In the $1 trillion won second central contract market for energy storage systems (ESS), SK On won more than half of the total volume, marking a reversal. SK On failed to secure any volume in the first ESS central contract market bidding held last year. Samsung SDI, which took about 80% of the volume in the first bidding, fell to second place with 35.7%, and LG Energy Solution secured only 14% of the total.
The ESS central contract market bidding is a project under the government's 11th Basic Plan for Long-term Electricity Supply and Demand to supply 23 gigawatts (GW) of ESS nationwide by 2038. The first bidding covered 540 megawatts (MW) of ESS needed in 2026, and the second bidding covered 540 MW of ESS needed in 2027. A total of 563 MW was awarded in the first bidding, and 565 MW in the second.
On the 12th, the Ministry of Climate, Energy and Environment and the Korea Power Exchange announced the preferred bidders for the second ESS central contract market. The awarded volume totals 565 megawatts (MW), with project sites in seven locations: six in South Jeolla—Namchang (96 MW), Unnam (92 MW), Eupdong (96 MW), Jindo (66 MW), Haenam (79 MW), and Hwayon (96 MW)—and one in Jeju—Pyoseon (40 MW).
SK On will supply ESS batteries to Namchang, Unnam, and Eupdong in South Jeolla. Its 284 MW accounts for 50.3% of the total 565 MW. Samsung SDI won the Jindo and Hwayon sites in South Jeolla and the Pyoseon site in Jeju, taking 202 MW (35.7%) of the total. LG Energy Solution won only Haenam in South Jeolla, coming in at 14% (79 MW), down 10 percentage points (P) from the first bidding.
The factor seen as enabling SK On's sweeping win in the second bidding was the change in evaluation metrics from the first. In the second round, the government lowered the price evaluation by 10 points from before, setting it and the non-price evaluation to each account for 50%. It also raised the score for fire and facility safety within the non-price criteria by 3 points to 25. The industry and economic contribution and grid interconnection categories each gained one point, with 25 points allotted to each.
When conducting the non-price evaluation, the government had disclosed scoring criteria prioritizing grid interconnection, industry and economic contribution, and fire and facility safety, in that order. Grid interconnection assesses whether the consortium that includes the battery supplier can effectively carry out the project in connection with a specific substation, which is separate from the battery company's inherent capabilities.
To earn higher scores in industry and economic contribution and in fire and facility safety, SK On bid on the condition that it would produce lithium iron phosphate (LFP) batteries in Seosan, South Chungcheong. LG Energy Solution also bid, unlike in the first round, on the condition that it would produce LFP batteries not in China but in Ochang-eup, Cheongju, North Chungcheong.
But the two companies received very different outcomes. A SK On official said, "The ESS battery production capacity in Seosan is 3 gigawatt-hours (GWh), three times that of LG Energy Solution, which appears to have worked to our advantage."
By contrast, multiple battery industry officials said, "Given domestic production and the use of LFP, the non-price evaluation scores of LG Energy Solution and SK On would have been similar," adding, "It is presumed that SK On, which needed an ESS supply track record, offered a lower price."
Samsung SDI, as in the first bidding, participated on the condition that it would produce ternary batteries in Ulsan. However, due to SK On's strong showing, it secured a smaller volume than in the first round.
A battery industry official said, "It was an unexpected result that SK On, which lacks a track record of supplying large-scale ESS batteries, performed well." A SK On official said, "We are actively pursuing the localization of core ESS battery materials and domestic production to help vitalize the domestic ESS ecosystem," adding, "We will work to achieve strong results in the next ESS central contract market bidding as well."