LS ELECTRIC Acquires Stake in Chinese Kunlan Subsidiary... Enters Local ESS Market

LS Electric Headquarters Exterior View

[Asia Economy Reporter Ki-min Lee] LS Electric announced on the 30th that it has signed a contract to acquire a 19% stake in Changzhou Kunlan, a PCS production subsidiary of Kunlan (KLNE), a leading PCS (Power Conversion System) company in China, for 10.52 million yuan (approximately 1.8 billion KRW).

This contract is part of LS Electric's comprehensive business cooperation with the battery company Narada (NARADA), signed last year to enter the local ESS market in China. By acquiring Kunlan's stake in Changzhou Kunlan, LS Electric plans to fully launch its PCS business locally.

The contract signing was conducted as an ontact (online face-to-face) contract to prevent the spread of COVID-19. LS Electric Chairman Koo Ja-kyun signed in real-time using a tablet PC at LS Tower in Yongsan, while Narada President Zhu Baoyi (朱保?) and Kunlan Co-President Yu Zhongran (于忠?) signed at LS Electric's Shanghai office.

According to the contract, LS Electric will export PEBB (Power Electronic Building Block), a core component of PCS, to Changzhou Kunlan. PEBB refers to the converter that constitutes the PCS along with DC and AC breakers. Changzhou Kunlan plans to sell ESS finished products equipped with Narada batteries and PCS manufactured with Korean-made PEBB throughout China.

In 2018, LS Electric launched the 'Modular Scalable PCS,' which improved scalability, stability, and economic efficiency by connecting 16 PEBBs in parallel, the largest scale in Korea. Through this business cooperation, LS Electric plans to introduce PCS with the same quality competitiveness in China.

Following the equity participation, LS Electric will additionally invest 650 million KRW in production lines and testing facilities at Changzhou Kunlan and will also support local technical personnel. Through this, it aims to secure quality competitiveness equivalent to PCS distributed in the Korean market and lay the foundation for expanding market share.

An LS Electric official said, "This contract aims to stably produce high-quality PCS locally in line with rapidly growing local demand, combine them with Narada's batteries, and secure sales channels to enter the vast Chinese market." He added, "We plan to maximize synergy with Narada and Changzhou Kunlan to increase local market share and are also considering pursuing direct order sales in the long term."

Meanwhile, the global ESS market size is expected to expand significantly from 6.6GW in 2018 to around 90GW by 2023. Recently, the Chinese government has been strongly promoting new energy and ESS expansion as part of the China New Deal 'Xin Jijiang (新基建)' following the COVID-19 crisis. Accordingly, the Chinese ESS market is expected to expand to 19.3% by 2023 and account for more than 20% of the global market.

This content was produced with the assistance of AI translation services.