LG Energy Solution eyes bigger share of ESS orders with LFP batteries
LFP batteries touted as suitable for Korean gov't-led ESS project
LG Energy Solution's (LGES) energy storage systems for power grids in California / Courtesy of LGES
An upcoming selection of companies to supply batteries for a government-led energy storage system (ESS) procurement project has drawn attention to lithium iron phosphate (LFP) batteries.
The focus mainly stems from the government’s decision to prioritize safety in the 1 trillion won ($678 million) project, unlike the previous bid where price was the main factor.
Compared with ternary batteries made of nickel, cobalt and manganese, or nickel, cobalt and aluminum, LFP batteries are less prone to fires and explosions because of their stable chemistry. Their longer lifespan has also made them increasingly popular in ESS projects, while ternary batteries continue to power electric vehicles (EVs) that require rapid acceleration.
According to industry officials Monday, both LG Energy Solution (LGES) and SK On offered to supply LFP batteries in the latest bid. Samsung SDI once again participated with its ternary batteries.
In the previous 1 trillion won ESS procurement project, Samsung SDI secured six of eight battery supply deals using its ternary batteries. LGES was awarded two contracts, while SK On did not win any orders.
At the time, the government reportedly favored Samsung SDI for its plan to produce most of the ESS batteries at its Ulsan plant. LGES was said to rely mainly on batteries made at its Nanjing plant in China.
Last month, however, LGES announced it would produce LFP batteries at its factory in Cheongju, North Chungcheong Province. SK On also reportedly decided to repurpose its EV battery plant in Seosan, South Chungcheong Province, to produce LFP batteries for ESS use.
“Because only a few domestic firms can produce LFP batteries and manage battery systems, having a reliable supply chain and proven ESS experience are expected to be key factors in this tender,” a battery industry official said.
Given LGES’ strong track record in ESS bids, some industry watchers expect Samsung SDI to face tougher competition this time.
Since forming a team for domestic power grid services in 2013, LGES has provided ESS battery systems at eight branches nationwide. The company also won Korea Electric Power Corp.’s ESS project in 2022 and a separate ESS project on Jeju Island in 2023.
The battery maker has also strengthened its ESS business division to capitalize on the market’s growth potential.