South Korean battery companies are shifting their focus towards energy storage systems (ESS) instead of electric vehicles, as competition heats up in domestic and North American markets.
In the wake of declining demand for electric vehicles and the influx of cheaper Chinese products, South Korean battery corporations have been forced to pivot their strategies significantly towards energy storage systems (ESS). Competitive tensions have heightened among the country’s top three battery firms—Samsung SDI, SK On, and LG Energy Solution—as they prepare for the upcoming second round of bidding for a new ESS project initiated by the government. This project aims to stabilize power supply in areas with high renewable energy generation and is set to establish large-scale ESS installations by 2027, creating opportunities worth approximately 1 trillion won.
The second ESS project will involve the installation of 500 megawatts (MW) and 40 MW systems in the mainland and Jeju, respectively. While the bidding amounts may be relatively small on an individual project basis, the government's long-term plan includes establishing a substantial capacity of 23 gigawatts (GW) by 2038, worth around 40 trillion won. This incentivizes the 'big three' to commit fully to each bidding round, with Samsung SDI having dominated the previous round by securing 76% of the total bid quantities.
Meanwhile, in foreign markets such as North America, fierce competition persists among South Korean firms. LG Energy Solution stands out as the only domestic company producing batteries for ESS in the U.S. and has reported significant cumulative backorders. This competitive environment not only emphasizes the shifting focus of these companies but also highlights the growing importance of ESS as a pivotal element in energy solutions and sustainability strategies moving forward, especially amidst the evolving landscape of renewable energy adoption.
