KB News Desk
Samsung SDI defends cumulative lead as SK On’s lower-cost LFP strategy reshapes competition
South Korea’s three largest battery makers are preparing to compete for about 1 trillion won ($706.8 million) in the government’s third energy storage system tender, which could open as early as this month.
Samsung SDI leads in cumulative orders from the first two rounds, but SK On’s victory in the latest tender has reset the competition, putting greater pressure on LG Energy Solution and its domestic rivals to cut costs.
The Korea Power Exchange completed industry consultations for the third round of the ESS central contract market tender late last month and is finalizing the tender notice, according to industry sources on Tuesday.
The projects are scheduled to be fully installed in 2028. The procurement is part of the government’s plan to secure more than 2.2 gigawatts of long-duration energy storage capacity by 2029 to stabilize the power grid.
The Korea Power Exchange awarded contracts totaling about 1.13 GW in the first two rounds.
The evaluation framework for the third round is expected to remain broadly unchanged from the second, with price and non-price criteria each accounting for 50 percent of the score. Non-price factors include fire safety and contributions to Korea’s battery supply chain.
Despite the equal weighting, industry officials expect price to remain decisive.
Bid prices fell from the 30-won-per-kilowatt-hour range in the first round to the 20-won range in the second. Competition drove prices down even after the weighting for price was reduced to 50 percent from 60 percent.
That shift helped SK On capture 50.3 percent of the capacity awarded in the second round.
SK On based its bid on lower-cost lithium iron phosphate batteries. The company also highlighted plans to convert part of its second plant in Seosan, South Chungcheong Province, to produce LFP batteries for energy storage systems.
The converted line is scheduled to begin mass production next year with an annual capacity of 3 gigawatt-hours. SK On has also pledged to source key materials domestically, including cathode materials, electrolytes and separators.
Its victory marked a sharp reversal from the first round, when Samsung SDI secured 75.8 percent of the awarded capacity.
Samsung SDI competed with its premium nickel-cobalt-aluminum batteries, relying on price cuts, fire-safety features and domestic production. It maintained that premium strategy in the second round but lost ground to SK On’s cheaper LFP products.
Across the first two rounds, Samsung SDI still holds the largest cumulative share at 55.8 percent. SK On follows with 25.1 percent and LG Energy Solution with 19 percent.
Samsung SDI could add lower-cost LFP batteries to its offering in the third round, according to industry sources.
The company announced last month that it plans to invest about 16 trillion won in Ulsan through 2040 to establish a production base for next-generation batteries, including LFP cells for energy storage systems.
The tender carries added importance as weak electric vehicle demand leaves battery makers looking for other ways to improve factory utilization.
“ESS is one of the few large-scale markets that can help raise plant utilization amid slowing EV demand,” an industry source said. “Securing domestic orders also provides an important track record for winning global contracts.”
Battery makers have asked the Korea Power Exchange to revise the price-scoring system, according to the source. Unless the framework changes substantially, however, cost competitiveness is expected to remain the key battleground in the third round.
