Battery makers rise as beneficiaries of Lee's industrial policies

An energy storage system at Korea Electric Power Corp.'s (KEPCO) substation in Gyeongsan, North Gyeongsang Province / Courtesy of KEPCO

The Lee Jae Myung administration is ramping up efforts to deliver on the president's pledge to invest in energy storage systems (ESS), raising hopes that Korean battery makers will capitalize on this opportunity to overcome challenges from sluggish electric vehicle (EV) demand.

As the government highlights the role of ESS in its artificial intelligence (AI) and energy policies, investors are betting on a rebound for battery companies.

The presidential office announced Thursday that the government will make major investments in ESS to prevent unstable power supplies at the upcoming national industrial complex, which will rely solely on renewable energy sources such as solar and offshore wind.

This announcement follows the administration's decision to prioritize the creation of the so-called RE100 (renewable energy 100 percent) industrial complex, as Lee previously promised.

“We are considering addressing the issue by increasing regional ESS,” said Kim Yong-beom, presidential chief of staff for policy, when asked about measures to counter intermittent power generation.

“This approach will also help the rechargeable battery industry overcome the current slowdown,” he added.

The office of the senior presidential secretary for AI Future Planning also reportedly brought together representatives from battery manufacturers for a one-hour meeting with the presidential secretary for climate, environment and energy on Wednesday.

It was unusual for manufacturers to meet with the AI secretary’s office rather than the economic growth secretary’s office, which typically handles industrial policy. Given the significant electricity demand at AI data centers, there is speculation that the meeting focused on using ESS to power these facilities.

Earlier this month, the Ministry of Trade, Industry and Energy closed tenders from battery makers for a 1.5 trillion won ($1 billion) project to supply ESS built with 3 gigawatt-hours of batteries. The preferred bidder will be selected by the end of this month.

This project is part of the government’s plan to supply 40 trillion won’s worth of ESS by 2038.

“To build a distributed, intelligent power grid, we will significantly expand ESS deployment and raise Korea’s technological competitiveness to the world’s highest level, so that Korean battery companies can lead the global market with strong government support,” Lee said in May.

At that time, he also pledged tax incentives to support investment in the research, development and manufacturing of rechargeable batteries.

“With growing uncertainty about EV demand in the second half, ESS will attract more attention,” Kiwoom Securities analyst Kwon Joon-soo said.

Boosted by expectations for the battery sector’s recovery, shares of related companies surged Friday.

The stock price of Samsung SDI rose 5.34 percent from the previous session’s close to 179,400 won, while LG Energy Solution increased 1.1 percent to 321,500 won. POSCO Future M, EcoPro BM and L&F saw gains of 7.34 percent, 3.65 percent and 11.32 percent, respectively.