(Yicai) March 11 -- China’s energy storage industry needs to push back against excessive competition that yields diminishing returns, Zhang Tianren, chairman of battery maker Tianneng Holding Group, said at the Two Sessions, the country's annual policy-setting meetings.

“The electrochemical energy storage industry has fallen into severe irrational price competition in recent years,” said Zhang, who is also a deputy to the National People's Congress. “Prices of key equipment have plunged around 80 percent over the past three years, with some prices persistently remaining below the industry's average production cost.”

Zhang was referring to “involution,” or neijuan in Chinese, a self-defeating cycle of ever-intensifying competition in key sectors that results in diminishing returns. A national "anti-involution" campaign has been underway since last year. This year's Government Work Report released during the Two Sessions called for using a combination of capacity regulation, standards-setting, and quality supervision to thoroughly address involution-style competition.

In the first half of last year, net profit margins at leading energy storage companies fell to around 3 percent, Zhang noted, warning that irrational competition has evolved into systemic risks for users, prompting some firms to cut corners on cell quality control, system integration, and safety redundancy design in pursuit of short-term market share.

To break the cycle, he suggested that China's energy regulator and other government departments revise tendering and bidding rules for storage projects so that evaluations include key metrics such as levelized cost of energy, battery lifecycle and degradation rate, and safety redundancy configuration levels.

Zhang also called on regulators and industry associations to produce quantifiable implementation rules and safety technical thresholds to redirect capital toward technology and long-term value, strengthening the basis for high-quality industry growth.

China's installed capacity of new-type energy storage reached 136 gigawatts at the end of last year, up 84 percent from a year earlier and accounting for over 40 percent of the global total, with lithium-ion battery storage contributing about 96 percent.

The country aims to raise the figure to 180 GW by the end of next year, according to an action plan issued last August by the National Development and Reform Commission and other government departments. As wind and solar power become the dominant sources of new installed capacity, the reliance of new power systems on energy storage will continue to grow, according to analysts.

Editor: Futura Costaglione