The South Korean government's initiative to expand access to the power grid for renewable energy sources is boosting expectations within the domestic battery industry. With the launch of the energy storage system (ESS) project, there are forecasts that subsequent orders responding to the expansion of solar and offshore wind energy could open a new large-scale market for the three major battery companies.
According to industry sources, the Ministry of Climate, Energy and Environment signed a memorandum of understanding on July 10 with nine selected companies for the '2026 AI-based ESS Construction Support Project.' The selected companies include VPP Lab, LG Energy Solution, Korea Electric Power Corporation (KEPCO) KDN, SK Eteronics, HD Hyundai Electric, Gridwiz, Korea East-West Power, Korea Midland Power, and Hyundai Engineering & Construction.
The ministry plans to add 182.4 megawatts of solar power facilities currently waiting for grid connection to the power network through this project. To achieve this, ESS with a maximum output of 128 megawatts and a storage capacity of 640MWh will be built across 32 distribution lines nationwide. The goal is to manage surplus power by installing ESS in areas like Honam and Jeju, where the capacity for renewable energy is saturated, instead of expanding the distribution network. A budget of 558.6 billion won will be allocated over the next five years.
What the battery industry is particularly focused on is the potential for future follow-up projects beyond the current orders. With the cumulative installed capacity of solar energy in South Korea exceeding 30GW and the anticipated expansion of offshore wind energy, demand for ESS to compensate for fluctuations in renewable energy output is expected to continue rising.
Solar energy generation varies with daylight and weather, while wind power output fluctuates significantly based on wind strength. As the share of renewable energy increases, the importance of ESS, which can store generated power for supply during peak demand times, also grows.
Moreover, the government's announcement last month of a long-term bidding plan for offshore wind energy aims to pursue a total of 55GW in bids by 2035, further increasing the potential demand for ESS. As offshore wind facilities increase, the need for storage systems to complement the intermittency of wind power and maintain grid stability will also expand.
If the government gradually expands the ESS project for the distribution network, competition for follow-up orders among the three major domestic battery companies is expected to intensify. An industry insider noted, "While the government's specific long-term order plans have not all been disclosed, it is difficult to determine the market size immediately. However, we are closely watching the potential for ESS to grow into another large market in South Korea."
* This article has been translated by AI.
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