China's largest battery producer, CATL, plans to invest in a hydropower project in Yajiang county, Ganzi prefecture, Sichuan province, through a joint venture (JV) with state-owned power producer SDIC Power, in a move that could help secure renewable electricity supply and reduce the carbon footprint of its battery products.
CATL and SDIC Power will establish a JV, Yalong River Yagen Hydropower Development, to develop a second hydropower station downstream of an existing project on the Yalong River, SDIC Power said on 21 July. The project has a total planned investment of 33.39bn yuan ($4.66bn), with CATL holding a 10pc stake in the Yagen JV.
Construction is expected to take around 101 months, with the first generating unit scheduled to enter operation in 2035 and full commissioning targeted for 2036. The station will be capable of replacing 2.664GW of coal-fired and natural gas-fired power generation capacity once commissioned, SDIC power said. Based on thermal-equivalent calculations, the project is expected to save approximately 2.535mn t/yr of standard coal and 2.086bn m³/yr of natural gas, while reducing CO2 emissions by around 4.51mn t/yr.
The investment highlights growing efforts by battery manufacturers to secure access to renewable electricity as they seek to lower emissions across their supply chains. The project could help CATL lock in long-term green power supplies and support its broader strategy of reducing the carbon footprint of battery production.
CATL has increasingly emphasized the commercial value of emissions reductions and low-carbon manufacturing, according to sources familiar with the matter, as battery producers face stricter sustainability requirements from overseas customers and regulators.
Earlier this year, CATL invested Yn10bn to establish a zero-carbon technology company in Xiamen. In June, the company's EnerD+ energy storage products received one of the first certifications issued under China's pilot programme for product carbon-footprint labelling. The certification was the first, and so far the only, national-level carbon-footprint certification awarded to a lithium battery product in China.
The EU is one of the major export markets for Chinese battery suppliers. The EU's Carbon Border Adjustment Mechanism (CBAM) and the bloc's new battery regulation have introduced more stringent requirements for carbon footprint reporting and emissions performance across battery supply chains.
The EU announced in July 2023 that it will require electric vehicle (EV) and industrial batteries with a capacity greater than 2kWh placed on the EU market to be electronically registered from 18 February 2027. This registration will take the form of a battery passport featuring an identification QR code and CE marking.
The hydropower investment also reflects a broader trend of battery manufacturers seeking greater control over upstream resources, energy supply, and decarbonisation pathways as global demand for EVs and energy storage systems continues to expand.