Tesla has signed its first agreement to build a large-scale grid battery power plant in China amid ongoing trade tensions between Beijing and Washington.

Announced on the Chinese social media platform Weibo, Tesla said the project will be the largest of its kind in the country once completed.

Utility-scale battery energy storage systems help balance electricity supply and demand, especially by bridging gaps caused by intermittent sources like solar and wind.

According to Chinese media outlet Yicai and Reuters, Tesla has signed a 4 billion yuan ($556 million) deal with the Shanghai local government and China Kangfu International Leasing to build such a grid-scale battery plant.

Tesla reported that its Shanghai battery factory produced over 100 Megapacks in the first quarter of this year. Each Megapack can deliver up to 1 megawatt of power for four hours, designed specifically for utility-scale energy storage.

“The grid-side energy storage power station is a ‘smart regulator’ for urban electricity, which can flexibly adjust grid resources,” Tesla said on Weibo, according to a Google translation.

It added that this would “effectively relieve the pressure on urban power supply and ensure safe, stable, and efficient electricity for the city.”

According to Tesla’s website, each Megapack retails for just under $1 million in the U.S., while pricing for China has not been disclosed.

Demand for grid-scale battery installations is strong in China.

In May last year, Beijing set a target to add nearly 5 gigawatts of battery storage capacity by the end of 2025, raising the total to 40 gigawatts.

Tesla is also exporting Megapacks from its Shanghai factory to Europe and Asia to meet global demand.