American electric automaker Tesla’s plans to produce energy-storage batteries in China moved forward on Friday with a signing ceremony for the land acquisition for a new factory in Shanghai, China’s state media said.

Construction is scheduled to start early next year with production to come on line by the end of the year, the official Xinhua News Agency said.

The factory won’t build batteries for cars but for electric utilities and other companies to store power. Such storage units have become increasingly important with the growth in solar power and wind energy, which only generate electricity when weather conditions are favorable and need to store it for when residential and commercial users need it.

The new factory will initially produce 10,000 of Tesla’s Megapack units annually for sale worldwide, Xinhua said.