been commenced will not proceed forward for now due to temporary stalling of storage capacity for battery cells production, but those currently under development will not be impacted, Cailianshe sources stated, adding that the directive could be tweaked later.

The energy storage industry of China has grown rapidly with the renewable energy build-out in the country, but as with other industries such as solar panels as well as electric vehicle manufacturing, manufacturers have come under increasing pressure from fierce competition and price reductions.

The top solar makers from China are rapidly expanding into battery ⁠energy storage, seeking new growth prospects as profits drop and there is a capacity surplus in the panel sector.

It is well to be noted that China has also imposed a consumption tax on lithium-ion batteries and solar cells so as to bring about rationalization of the market.