[Insight & Opinion] ESS Must Be Fostered as a Strategic Industry in the Era of Climate and Energy

Fostering ESS as an Independent Industry, Not Just a Supplement to Renewables
Korea Gains Opportunities Through Stable Supply Chains

Park Taesung, Executive Vice Chairman of the Korea Battery Industry Association

As the proliferation of artificial intelligence (AI) and the acceleration of climate and energy transitions continue, energy storage systems (ESS) are emerging as core strategic assets in the energy industry. Until now, the global ESS market has been led by China; however, concerns over China-centric supply chains and rising geopolitical risks are opening new opportunities for the Korean ESS industry. In this changing environment, a national approach is needed to foster ESS as an independent strategic industry, rather than merely as a supplementary tool for renewable energy.

The global ESS market is experiencing rapid growth. BloombergNEF forecasts that the market size (based on installations) will increase by 33% next year, reaching 360 GWh. By 2035, it is expected to grow at an average annual rate of around 20%. In the United States, surging electricity demand from data centers and an aging power grid are driving strong adoption of ESS. Europe is also ramping up investments in ESS to stabilize its grid and expand renewable energy.

However, the market structure still relies excessively on China. This exposes energy security risks. This is why major countries, including the United States, are strengthening policies to reduce dependence on China, such as imposing high tariffs and implementing supply chain regulations.

The global market is being reorganized with a clear focus on "securing stable supply chains." This presents a strategic opportunity for the Korean ESS industry. Fortunately, domestic companies are demonstrating their competitiveness by winning large-scale ESS projects in the United States, Europe, and the Middle East, leveraging high safety standards, quality reliability, and project management capabilities.

Efforts are also accelerating to convert existing electric vehicle battery production lines to ESS, expand investments in lithium iron phosphate (LFP), and develop long-duration ESS and AI data center-specialized products. The government is also strengthening the market foundation by promoting ESS-friendly policies, such as supporting the AI economy, establishing energy highways, and raising greenhouse gas reduction targets (NDC).

However, the current policy framework has clear limitations in elevating the ESS industry to the status of a national strategic industry. Technology, market, and regulatory systems remain fragmented, and there is a lack of systematic mid- to long-term technology strategies. Now, a comprehensive strategy from an industrial ecosystem perspective is needed.

First, a joint public-private "ESS Industry Strategy Committee" should be established to integrate market, technology, and regulatory systems, and to develop national strategies and mid- to long-term development roadmaps in five- and ten-year increments. ESS should be defined as an independent industry rather than a subordinate element of renewable energy, and specialized industrial policies should be formulated accordingly.

Second, ESS installation targets need to be raised and diversified. The current target for grid stabilization ESS in the power supply plan (2.2 GWh) is insufficient given the pace of changes in the power grid. It is necessary to analyze and reset targets by application-such as renewable energy integration, grid stabilization, and dedicated data center use-and to overhaul the electricity market system, investment incentives, and subsidy structures.

Third, it is crucial to prioritize and focus research and development (R&D) on next-generation ESS. Key areas that will determine global competitiveness include long-duration ESS, innovative ESS fire safety technologies, next-generation battery cells and materials such as sodium-ion, and AI-based energy management systems (EMS). An R&D system should be established where "leading technology, demonstration, and standards" are organically connected.

Fourth, a "Team Korea" system should be established to strengthen competitiveness in securing overseas contracts. An integrated alliance should be formed with participation from battery, system integration (SI), solar, wind, and virtual power plant (VPP) companies, and the government should provide policy financing to mitigate risks associated with large-scale overseas projects.

Amid the rise of the AI economy and the intensification of the climate crisis, ESS is becoming the foundation for economic security and energy industry competitiveness, beyond simply serving as a grid auxiliary device. The strategic opportunity presented by the reorganization of the global ESS market must not be missed. Through a systematic industrial strategy linked to the new government's climate and energy policies, ESS should be developed as a new growth engine for Korea.

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