LG Energy Solution is transforming from simply supplying batteries to becoming an operator that manages energy sources made with batteries. It is a strategy aligned with the expansion of energy storage system (ESS) deployments driven by artificial intelligence (AI) data center construction and the growth of renewable energy. The goal is to shift from being just a hardware manufacturer that supplies ESS batteries to an energy platform corporations that collects and manages battery-related information and directly builds ESS.
According to the battery industry on the 23rd, LG Energy Solution is attempting a transformation into an ESS operating business based on ESS operation experience secured through Avel (AVEL), which had been an in-house independent corporations.
A representative example is that LG Energy Solution was selected on the 10th as the operator for the "2026 AI-utilized distribution-grid ESS construction project" led by the Ministry of Climate, Energy and Environment. LG Energy Solution participated in the government-led first and second ESS central contract market bids not as an operator but as part of a consortium. However, it took part in the distribution-grid ESS construction only as an operator.
This move is an extension of Avel securing AI-based ESS operation experience in the Jeju region. Avel is LG Energy Solution's first in-house independent corporations, launched in 2022. Avel performed EaaS (Energy as a Service) specialized services that help improve grid efficiency by using distributed renewable energy and ESS.
Starting in 2024, Avel established and operated a distribution-grid–connected ESS power plant in Seogwipo, Jeju. The business stored irregularly generated renewable energy in ESS as a priority and supplied power through the local distribution grid when electricity was needed. Since Nov. 2024, Avel has been reorganized and absorbed as the service ESS business unit under the chief operating officer (CSO) of LG Energy Solution.
The biggest reason LG Energy Solution is seeking to transform into an ESS operator is the slowdown in the electric-vehicle battery market. According to SNE Research, in the first quarter of this year, the global battery usage market share of Korea's three companies—LG Energy Solution, Samsung SDI, and SK On—was 15.6%, down 2.1 percentage points (P) from the same period last year.
In contrast, the ESS market is growing rapidly. According to market research firm Mordor Intelligence, the United States alone is expected to see new ESS installations expand from 49.5 gigawatts (GW) in 2024 to 131.75 GW by 2030. In response, LG Energy Solution has converted many electric-vehicle battery production lines into ESS battery production lines.
LG Energy Solution is currently producing ESS batteries at four hubs, including Michigan and Ohio in the United States. In addition, it will start producing ESS batteries at its Lansing, Michigan, plant within this year, aiming to produce more than 50 GWh of ESS batteries in the United States alone by the end of the year.
While maximizing production capacity for ESS batteries, LG Energy Solution also plans to supply related operating software and systems to overcome the limits of being a simple hardware manufacturer. Manufacturing battery cells and packs faces intense price competition with Chinese companies and is sensitive to raw material price fluctuations. However, by supplying ESS construction and operation together and establishing a foothold as an energy platform corporations, it can generate revenue beyond battery supply in the long term.
LG Energy Solution is also building out battery-related services. Through its subsidiary Vertech, LG Energy Solution has carried out ESS systems integration (SI) business. It also operates the battery management total solution (BMTS) brand B.around.
B.around is a service that combines cloud and AI to provide battery safety diagnostics and life prediction. In addition, it runs BaaS (Battery as a Service) businesses such as B-lifecare, a battery continuous-diagnostics service, and B.once, a battery evaluation service. BaaS refers to a business model that provides various services based on data generated throughout the entire battery life cycle.
An LG Energy Solution official said, "In the situation of an electric-vehicle 'chasm,' we will strengthen our portfolio of new businesses and expand our services and software businesses leveraging AI capabilities to build a business structure that does not rely on the electric-vehicle market and to create new growth opportunities."