[Edaily Reporter SOYEON KIM ] The government is set to announce the third round of bidding for the Energy Storage System (ESS) Central Contract Market later this month. With domestic demand for ESS on the rise, there is speculation that the order volume will be larger than in the first and second rounds. The three major domestic battery manufacturers are expected to form consortia to compete for the contracts.
According to industry sources on the 6th, the Korea Power Exchange is expected to issue a call for bids for the third round of the ESS Central Contract Market this month. This is the third round following the first and second rounds conducted last year, though the specific volume of the bid has not yet been finalized.
The ESS Central Contracting Market is a program administered by the Korea Power Exchange (KPX), an agency under the Ministry of Trade, Industry and Energy, through which ESS systems are procured via medium- to long-term contracts following a bidding process. Industry observers believe it is highly likely that the scale of the third project will be expanded to address rising electricity demand and grid bottlenecks. An official from the Korea Power Exchange stated, “According to the government’s 11th Basic Plan for Power Supply and Demand, plans are in place to introduce 530 MW of ESS capacity in 2028 and 600 MW in 2029,” adding, “Reflecting this, the industry expects the volume for the third phase to expand to 1 gigawatt (GW).” If the volume of the third Central Contract Market tender is expanded beyond previous levels, the total project scale is expected to grow to the 2 trillion won range.
Looking at the cumulative results of the first and second rounds, SAMSUNG SDI CO.,LTD. secured 629 MW, accounting for 55.8% of the total volume. SK On secured 25.2% with 284 MW, while LG Energy Solution secured 19.1% with 215 MW. In the first round, SAMSUNG SDI CO.,LTD. was reportedly highly evaluated as it was the only one among the three battery companies to participate in the bidding with domestically produced products.
As with the second round, non-price factors—such as safety and contribution to the domestic industry—are expected to play a more significant role than simple price competition in the third round. In the previous first and second rounds, winning bid prices continued to decline.
LG Energy Solution is expected to emphasize its contribution to the domestic industry by highlighting its production of lithium iron phosphate (LFP) batteries for energy storage systems (ESS) at its Ochang Energy Plant in Cheongju, North Chungcheong Province. SK On is also expected to further strengthen its LFP battery and domestic supply chain strategies. SK On operates Plants 1 and 2 in Seo San Co. Ltd., South Chungcheong Province.
SAMSUNG SDI CO.,LTD., meanwhile, is focusing on bolstering its price competitiveness while maintaining the strengths it has secured in domestic production and supply chains. In the first and second rounds, SAMSUNG SDI CO.,LTD. highlighted its nickel-cobalt-aluminum (NCA)-based prismatic batteries. For this third round, the company plans to formulate its strategy—choosing between LFP and NCA batteries—after reviewing the bid announcement.
Industry observers believe that, having secured a track record in the domestic ESS market through the first and second rounds, it is unlikely that the three major battery manufacturers will engage in a cutthroat price war. In particular, since all three companies have established ESS battery production systems in the North American market—where ESS demand is high—there is less need to unnecessarily sacrifice profitability in their domestic operations, according to analysts.
An industry official stated, “If price competition continues, profitability issues could arise at the actual time of supply,” adding, “If the electric vehicle battery market improves in the future, the low prices set for ESS batteries in the past could actually become a burden on profitability.”
