[Edaily Reporter JAEMIN SONG ] With LG Energy Solution opting out of the largest-ever domestic energy storage system (ESS) central contract market bidding, SAMSUNG SDI CO.,LTD. and SK On are set to compete for orders worth approximately 2 trillion won. In particular, observers note that LG Energy Solution’s absence from the bidding—as a major competitor—may ease the price competition burden on SAMSUNG SDI CO.,LTD. and SK On and provide them with some breathing room to secure profitability. As ESS emerges as a new growth engine amid slowing demand for electric vehicle batteries, the market strategies of the three major domestic battery companies are diverging.

According to industry sources on the 6th, LG Energy Solution announced the previous day that it would not participate in the third competitive bidding round for the ESS Central Contract Market, leading to a competitive landscape centered on SAMSUNG SDI CO.,LTD. and SK On. This tender covers a total capacity of 1,180 megawatts (MW)—1,100 MW on the mainland and 80 MW on Jeju Island—amounting to 7.08 gigawatt-hours (GWh) in storage capacity. It is the largest tender to date, more than double the size of the second tender, with the total project cost estimated at approximately 2 trillion won.

Behind LG Energy Solution’s decision not to participate lies the pressure on profitability caused by overheated price competition. The company has determined that it is more advantageous to focus on existing projects rather than aggressively lowering prices to secure volume in this tender. Domestic production capacity is also cited as a contributing factor. LG Energy Solution plans to begin producing ESS batteries at its Ochang Energy Plant starting next year, with an initial annual capacity of 1 gigawatt-hour (GWh). Given that the volume of this tender amounts to 7.08 GWh, the company needs time to expand its domestic production base. The company plans to prioritize the 214 MW of orders secured in the first and second rounds of bidding, as well as the development of next-generation technologies.

With LG Energy Solution’s withdrawal, opportunities have opened up for SAMSUNG SDI CO.,LTD. and SK On to secure large-scale new orders. In the first and second rounds of bidding, SAMSUNG SDI CO.,LTD. secured a total of 629 megawatts (MW), accounting for approximately 56% of the total 1,128 MW. SK On secured 284 MW, or about 25%, while LG Energy Solution secured approximately 214 MW, or 19%. In particular, SK On is closing in on SAMSUNG SDI CO.,LTD. after winning the largest volume in the second round of bidding. Industry observers predict that, given the significant increase in the scale of this bidding round, the two companies are likely to split a substantial portion of the volume between them.

The key factor is price. In the previous two rounds of bidding, fierce competition among suppliers drove down supply prices and increased pressure on profitability. However, observers note that this time, with the number of major suppliers decreasing while the volume of orders has increased significantly, pricing leverage may improve. Nevertheless, non-price evaluation criteria—such as the bid prices submitted by each power generator consortium, fire safety, and contribution to the domestic industry—remain key variables that will determine the outcome of the bidding.

A look at the recent financial results of the three major battery manufacturers underscores the growing importance of expanding the ESS business. LG Energy Solution reported a third-quarter operating profit of 756 billion won—a 567% increase from the previous quarter—but has drawn a line against pursuing additional domestic orders due to uncertain profitability. In contrast, SAMSUNG SDI CO.,LTD. returned to profitability with an operating profit of 407.8 billion won compared to the same period last year and has secured ESS orders totaling more than 60 GWh this year. SK On, which posted an operating loss of 80.5 billion won, is seeking to improve its performance by converting electric vehicle battery production lines to ESS production and expanding new orders.

An industry official stated, “Given the sheer volume of this tender, there is a possibility that SAMSUNG SDI CO.,LTD. and SK On will split the orders to some extent,” adding, “While it is still difficult to predict the outcome, there are forecasts that pricing conditions will improve compared to the first and second rounds.”