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'Game for big players': LG affiliate touts 10-GWh US battery storage portfolio


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'Game for big players': LG affiliate touts 10-GWh US battery storage portfolio

The US energy storage systems business of South Korean battery giant LG Energy Solution Ltd. is preparing to seize a significant share of the surging market for large-scale battery stations.

"This is a game for big players now," Tristan Doherty, chief product officer at Massachusetts-based LG Energy Solution Vertech Inc., said in a Dec. 20 interview after the company announced it would supply 10 large-scale projects in the US, totaling 10 GWh.

Planned to come online in the next two years, the 10 projects in Arizona, California and Texas are underpinned by signed contracts and agreements likely to be completed in the coming weeks, according to Doherty, who declined to name specific projects or development partners.

With an average of 1 GWh per project, the portfolio reflects LG Energy Solution's invigorated downstream growth ambitions since it agreed to acquire NEC Energy Solutions Inc. two years ago, launching its large-scale US battery systems integration arm. At the time of the acquisition, the subsidiary of Japan's NEC Corp. had completed a total of only about 1 GWh, Doherty said, though that still made it a leading integrator. After the company stumbled during the early months of the coronavirus pandemic, LG Energy Solution added the storage systems specialist to its burgeoning battery manufacturing enterprise to form a vertically integrated supply chain.

Now LG Energy Solution Vertech believes its combination of hardware, software and financial resources puts it in a position to compete with the likes of Fluence Energy Inc., Sungrow Power Supply Co. Ltd., Tesla Inc. and other major integrators.

An August report from S&P Global Commodity Insights placed LG Energy Solution Vertech as the eighth-largest system integrator in the US. However, it did not include any newly contracted systems because the company did not participate in the survey.

"We're here, and we're serious, and we've got very big volumes that are right in line with all the market leaders," Doherty said. "We're one of the people you need to talk to if you're serious about building energy storage."

"The advantages of having a global battery company integrate storage systems wrapped with warranties supported by a financially strong company like LG Energy Solutionare hard to ignore," LG Energy Solution Vertech President and CEO Jaehong Park said in a statement.

The Inflation Reduction Act of 2022, which includes lucrative incentives for domestic energy storage manufacturing and installations, "further strengthens our view that the US energy storage industry is set for sustained growth, especially as large-scale battery manufacturing plants come online within the next two to three years," Park said.

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'True differentiator'

All 10 GWh of the announced capacity LG Energy Solution Vertech plans to supply in the next two years will rely on batteries sourced through its parent company's extensive Asian manufacturing base, according to Doherty. The company intends to use LG's US-made batteries once a planned 16-GWh factory comes online in Queen Creek, Ariz., as part of a $5.5 billion battery manufacturing hub for stationary storage and electric vehicles.

LG Energy Solution, a subsidiary of LG Chem Ltd., plans to break ground on the $2.3 billion energy storage factory in early 2024 and start production in 2026. It will rely on lithium-iron-phosphate technology, which has emerged in recent years as a favored chemistry for energy storage applications, largely because of lower costs compared to batteries rich in cobalt and nickel.

The integrator's software package is another critical component of its offering to developers, Doherty added, by helping to optimize project revenues with the use of artificial intelligence, machine learning and other advanced features.

"My view is that we're getting so much price pressure in the market on the equipment side of things that software becomes the true differentiator," Doherty said.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.