Energy Insider: AI Comes to China’s Power Sector, Foreign Battery-Makers Use Courts Against Chinese Rivals

This week's Caixin energy wrap highlights significant developments and trends in China's energy sector, touching on the role of artificial intelligence (AI), international legal battles over battery technology, Tesla’s expansion into energy storage, and the rapid growth of the green electricity market [para. 1].

AI is playing an increasingly transformative role in China’s energy industry. Companies such as China Gas Holdings Ltd. and China Southern Power Grid Co. Ltd. point to AI’s potential to convert the traditional energy sector into a data-driven, future-oriented system. Hangzhou-based DeepSeek’s open-source AI models are cited as having significantly raised the sector’s overall technological standard, making AI more accessible for energy companies [para. 2][para. 3]. Since 2020, China Gas has been using AI to predict natural gas demand, a move emblematic of the sector’s broader embrace of digital transformation. AI is now being used across a variety of energy industries, including oil, gas, mining, and power grids, with goals to reduce costs, improve efficiency, and enhance safety [para. 4]. This trend is closely linked to Beijing’s broader strategy to enhance productivity and competitiveness in the context of economic challenges and growing technology competition with the United States [para. 5].

On the international front, South Korean and Japanese battery-makers are pushing back against the rapid rise of Chinese competitors in Europe. Tulip Innovation, a company jointly formed by LG Energy Solution and Panasonic Energy, has obtained court injunctions in Germany against Chinese battery manufacturer Sunwoda Electronic for infringing two key battery separator patents [para. 6][para. 7]. The Munich District Court barred multiple Sunwoda subsidiaries from selling specific battery products in Germany, though Sunwoda is appealing and seeking to invalidate the patents [para. 8]. This marks the first time such injunctions have been issued for car batteries in Germany, illustrating the increasing importance of intellectual property protection as Chinese companies, especially CATL, expand aggressively in Europe at the expense of established Korean and Japanese firms [para. 9][para. 10].

Tesla has announced it will build its first grid-scale energy storage plant in China, located in Shanghai’s Lingang Special Area, in partnership with China Kangfu International Leasing. The project's investment totals 4 billion yuan (about $556 million), making it the largest grid-connected energy storage facility in the country [para. 11][para. 12][para. 13]. This is Tesla’s first such battery facility outside the United States and was constructed in just seven months. Its Shanghai factory, which began making Megapack units in February, offers an annual capacity of 10,000 units, each storing 3.9 megawatt-hours of energy, serving both Chinese and international markets [para. 14][para. 15].

China’s green electricity trading has experienced a surge, with over 220 terawatt-hours traded in the first five months of the year—a 50% increase compared to the previous year and nearly matching all of 2024’s trading volume thus far [para. 16][para. 17]. More than 60% of the nation’s electricity is now traded on the market. In May, a landmark policy allowed renewable energy generators to directly supply consumers, bypassing the grid and reducing waste [para. 18][para. 19]. Additionally, three regional grid operators have recently collaborated to deliver green electricity from the north, northeast, and northwest to energy-demanding Guangdong province [para. 20].