ESS Landscape Has Shifted... SK On Emerges as Top Winner in Second Central Contract Market

Dominating Rivals in Industrial Contribution and Safety Evaluation

In the second centralized energy storage system (ESS) contracting market, which was conducted at a scale of around 1 trillion won, SK On achieved a result that defied market expectations. By winning orders for more than half of the total volume, the company instantly rose to become the largest supplier.

SK On's Seosan plant producing ESS cells. Provided by SK On.

According to the industry on the 12th, in the results of the second ESS centralized contracting market bidding announced by the Ministry of Climate, Energy and Environment, SK On secured 284MW out of a total of 565MW, recording a 50.3% share. The project sites consist of a total of seven locations, including six in South Jeolla Province and one in Jeju, and SK On will supply batteries to three of these project sites.

This outcome is a dramatic reversal compared with last year’s first round of bidding. In the first round, SK On failed to win a single order and had to swallow disappointment, but in just one year it overturned the landscape and delivered a performance close to a landslide victory.

Rival companies showed mixed results. Samsung SDI, which had taken 75.9% of the total volume in the first round of bidding, secured 35.7% in this second round. However, when the first and second rounds are combined, it is still assessed to have delivered stable results by maintaining a majority of the total orders. In contrast, LG Energy Solution took 24% in the first round and only 14% in this second round, showing relatively weak performance.

Industry observers analyze that SK On’s strong showing was mainly driven by its clear competitiveness in the evaluation items of “industrial and economic contribution” and “fire and facility safety.” During this bidding process, SK On presented a plan to convert part of the lines at its second Seosan plant in Korea and begin domestic production of 3GWh of ESS-use lithium iron phosphate (LFP) batteries from the second half of this year.

In particular, as the order volume in this round far exceeded expectations, SK On is reportedly also internally reviewing a plan to expand production capacity for ESS-use LFP batteries to up to 6GWh, depending on future order trends. This would be the highest level in Korea and is seen as a move that reflects the company’s intention to fully advance the localization and internalization of ESS-use LFP batteries.

The company’s material procurement strategy is likewise focused on the domestic industry. SK On plans to source cathode materials, electrolytes, separators, and other components for ESS-use LFP batteries from Korean materials suppliers. As a result, the industry expects a virtuous cycle across the sector, including higher utilization rates at secondary battery materials, parts, and equipment companies, as well as direct and indirect job creation effects.

Since the fire at the National Information Resources Service in September last year, standards for ESS safety have been further strengthened, and analysts say SK On’s technological capabilities and strategy for securing safety had a positive impact on this evaluation.

An SK On official said, “We are contributing to revitalizing the domestic ESS ecosystem through localization and domestic production of key ESS battery materials,” adding, “We will continue to prepare so that we can maintain our competitiveness in the next ESS centralized contracting market bidding as well.”

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