LG Energy wins estimated $1 bn ESS battery deal from Qcells

LG Energy, Hanwha to collaborate further to dominate North American ESS market expected to more than triple to 181 GWh

A bird's-eye view of LG Energy Solution's battery plant in Arizona under construction (File photo, courtesy of LG Energy)

Hyeon-woo Oh 2

2024-05-17 16:52:40 ohw@hankyung.com

Batteries

LG Energy Solution Ltd., the world’s third-largest battery maker, won an estimated $1 billion energy storage system (ESS) deal from the US unit of South Korea’s Hanwha Q Cells Co. known as Qcells in overseas markets, in a move to boost profits amid the slowdown in the global electric vehicle industry.

LG Energy said on Friday it signed a contract with Hanwha Q Cells USA Corp. to supply 4.8 gigawatt hours (GWh) of ESS batteries until Oct. 1, 2026, in a filing to a South Korean financial regulator. The ESS with those batteries will be established in La Paz County, Arizona.

The deal’s value was estimated at 1.4 trillion won ($1 billion), which would be the largest single power grid ESS project among those conducted by LG Energy, industry sources in Seoul said, although the leading South Korean EV battery maker has yet to unveil its financial details.

“LG Energy Solution and Hanwha’s ESS supply deal in North America is significant as the battery industry has been sluggish with the EV market suffering a temporary slowdown in demand,” said an industry source in Seoul.

“The strategic partnership between the two companies is predicted to further expand to dominate the fast-growing North American ESS market.”

NORTH AMERICAN ESS MARKET TO MORE THAN TRIPLE

LG Energy agreed with units of South Korea’s chemicals-to-defense conglomerate Hanwha Group including Hanwha Q Cells – the top residential and commercial solar module maker in the US – and Hanwha Solutions Corp. to cooperate in battery businesses such as the ESS sector last year.

The regional ESS market was forecast to more than triple to 181 GWh by 2035 from 55 GWh in 2025, according to auto and energy industry tracker SNE Research.

LG Energy is building a battery complex to manufacture 17 GWh for lithium iron phosphate (LFP) ESS batteries in Arizona with a target of commercial operations in 2026 to expand its presence in the market.

Its subsidiary LG Energy Solution Vertech Inc. is reportedly set to supply system integration to Hanwha Q Cells through the deal.

LG Energy Solution Vertech founded in 2022 handles the overall ESS business processes such as planning, design, installation, maintenance and repair.

Write to Hyeon-woo Oh at ohw@hankyung.com

Jongwoo Cheon edited this article.