[Edaily Reporter JAEMIN SONG ] LG Energy Solution posted surprise earnings for the third quarter of this year, driven by growth in its energy storage system (ESS) business. Even amid slowing demand for electric vehicle batteries, ESS has emerged as a new driver of earnings improvement, prompting South Korea’s three major battery manufacturers to accelerate the expansion of their related businesses. They are restructuring their operations to focus on ESS through securing new orders and converting existing production lines.

LG Energy Solution announced on the 3rd that it recorded consolidated revenue of 9.6434 trillion won and operating profit of 756 billion won in the third quarter of this year. These figures represent year-over-year increases of 59.0% and 25.7%, respectively, while compared to the previous quarter, revenue rose 27.6% and operating profit surged 567.3%.

The improvement in earnings was largely driven by increased ESS shipments. ESS sales volume rose by more than 60% compared to the previous quarter, and its share of total revenue rose to the low 30% range. Improved capacity utilization at the Polish plant and expanded sales of cylindrical batteries also supported profitability. Operating profit, excluding 416.9 billion won in North American production subsidies, stood at 339.1 billion won.

The growth foundation for the ESS business is also expanding. The order backlog at the end of the third quarter stood at approximately 160 gigawatt-hours (GWh), and in North America, the company has secured most of the production volume planned through 2028. Recently, the company signed its first direct supply contract for battery energy storage systems (BESS) with a major tech firm and was also selected as a “DSX Ready BESS Partner” by NVIDIA.

To meet growing demand, the company is also expanding the conversion of existing electric vehicle battery production lines to ESS production. It plans to increase ESS production capacity in North America from over 50 GWh by the end of this year to over 70 GWh by the end of next year. Lee Chang-sil, Executive Vice President of LG Energy Solution, stated during a conference call that day, “We plan to maximize operational efficiency with limited resources by strengthening our strategy of ‘selection and concentration.’”

SAMSUNG SDI CO.,LTD. also reported improved earnings driven by ESS. In its third-quarter earnings announced on the 29th of last month, SAMSUNG SDI CO.,LTD. recorded revenue of 4.6856 trillion won and an operating profit of 407.8 billion won. Revenue increased by 52.6% year-over-year, and the company returned to profitability. Expanded sales of ESS and battery backup units (BBUs) drove the improvement in earnings.

SAMSUNG SDI CO.,LTD. has secured more than 60 GWh in ESS battery orders this year. It has begun mass production of lithium iron phosphate (LFP) batteries for ESS at the StarPlus Energy (SPE) plant in the U.S. and plans to launch additional production lines starting in the first half of next year. During a conference call, the company stated, “Based on the order volume currently secured, the SPE and Ulsan lines will be able to operate at full capacity through 2028.”

SK On is accelerating the conversion of its production facilities ahead of the reflection of ESS order volumes in its financial results. In the third quarter, the company reported revenue of 1.5263 trillion won and an operating loss of 80.5 billion won. It signed a supply contract with U.S.-based NeoVolta Power to provide a total of 9 GWh of LFP batteries for ESS over five years starting in 2027, and is also pushing forward with the conversion of its EV production lines in Korea and North America to ESS production.

This business expansion is driven by rapidly growing demand for ESS. According to market research firm SNE Research, global shipments of lithium-ion ESS batteries in the first half of this year reached 461.3 GWh, a 71% increase compared to the same period last year. In particular, as investment in artificial intelligence (AI) data centers and power grids expands, the range of ESS customers is also diversifying.

An LG Energy Solution official stated during a conference call that day, “ESS demand is exceeding our available production capacity,” adding, “Customers currently in discussions with us regarding supply include not only existing power grid and utility customers but also AI data centers seeking to secure ESS through these channels, as well as hyperscalers making direct purchases.”