SK On has achieved a significant victory, securing the majority share of a 1 trillion won ($695.3 million) contract in the South Korean government’s second bidding round for domestic energy storage system (ESS) projects.
Reports indicate that SK On was awarded 50.3 percent, or 284 megawatts, of the total 565-megawatt project. This allows them to supply ESS solutions to state-run substations in three designated regions: South Jeolla Province and Jeju Island, selected from a pool of seven regions.
Samsung SDI, the leading supplier from the first tender with a 76 percent share, came in second, securing 35.7 percent, or 202 megawatts. LG Energy Solution followed with 14 percent (79 megawatts), a decrease from their 24 percent win in the initial round.
This win represents a remarkable comeback for SK On, which did not secure any contracts in the first 563-megawatt tender held last year.
Industry experts suggest that SK On’s strong performance in key evaluation areas, including industrial and economic contribution and safety technology, were crucial to their success.
Leading up to the bidding, SK On announced its plan to convert a portion of its production line at its second Seosan plant in South Chungcheong Province to establish a 3-gigawatt-hour lithium iron phosphate (LFP) battery production line specifically for ESS applications. This conversion is scheduled for the second half of the year.
Furthermore, the company intends to source essential materials for its ESS LFP batteries, such as cathodes, electrolytes, and separators, from domestic suppliers, strengthening the local supply chain.
Following the announcement of the second tender results, SK On is reportedly considering expanding its production capacity to 6-gigawatt-hours. If realized, this expansion would establish the largest domestic production capacity for ESS LFP battery cells.
To address the critical safety concerns associated with lithium-ion batteries, particularly the risk of fire, SK On has integrated an electrochemical impedance spectroscopy (EIS)-based diagnostic system into its ESS LFP batteries. This advanced system can detect potential warning signs up to 30 minutes before a fire incident. SK On is the first Korean battery manufacturer to implement this technology.
An SK On official stated, “The company is accelerating its efforts to localize key materials for ESS batteries and enhance domestic production to contribute to the revitalization of Korea’s ESS ecosystem. We are committed to achieving significant results in the upcoming ESS tender.”
According to the Ministry of Climate, Energy and Environment, the winning bidders are required to complete facility installation by December 2027. The third contract tender is anticipated to be announced later this year.
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