Tesla of the United States is eyeing the Korean energy storage system (ESS) market amid lingering concerns about the safety of domestic ESS products.
Tesla recently started procedures to obtain a certificate from the Korea Battery Industry Association (KBIA) for ESS sales in Korea. Once its ESS batteries and ESS finished products are certified, Tesla will make a foray into the Korean market with large-capacity ESS products compatible with solar power and wind power stations. The capacities of its ESS products are expected to range from 100 ㎾ and 200 ㎾ to 100 ㎿h.
Korean ESS producers are on alert as foreign ESS companies are seeking to penetrate the Korean market by taking advantage of the continuing spate of fires that hit domestically produced ESS products.
The problem is that the causes of the ESS fires remain undetermined. The government investigation team said in June that it has found manufacturing defects at some battery cells. Yet it added that fires did not occur under the same conditions. Safety concerns have not been allayed as four additional ESS fires have broken out for four months since the government introduced safety measures.
Foreign ESS companies are accelerating the expansion of their ESS business as the Korean government has been unable to identify the exact causes of the fires. In particular, China’s CATL, the world’s No. 1 battery maker, is aggressively expanding its ESS business, putting Korean battery companies on alert. Last year, CATL posted 185 million yuan in sales in the ESS business, an increase of more than 1,000 percent from a year ago. Currently, CATL sells 271 Ah, 100 Ah and 92 Ah ESS batteries and is entering the U.S. ESS market. It is considering setting up a battery factory in the United States. Industry experts say that CATL poses a serious threat to Korean battery makers as it is preparing to launch lithium iron phosphate batteries for ESSs which are safer and have longer lives than ternary batteries, the main product of Korean battery makers.
BYD, the second largest battery maker in China, is also zooming in on the ESS business. BYD is focusing on ESS project developers and power generators rather than participating in government tenders.
China Guoxuan is also expanding its ESS business in overseas countries by strategically partnering with Shanghai Electric and Huawei. Tesla decided to supply Power Wall, a home ESS, in the Japanese market early next year.
Some energy industry experts are concerned that Korean ESS companies may lose their shares to foreign companies in the rapidly growing global ESS market. Battery market researcher SNE Research estimates that the global ESS battery market will nearly double from 12.7 GWh this year to 24.6GWh in 2021. In particular, demand for home ESSs is explosively growing in Japan and California of the United States.
Samsung SDI recently came up with intensive safety measures to keep its global ESS battery leadership, but industry watchers say that the battery industry’s efforts alone are not enough to save the Korean ESS ecosystem. LG Chem said in a conference call on Oct. 25 that it expects few ESS sales this year due to the continued ESS fires.
"The Korean government should definitely find out the causes of the fires and take corrective measures to prevent such fires from breaking out again," said an official of the ESS industry. “Otherwise, batteries will not become a new growth engine for Corporate Korea.”