Hebei Energy Storage Sector Cleanup: 85 Projects Canceled or Postponed – Curbing "Paper Wealth" From Unbuilt Occupied Quotas & Land Resources

China's energy storage sector is clearing bubbles and reducing excess production capacity, with enterprises heading overseas to secure orders and pursue development.

Hebei and Shanxi are cleaning up energy storage projects; squeezing out domestic bubbles and seizing overseas orders has become the way out.

Energy Insight learned that an official public notice from the Hebei Provincial Development and Reform Commission has sent shockwaves through the entire energy storage industry.

A total of 85 independent energy storage projects have been disposed of in a centralized manner: 69 are postponed to start construction before January 31, 2027, and 16 have their construction plans cancelled directly. The total disposed capacity reaches 11.66GW/37.71GWh. The public notice period is only three days, from August 20 to 22. The authorities took swift and decisive action, leaving no room for mediation.

Hebei is not an isolated case. In the first quarter of this year, Shanxi adjusted its 5th round of energy storage project library, removing 31 projects in a single round with a total capacity of 6.05 million kW. In total, Shanxi has completed 5 rounds of adjustments, with 556 projects admitted to the library, 222 projects removed, releasing a capacity of over 25GW/76GWh.

222 projects removed from the library in a single province. No one would have believed this figure two years ago.

Over the past five years, China's new energy storage installed capacity has surged from 3 million kW to 153 million kW, a 50-fold skyrocketing increase. However, the prosperity is full of bubbles underneath. The total reserved capacity of Shanxi's project library is 173.49GWh, while the actual implementation rate is less than 15%, and the real grid-connected rate is even lower than 10%. The 173GWh of paper planning is enough to build hundreds of power stations, but the number of projects that are actually put into operation is not even a fraction of that.

How did energy storage become a "paper prosperity"? The answer is four words: occupying the index without actual construction.

01 Snatch and you gain

Who cares whether the project can start construction or not

"Snatching indexes to occupy pits" has been an unspoken rule in the energy storage industry over the past few years. Enterprises acquire land at extremely low cost or even for free to seize project indexes, and do not rush to start construction after obtaining the record-filing. What are they waiting for? They wait for lithium prices to fall to reduce costs, wait for better policy windows, or simply hoard resources to wait for a good price and find a buyer to take over the project. The implementation of a 100-billion-yuan level energy storage project can quickly attract supporting enterprises from upstream and downstream to cluster, and translate into considerable industrial output value and tax revenue. To attract investment, local governments set loose time limits for project implementation, and the phenomena of "valuing signing over implementation" and "valuing record-filing over construction start" are very common.

A large number of "three-no" enterprises — with no capital strength, no power development experience, and no professional operation and maintenance capabilities — have swarmed into the industry. They do not invest or start construction, but only hoard indexes and speculate on project approvals. The access intervals of grid substations are extremely scarce, which are occupied by these shell projects, making it impossible for enterprises with real strength to obtain resources and connect to the grid.

Gresham's Law, the bad money drives out the good, has been fully demonstrated in this industry.

Shanxi's response can be called "shock therapy". Large-scale project removal forces actual construction. Starting from September 1, 2026, projects admitted to the library must start substantial construction within 6 months, and be completed and connected to the grid within 12 months. Postponement is allowed, but the threshold is extremely high — the recorded fixed asset investment shall not be less than 30%, the maximum postponement for electrochemical energy storage is 6 months, and the project will be directly removed from the library if it exceeds the time limit. Projects shall not be transferred without permission within 5 years after being admitted to the library, which blocks the channel of project approval speculation from the source.

Hebei takes stricter measures: substantial construction must be started within 9 months, grid connection must be completed within 15 months, those who exceed the time limit will lose the qualification for capacity price support, and projects outside the list will not be granted capacity price. In short: no construction, no subsidies.

With this combined set of measures, the energy storage project library has changed from a "digital game of paper prosperity" to a "life-and-death field where you advance or perish".

02 Win public praise but lose money

Even leading enterprises cannot hold on

The fundamental reason for projects being cleaned up is that the business cannot break even.

The investment calculation of early energy storage projects was mostly based on idealized peak-valley price differences and high-frequency dispatch. When it comes to actual operation, with the full rollout of the spot power market, independent energy storage generally adopts the "capacity + spot" revenue model. The capacity price can only cover 10% to 40% of the revenue demand, and the average charge-discharge price difference in the spot market is relatively low, so most regions cannot even reach the break-even point.

The profit anxiety of enterprises leads to widespread wait-and-see sentiment — waiting for policies, waiting for better electricity prices, and waiting for favorable market conditions.

The residential energy storage track is more fragmented. Sungrow New Energy recorded a revenue of 9.874 billion yuan in the first half of the year, a year-on-year increase of 261.2%, and a net profit of 2.428 billion yuan, a year-on-year increase of 201%, delivering very impressive results. In the same track, Ailo Energy recorded a revenue of 3.154 billion yuan, a year-on-year increase of 74.59%, but its net profit turned to a loss of 35.13 million yuan from 142 million yuan in the same period of the previous year.

Some enterprises see revenue growth but no profit growth, or even turn from profit to loss with growing revenue. This is not an individual phenomenon, but an industry-wide problem.

Tian Qingjun, Senior Vice President of Envision, once stated that the planned expansion of energy storage cell production capacity this year has exceeded 800GWh, the completed production capacity by the end of the year will be about 1.2 to 1.5TWh, and the total planned production capacity exceeds 2TWh, "which has far exceeded the real demand of the global market". Cell production requires continuity. Once there is overcapacity, enterprises will inevitably launch price wars for survival.

The overcapacity rate of planned energy storage cell production exceeds 300%. This is not a warning, but an alarm.

Regulatory authorities have already taken action. According to reports from CLSA, relevant departments are comprehensively investigating the existing and planned production capacity, and suspending the advancement of projects that are still in the planning stage and have not officially started construction. During the 15th Five-Year Plan period, new energy storage capacity projects may "shift from accelerating construction to strict approval".

03 Overseas markets have become the only viable way out

While China is "squeezing bubbles", overseas markets are snapping up energy storage products frantically.

In the first half of 2026, Chinese enterprises secured more than 300 overseas energy storage orders with a total capacity exceeding 288.69GWh. In June alone, the publicly signed capacity reached 125.1GWh. Nearly half of the total energy storage system order capacity in the first half of the year was concentratedly signed in the last month.

In July, BYD signed an 11.275GWh energy storage contract with Emirati energy giant Masdar to provide energy storage systems for the Abu Dhabi RTC project. This single order accounts for nearly 30% of the total overseas energy storage order capacity of Chinese enterprises in July. The RTC project is planned to have 5.2GW of photovoltaic power and 19GWh of energy storage, with the goal of continuously and stably outputting 1GW of clean power to the grid, with a total investment of about 6.1 billion US dollars.

The energy storage in this project is no longer just for peak shaving and frequency regulation, but to convert fluctuating photovoltaic power into dispatchable power close to traditional baseload power sources.

In July, CATL signed a 5GWh sodium-ion energy storage cooperation memorandum with Dutch company Alfen, and then signed a 2GWh sodium-ion energy storage cooperation agreement with Solarpro. Chinese enterprises are putting next-generation battery technologies into verification in high-value overseas markets first.

Sungrow New Energy secured 10 overseas energy storage orders totaling 25.7GWh in the first half of the year, ranking first. This company, founded in 2021, saw its market value exceed 160 billion Hong Kong dollars on the first day of listing on the Hong Kong Stock Exchange in April. Chooneng New Energy signed 74GWh of orders within 40 days. In the first half of 2026, the top five leading enterprises took nearly 60% of the market share.

Orders in Europe reached 104.27GWh, 64.72GWh in Asia, and 32.91GWh in Oceania. The Middle East and Africa region exceeded 40GWh, a year-on-year increase of 17%.

Overseas markets have become the only incremental outlet for the energy storage industry.

However, the 288.69GWh is the signed capacity, not the current shipment volume, let alone the current revenue. The performance certainty of framework agreements, priority supply agreements and formal procurement contracts is completely different. These orders are more appropriately understood as locked project reserves, rather than realized operating performance.

Greater challenges lie ahead. In mature markets such as Europe, the United States and Australia, projects attach great importance to compliance, financing, grid connection capabilities and full life cycle returns. In emerging markets such as the Middle East and South Asia, customers prefer large capacity, fast delivery and integrated solutions. The old model of applying one single product to all markets no longer works. The real challenge has become to adapt to vastly different power markets with different system architectures, business models and local teams.

On June 9, China's first inter-institutional energy storage REITs was listed on the Shanghai Stock Exchange. The underlying asset is the 200MW/800MWh grid-side independent energy storage power station in Jiuquan, Gansu, with an issuance size of 451 million yuan. Energy storage assets finally have a standardized capital exit channel.

The logic of the capital market is also changing. Sungrow New Energy's IPO was oversubscribed by 1102 times. Starry New Energy completed the third round of financing of nearly 500 million yuan and launched its Pre-IPO process. The window is open, but not everyone can pass through it.

Among the 16 cancelled projects in Hebei, there are multiple all-vanadium redox flow battery projects — the initial investment is too high, the internal rate of return fails to meet the requirements, and enterprises have insufficient willingness to construct.

The technical route itself is not problematic, the problem is that the business cannot break even.

The energy storage industry is standing at a crossroads. The domestic market is "squeezing bubbles", while overseas markets are "seizing orders". Some enterprises sandwiched in between have seen their market value surge after listing, while others have turned from profit to loss with growing revenue. The 173GWh paper prosperity is being punctured, while the 2TWh planned production capacity is still on the way.

This cleanup is far from over.

This article is from the WeChat official account "Energy Insight", written by Zhao Jianan, and published with authorization from 36Kr.

该文观点仅代表作者本人，36氪平台仅提供信息存储空间服务。