As domestic battery corporations' backlogs of orders for energy storage system (ESS) batteries rise, expectations are growing that business conditions will improve. The U.S. government declared a "national emergency on grid security," effectively signaling a principle of excluding Chinese batteries, and the Chinese government has also moved to put the brakes on expanding new battery production capacity.
According to the battery industry and the securities community on the 15th, the order backlogs for ESS batteries at LG Energy Solution and Samsung SDI are estimated to exceed two years of the production capacity that can be built in North America. The estimated backlogs are 150 gigawatt-hours (GWh) for LG Energy Solution and 80–100 GWh for Samsung SDI.
At the end of July, during its second-quarter earnings conference call, LG Energy Solution said it would expand ESS battery production capacity in North America to 50 GWh by the end of this year.
LG Energy Solution has five ESS production bases in North America. The total capacity of these plants (including automotive batteries) was 229 GWh based on the plans announced when the plants were revealed. Depending on ESS battery order conditions, there is room to expand capacity.
Samsung SDI is producing ESS batteries at its Ulsan plant and at the first joint plant with Stellantis in Kokomo, Indiana. The Ulsan plant's capacity is known to be 15 GWh. The first Stellantis plant was announced at 23 GWh at the time of the plant construction plan, and part of that has been used to make ESS batteries since the end of last year. Samsung SDI plans to increase ESS production capacity in North America by 20–30 GWh by the second quarter of 2028.
SK On has not yet begun mass production of ESS batteries. SK On first won an ESS battery order in September last year. The volume contracted then for the U.S. renewable energy corporation Flatiron is scheduled to begin mass production only at the end of this year.
SK On is converting part of its standalone Georgia plant (22 GWh) for ESS use. SK On's ESS battery order target for this year is 20 GWh, and it has secured 9 GWh so far.
Chinese products currently dominate 79% of the North American ESS battery market. However, the North American ESS market shares of Korea's three battery makers are rising. As of the first quarter of this year, LG Energy Solution held 14% of the North American ESS battery market, more than tripling its share from a year earlier. Samsung SDI's share is around 6%.
In the battery industry, there is analysis that the Trump administration's declaration of a "national emergency on grid security" on the 26th of last month is a positive signal for Korean companies. The measure is expected to include a plan to block equipment from certain foreign companies, including China, from being supplied to the U.S. grid. Specific implementation rules are set to be announced on Dec. 24. Once implemented, the measure is expected to increase incentives to turn to domestic battery companies and power equipment companies to avoid Chinese products.
The effective halt by Chinese local governments to accepting applications to build new automotive and ESS battery plants could also positively affect the Korean battery industry. In China, concerns are being raised that an oversupply of ESS could emerge in one to two years, leading some companies to go bankrupt. If Chinese battery companies that dominate the global ESS battery market slow their expansion, reduced supply could give Korean battery companies a price competitiveness edge.
Jun U-jae, a researcher at KB Securities, said, "A meaningful reduction in the share of Chinese products is expected starting in 2027–2028," and added, "The U.S. government's measure restricts market access for Chinese products itself, so it is highly likely to be favorable for additional market share gains by Korean battery cell companies."