LG Energy bags 1-GWh ESS battery deal from Poland’s PGE

LG Energy Solution Ltd. will supply 1 gigawatt-hour of energy storage system (ESS) batteries to a state-owned utility company in Poland in a deal expected to help South Korea’s No. 1 lithium-ion battery maker mitigate the prolonged electric vehicle market slowdown.

The company announced on Tuesday that it won an order to deliver 1 GWh of lithium-iron phosphate (LFP) batteries to Poland’s state-owned and largest energy provider PGE. That is enough to power 2,200 three-person households per month.  

The deal value is undisclosed but estimated at hundreds of billions of won, or hundreds of millions of dollars, according to sources.

The Korean battery producer will manufacture ESS batteries at its Polish plant for PGE's energy storage facility in Zarnowiec, northern Poland, with commercial operation slated to start in 2027.

The latest ESS order is expected to pave the way for LG Energy Solution’s deeper penetration into the European clean energy market, which could be a breakthrough amid the lengthy slump in the global EV market.

Considering that countries in Europe and North America tend to use locally produced products, the Korean battery giant plans to ramp up its ESS battery output in these regions.

LG Energy Solution has been converting some of its EV battery lines into ESS lines at its plant in Wrocław, Poland.

TO GAIN GROUND IN THE LFP BATTERY MARKET  

LG Energy Solution is also in talks with multiple other energy providers in the US and Europe to supply its ESS batteries.

It won orders to supply US renewable energy power producer Terra-Gen LLC and US renewable energy infrastructure fund Excelsior Energy Capital (Excelsior) with 8 GWh of ESS last November and 7.5 GWh of ESS last December, respectively. 

The company is set to kick off LFP battery production at its Holland, Michigan, facility later this year, positioning itself to meet rising demand for LFP batteries from the US market.

LFP batteries, which are cheaper and more thermally stable than their nickel-based counterparts, have recently gained traction in the ESS market, where energy density is less of a concern than cost and durability.

Chinese battery players have dominated the LFP space, while Korean peers have focused on more expensive nickel-based batteries.

But the Korean battery leader has been gradually gaining ground in the LFP market.

On Wednesday, LG Energy Solution also announced that it will supply 4 GWh of ESS batteries for residential buildings in the US from 2025 to 2030 under a partnership agreement with Delta Electronics Inc., an electronics manufacturing company based in Taiwan.

The deal value is estimated at about 1 trillion won ($682 million), according to sources.  

The two companies will later expand their partnership in the energy grid and commercial ESS markets.

LG Energy Solutions shares jumped 7.3% to close at 360,000 won on Wednesday.  

Write to Hyung-Kyu Kim at khk@hankyung.com

Sookyung Seo edited this article.