Each player chooses how much energy to spend during Step 3: Battle Preparations of the battle sequence.

• According to the rulebook, during Battle Preparations, "beginning with the active player and proceeding in turn order, each player may spend any amount of energy to gain 1 die per energy spent. Each player only gets 1 chance to spend energy."
• This means each player, in turn order, decides how much energy to spend to gain extra dice for the battle, and this decision is made before any dice are rolled.

Source: Core Rulebook, Page 21

Sources:

• Core Rulebook (pp. 21, 22, 23, 24, 7)
• Appendix (pp. 21, 25, 26, 27, 6)