“Chinese and South Korean companies are extending the battery battle from electric vehicles to energy storage,” the Financial Times reported yesterday, citing surging demand for renewable energy and data centres around the world, the country is pushing a boom in battery energy storage for the grid, opening a new front in competition between Chinese and South Korean companies that dominate battery production.
Energy storage systems (ESS) could help the national grid, as well as homes, businesses and factories, cope with erratic wind and solar power supplies, the report said. In addition, ESS could provide back-up power for an increasingly stressed grid, given the surge in energy demand for artificial intelligence-related hardware and clean technologies such as electric vehicles. Now many countries and regions have begun to promote battery energy storage. According to Rho Motion, the UK energy consultancy, storage batteries have grown from 5 per cent of the global battery market in 2020 to 20 per cent. Global battery storage capacity will more than double by 2030, the consultancy predicts. Elon Musk, Tesla’s chief executive, said on an earnings call last year that ESS was“Growing like wildfire”.
China now accounts for nearly 90 per cent of global energy storage system (ESS) capacity, with a market share of more than 80 per cent in the US and more than 75 per cent in Europe. The Financial Times reported that Chinese battery companies could face a high tariff of 173.4 percent next year after the US imposed the tariffs, that gives hope to Korean battery companies trying to make a comeback in the US and Europe. According to the The Korea Herald, South Korea’s LG New Energy is shifting its focus to cost-effective lithium iron phosphate batteries for the US market. The company plans to switch part of its production line from pure electric vehicles to energy storage systems later this year. Samsung SDI, South Korea’s second-largest battery maker, said on Monday it would promote its latest battery for energy storage systems at next month’s major European battery shows.
Yora Hughes, head of research at Rho Motion, told the financial times that Korean battery makers had once led the industry by focusing on high-nickel batteries. But a series of fires caused by high-nickel batteries in South Korea over the past decade, combined with the rise of cheaper and increasingly high-performance lithium iron phosphate batteries in China, has led the energy industry to switch away from high-nickel batteries. William Beveridge, Hong kong-based head of energy research at Leonard Bernstein, the Wall Street investment house, said the diverging fortunes of Chinese and Korean energy storage companies formed“The story of the two battery markets”.
Chinese exports to the US were worth $15.3 lithium-ion battery last year, according to the Atlantic Council, a think-tank, widening the market share gap with arch-rivals such as South Korea. “Chinese lithium iron phosphate batteries are popular in the US because they are more competitively priced,” said an industry source who asked not to be named. In addition, these products can use more cells and are favored by data centers because of their cost-effectiveness.”
Thewes believes that given Chinese exporters’ existing cost advantages over Korean high-nickel batteries, cheaper lithium prices and a series of technological innovations that have driven down battery prices, chinese exporters could face tariffs of even more than 150 per cent. Tim Bush, an analyst at UBS, said that although South Korea’s leading manufacturers, such as LG New Energy and Samsung SDI, were likely to“Take a bigger share of a smaller market” because of the US tariffs, but they have yet to prove they can mass-produce lithium iron phosphate batteries at a competitive cost.