Regulatory Bodies Collaborate to Address Challenges in the Power and Energy Storage Battery Industry

The energy storage industry is currently facing a cycle of irrational competition, with many companies grappling with the challenge of increasing revenue without expanding profits. In response to this situation, a significant regulatory signal was issued recently. On January 7, 2026, the Ministry of Industry and Information Technology, the National Development and Reform Commission, the State Administration for Market Regulation, and the National Energy Administration jointly held a seminar on the power and energy storage battery industry. The meeting highlighted issues such as blind construction and price competition, and outlined measures to regulate industry competition.

During the meeting, the authorities emphasized the need to strengthen collaboration between central and local governments, implement comprehensive policies, provide guidance to local enterprises, and strictly control duplicate construction to promote a healthy and orderly development of the industry. This initiative follows a similar seminar held by the Ministry of Industry and Information Technology in late November 2025, aimed at steering the energy storage industry back towards rational development.

According to Zhu Junpeng, president of the Jiangsu Energy Storage Industry Association, the association does not oppose competition but rather meaningless consumption. He noted that the energy storage sector is transitioning from a period characterized by aggressive hardware price competition to a new phase focused on technological and operational capabilities. Moving away from low-price competition to embrace “true operations” supported by technologies such as artificial intelligence will be crucial for companies aiming to succeed in the market.

The seminar underscored the necessity for regulatory governance. It was pointed out that while China has achieved a competitive advantage in the global power and energy storage battery industry, issues such as blind construction and irrational low-price competition have disrupted the normal market order and weakened the industry’s sustainable development capacity, necessitating regulatory measures.

To regulate industry competition, the meeting proposed four key initiatives. First, to enhance market regulation by increasing price enforcement inspections and strengthening production consistency and product quality oversight, while cracking down on intellectual property violations. Second, to optimize capacity management by establishing capacity monitoring and tiered early warning mechanisms, enhancing macroeconomic control, and preventing the risk of overcapacity. Third, to support industry associations in exercising self-discipline, guiding enterprises in the scientific layout of capacity, and promoting the establishment of a market order that prioritizes quality and fairness. Lastly, the meeting emphasized the importance of regional collaboration, calling for enhanced synergy between central and local authorities, comprehensive policy implementation, and strict control of duplicate construction.

Data indicates that by the end of 2024, China’s newly installed energy storage capacity is expected to exceed 100 million kilowatt-hours, reflecting a twentyfold increase over the past five years, with energy storage batteries and systems accounting for more than 90% and 70% of the global market, respectively. However, beneath this prosperity, the entire industry is struggling. In September 2025, Zeng Yuqun, founder and chairman of CATL, stated at the World Energy Storage Conference that energy storage system prices have dropped by about 80% in the past three years, with recent tender prices for some projects falling below 0.4 yuan per watt-hour, significantly deviating from costs.

Moreover, competition in the energy storage industry has even extended overseas. Zeng openly remarked that competition among Chinese companies in the GWh level large projects in Europe, America, and the Middle East is particularly fierce, with some enterprises cutting prices by 30% from the normal pricing level while promising a 50% increase in lifespan.

According to Zhu Junpeng, the industry currently finds itself in a state of “increasing revenue without increasing profit.” He analyzed that while market demand should theoretically drive prices and profits up, the reality shows that while shipment volumes are increasing, profits are declining. He attributed this disparity to the fact that capacity release is outpacing market demand growth, driven by a surge of capital entering the sector due to its certainty. Although demand in overseas markets is recovering, the time required for order signing to delivery means that the market cannot immediately absorb the excess capacity.

Zhu further elucidated three underlying logics contributing to the industry’s competition: first, severe product homogeneity, with many companies pursuing the same technological paths; second, exaggerated marketing, where companies often misrepresent laboratory data as production performance; and third, a disconnect between products and real application scenarios, failing to address actual user pain points. He stated that such low-price competition often leads to reductions in product quality.

Zhu stressed, “Currently, the pace of technological iteration is not rapid enough. If material costs do not decrease significantly, excessive price wars will inevitably compromise product quality and safety.” As of May 2025, there have been 167 reported major safety incidents in energy storage globally.

He suggested that leading companies should focus on overcoming system-level challenges, while small and medium enterprises can innovate in niche areas to find survival space, rather than all competing in the same market segment.

Notably, current policies and industry dynamics are also pushing the market towards a shift from “price competition” to “true operations.” In December 2025, the National Development and Reform Commission and the National Energy Administration issued the “Basic Rules for the Medium- and Long-Term Power Market,” which will come into effect on March 1, 2026. These rules will eliminate arbitrary pricing for time-of-use electricity rates for entities directly participating in market transactions.

Sun Jie, Chief Sustainability Officer at Envision Energy, explained that although traditional “two charge, two discharge arbitrage” models may persist in some provinces for a short period, the lesson for the market is that the era of relying on fixed peak and valley price differences for easy profits is over. He believes that in the long term, this model will be replaced by more economically viable diversified solutions, with commercial energy storage accelerating its transformation from arbitrageurs to value providers.

Sun further emphasized that energy storage investors must shift their thinking, focusing not just on hardware prices but on assessing whether solution providers can offer a comprehensive ability that combines hardware, software, and services, along with clear profit models and operational guarantees.

He concluded, “Previously, operations were ‘fake operations’; the future of operations is ‘true operations.’ The past model merely involved charging and discharging based on fixed time-of-use prices, requiring low operational and equipment responsiveness. In contrast, ‘true operations’ will leverage tools like artificial intelligence to predict prices, loads, weather, and trading data with precision and optimize dispatch dynamically, which will be the true core competitiveness.”

Sun also stated, “In the future, the value of an energy storage system will mainly depend on whether it has a powerful AI brain capable of accurate forecasting, multi-objective dynamic optimization, and adaptive safety assurance, integrating real-time system conditions and data inputs for optimal scheduling and control decisions, thereby maximizing returns for owners and investors through AI and operational capabilities.”