According to Chang Seungse, who oversees the company’s ESS business, LG is considering more investment in the US after announcing a $2.3 billion expenditure plan in March to manufacture grid-scale batteries for storage in Arizona. According to him, up to 70% of LG’s ESS sales in North America by 2030 will contribute to the company’s sector-wide revenue tripling during the next five years.
Chang opted against providing any information regarding the additional investment in the US.
The Korean manufacturer’s entry into the US market highlights its efforts to ward off Chinese competitors and reclaim influence in the energy storage industry. According to Chang, the company will concentrate on providing higher-end storage solutions in North America, with a focus on high-end goods, and will profit from the tax credits offered by US President Joe Biden’s Inflation Reduction Act.
Before leaving for the industry trade show RE+ 2023 in Las Vegas, he noted in an interview that it would be difficult for Chinese suppliers to directly compete with us in the US. “Playing a market-share game with China is not in our plan,”
The plans for expansion follow a string of incidents that occurred at energy storage facilities in South Korea between 2017 and 2019, which stunted the sector’s growth there and led to stronger government regulations. One of the main obstacles to Korea’s efforts to decarbonize its electricity grid is safety.
As South Korean ESS battery producers struggled with safety issues, their major competitors in China increased their market share. According to a survey from Seoul-based SNE Research, modern Amperex Technology Co. and Eve Energy Co. have both witnessed increases in their shares to around 43% and 7.8%, respectively, while LG’s stake fell to 7.5% last year from over 18% in 2021.
Chinese producers have also benefited from China’s soaring domestic demand. According to a BloombergNEF analysis, the worldwide energy storage industry is anticipated to develop at a compound annual growth rate of 23%, with China overtaking the US as the largest market by 2030.
The ESS market is where LG hopes to apply its knowledge of EV batteries—it is a supplier to major automakers like Tesla Inc. and General Motors Co. According to Chang, the business will quicken the development and production of lithium-iron-phosphate, or LFP, batteries because they are generally safer and less expensive than the nickel-cobalt-manganese cells often used in storage systems.
According to Helen Kou, a BloombergNEF analyst, LFP will continue to dominate the stationary storage market through 2030, accounting for 65% of the ESS battery storage chemistry mix. “LG ESS must invest in LFP technology if it wants to compete with other battery providers,”
Read more: As China Advances, Korea’s Battery Makers Adopt LFP Cells
According to Chang, LG is considering options besides the battery manufacturing industry. To assist in running enormous energy storage systems, the company will hire more software experts. According to him, having more sophisticated and integrated software capabilities is essential for generating new revenue sources as well as guaranteeing battery safety.
Before taking over as LG’s director of ESS last year, Chang, a former consultant who turned 50 this year, struck significant supply agreements with European automakers like Volkswagen AG that paved the way for the development of the biggest battery plant in the region in Poland.
China will simply make the competition tougher, he predicted. We won’t succeed in this game until we can set ourselves apart by providing comprehensive solutions that include the full software system in addition to trustworthy and secure batteries.