Samsung SDI overwhelms rivals in gov't-led ESS deals

A Samsung SDI official showcases the battery maker's energy storage system technologies at the company's exhibition booth for the 2024 Korea Smart Grid Expo at COEX in Seoul, April 2024. Newsis

Samsung SDI has secured six of eight battery supply deals in a 1 trillion won ($726 million) project led by the Ministry of Trade, Industry and Energy to install energy storage systems (ESS) in Korea’s southern regions.

According to industry officials on Friday, Samsung SDI was selected as the preferred bidder to supply its nickel-cobalt-aluminum (NCA) batteries to six facilities in South Jeolla Province’s Jindo, Goheung, Yeonggwang, Muan and Shinan counties. These facilities will have a combined capacity of 465 megawatts, or 2,574 megawatt-hours.

The other two facilities, in Gwangyang, South Jeolla Province and on Jeju Island, will use lithium iron phosphate (LFP) batteries from LG Energy Solution (LGES). SK On did not win any orders this round.

The outcome came as a surprise, given LGES' track record of winning most ESS bids. Because NCA batteries with higher energy densities are more expensive than LFP batteries, LGES had been expected to sweep most of the recent orders.

However, the government reportedly favored Samsung SDI for its plan to manufacture most of the batteries for the ESS project at its Ulsan plant. Industry sources said LGES planned to rely mainly on batteries produced at its Nanjing plant in China.

“Samsung SDI also seems to be recognized for its technology to prevent ESS fires,” a battery industry official said.

The government plans to place additional orders for ESS installations in areas that rely heavily on renewable energy. All three major Korean battery makers are expected to participate in upcoming bids.

As competition in the domestic ESS market intensifies amid slower demand for electric vehicle batteries, LGES also said Friday it will capitalize on rising ESS demand in North America.

“Our joint venture with a U.S. automaker is partially using its factory to supply ESS, allowing us to maximize capacity utilization,” an LGES official said during a conference call after the company reported 5.6 trillion won in sales and 492.2 billion won in operating profit for the second quarter.