LG Chem to power Wuxi plant with renewable energy bought from China

South Korea's LG Chem Ltd. says it will power its battery component plant in China with renewable energy as part of its goal to be carbon neutral by 2050.

LG Chem, Korea’s largest electric vehicle battery maker, on Dec. 13 signed a contract to procure 140 GWh a year of renewable energy from Jiangsu New Energy Development Co. to power its cathode plant in Wuxi, Jiangsu Province.

The contract marks the first such power purchase agreement (PPA) a South Korean company operating in China has clinched with a Chinese power supply company. Under a PPA agreement, LG Chem can secure a stable supply of electricity directly from wind and solar power generators at a fixed price.

The 140 GWh capacity is enough to power more than 30,000 households a year and will help eliminate 100,000 tons of carbon emissions, equivalent to planting 1.7 million trees, according to LG Chem.

The company said it is also considering powering its precursor plant in Quzhou, Zhejiang Province with renewable energy through a PPA deal in 2021.

Through the transition to renewable energy, LG Chem expects to become 90% carbon neutral at its battery materials plants in China.

In July, LG Chem was the first Korean chemical company to announce a carbon neutrality plan aimed at producing zero carbon by 2050.

“Our PPA push in China is one of LG Chem’s key strategies to achieve growth through carbon neutrality by 2050. We’ll continue to secure renewable energy sources in Korea and abroad,” said LG Chem Vice Chairman Shin Hak-cheol.

LG Chem, which launched its battery unit LG Energy Solution as a subsidiary on Dec. 1, is the third-largest EV battery maker in China, following local market leaders CATL and BYD Co.

Write to Kyung-Min Kang at Kkm1026@hankyung.com
In-Soo Nam edited this article.