With a 1 trillion won second round of bidding for the central contract market for energy storage systems (ESS) scheduled, competition for orders in the battery industry is intensifying. Attention is on whether Samsung SDI, which gained the upper hand in the first bidding, can achieve similar results this time and whether LG Energy Solution and SK On can make a comeback.
According to the battery industry on the 23rd, the ESS central contract market bidding is a project to supply 23 gigawatts (GW) of ESS nationwide by 2038 under the government's 11th Basic Plan for Long-term Electricity Supply and Demand. The first ESS central contract market bidding targets 540 megawatts (MW) of ESS needed in 2026, and the second ESS central contract bidding targets 540 MW of ESS needed in 2027.
The results of the first ESS central contract market bidding, announced in July, ended in a win for Samsung SDI. Samsung SDI, the only one among the three domestic battery companies to set a domestic production condition, became the battery supplier for six of the eight project sites (Jindo, South Jeolla; Goheung, South Jeolla; Yeonggwang, South Jeolla; Muan, South Jeolla; Anjwa, South Jeolla; Eupdong, South Jeolla). LG Energy Solution secured two sites (Gwangyang, South Jeolla; Pyoseon, Jeju), and SK On did not secure a single one.
When bidding with domestically produced products, companies can receive high scores in the industrial and economic contribution category of the non-price evaluation criteria. During the first bidding, LG Energy Solution and SK On participated with lithium iron phosphate (LFP) batteries produced at factories in China. In contrast, Samsung SDI offered NCA batteries produced at its Ulsan plant and took about 80% of the total volume.
Ahead of the second bidding, the government adjusted some of the evaluation weights. The weight of price and non-price evaluations is now the same, and the scores for fire and facility safety in the non-price evaluation criteria were raised by 3 points from before. The scores for industrial and economic contribution and grid interconnection were also each increased by 1 point.
All three domestic battery companies—LG Energy Solution, Samsung SDI, and SK On—are expected to set domestically produced batteries as a bidding condition in this round. LG Energy Solution recently announced it would build an LFP battery production line for ESS at its Ochang, North Chungcheong, battery plant by the end of this year. Full-scale operation is set to begin in 2027, aligning with the delivery timeline for the second ESS central contract market.
SK On verified mass-production feasibility for LFP pouch batteries for ESS at its electric-vehicle battery plant in Seosan, South Chungcheong. This laid the groundwork to produce LFP batteries for ESS in Korea.
Unlike in the first bidding, the higher score for fire and facility safety in the non-price evaluation criteria could be a point that gives LG Energy Solution and SK On extra credit.
The nickel-cobalt-aluminum (NCA) batteries Samsung SDI proposed in the first bidding are considered inferior to LFP batteries in terms of fire safety. Lithium iron phosphate, the cathode material in LFP batteries, has little to no oxygen release. Because of this, LFP batteries have a thermal runaway onset temperature of 270 degrees, which is 60 to 90 degrees higher than NCA or nickel-cobalt-manganese (NCM) batteries, making them relatively more resistant to fire.
In addition, while LFP batteries are heavier, they are cheaper and have a longer lifespan. NCA batteries, with strengths in energy density and high output, are suitable for high-performance EVs or large ESS. The drawback is that they are more expensive than LFP.
Given the government's stance to place a high value on fire and facility safety, LG Energy Solution and SK On are likely to propose supplying LFP batteries for the second bidding as well. In contrast, Samsung SDI has only drawn up a plan to produce LFP batteries for ESS in Korea in 2027. A battery industry official said, "There is almost no chance that Samsung SDI will put forward LFP batteries in the second bidding."
Although the weight of price evaluation in the second ESS central contract market criteria has been reduced from 60% to 50%, price competitiveness remains a key factor. The price evaluation is conducted separately for the mainland and Jeju, but since the principle is lowest bid by region, cutthroat competition could occur.
In the battery industry, price is cited as a factor that allowed Samsung SDI to secure a significant volume in the first bidding. A battery industry official said, "It is known that Samsung SDI sharply lowered the relatively expensive NCA price just before the first bidding deadline," adding, "Whether it was to clear inventory or to raise plant utilization, no one knows, but it is an open secret that Samsung SDI bid at a very low price."
Korea Power Exchange plans to collect industry opinions through the 24th and issue a bidding notice at the end of this month. A Korea Power Exchange official said, "After a comprehensive evaluation of the bids, we plan to select preferred negotiation partners around February 2026."