LG Energy acquires ESS company in US from Japan's NEC

LG Energy Solution Ltd. has acquired US-based NEC Energy Solutions to expand its capabilities into the energy storage system (ESS) integration market, the South Korean company said on Thursday.

The world's No. 2 battery producer recently bought a 100% stake in the ESS integration service provider from NEC Corp., a Japanese IT company, for an undisclosed sum.

"By securing the battery system integrator’s technology and extensive operational data, LG Energy Solution will have a strong platform to enhance system-level performance and reliability," LG said in a statement.

“Through the deal, LG Energy Solution will accelerate its energy storage business and ultimately provide our clients with a more comprehensive ESS program that meets the growing demand,” its CEO Kwon Youngsoo said in the statement.

NEC Energy produces non-automotive lithium-ion batteries and system integrators. To take over the new US operations, LG will establish a new US unit, LG Energy Solution Vertech. Inc.

The acquisition will enable LG Energy to offer fully integrated alternating current (AC) and direct current (DC) storage systems to meet clients’ needs, it added.  AC and DC are two types of voltage that transmit and conduct electricity. 

NEC Energy has grown by an average of more than 60% in revenue per year since 2018. Its 2020 revenue came in at 240 billion won. 

Back in 2014, NEC took over the ESS company from a US battery maker A123 Systems LLC.

ESS is used to stabilize renewable energy, which is greatly affected by the weather and often highly volatile. Energy companies will store energy in ESS and distribute supplies depending on demand.

"Global demand for standardized, fully integrated storage systems has experienced significant and sustained growth as such systems reduce both capital equipment and site installation costs," LG said.

Battery market researcher SNE Research predicts that the global ESS market size will expand by an average of 35% on an annual basis. The ESS industry was at 11-gigawatt hours (GWh) in 2019, 20 GWh in 2020 and is anticipated to hit 302 GWh by 2030. 

The acquisition came on the heels of LG Energy's spectacular debut on the Kospi last month, after raising $11 billion won in an IPO.

Last year, it swung to a profit after two years of losses. Its 2021 operating profit reached its largest-ever 768.5 billion won ($641 million), with a profit margin of 4.3%. 

Write to Jun-ho Cha at chacha@hankyung.com
Yeonhee Kim edited this article.