AI Power Demand Sends ESS Batteries Soaring...Market Set to Top 1,000 GWh Next Year

[Financial News] The expansion of artificial intelligence (AI) data centers is driving growth in the energy storage system (ESS) battery market. Global shipments rose by more than 70% in the first half of this year, and annual shipments are expected to surpass 1,000 GWh for the first time ever next year. As prismatic batteries become the market mainstream, competition is intensifying among Korean battery makers seeking to win a larger share of the U.S. ESS market.
Global ESS battery shipments totaled 461 GWh in the first half of this year, according to market research firm SNE Research and industry sources on the 21st. That was a 71% increase from the 270 GWh recorded during the same period last year. The growth was driven by rising demand for energy storage as AI data center construction expanded, particularly in the United States.
Annual shipments are expected to rise from 984 GWh this year to 1,150 GWh next year. Growth is projected to continue thereafter, reaching 1,870 GWh in 2035—nearly double this year's level.
Prismatic batteries are at the center of the market's expansion. They are estimated to account for 94% of the global ESS battery market this year. Although their share is expected to edge down to 92% next year, it is projected to rise again from 2028 and reach 97% by 2035.
The temporary decline in the share of prismatic batteries next year is due to increased supplies of pouch-type batteries targeting the U.S. market. An industry source said, "As LG Energy Solution produces pouch cells for the U.S. market, the share of pouch-type batteries will increase next year from this year. The share of pouch cells is expected to gradually decline after next year."
The high share of prismatic batteries is linked to the characteristics of ESS facilities, which must operate large-capacity batteries reliably. Their cells are enclosed in rigid aluminum cans, providing structural strength, and the cell size can be expanded relatively easily to meet the required capacity.
Pouch-type batteries have advantages in energy density and space utilization, but their thin-film outer material requires structural reinforcement. As cells become larger, safety design also becomes more challenging. Cylindrical batteries face difficulties in releasing internal heat when their diameter increases, making thermal management a key challenge as they are scaled up.
Korean battery makers are also working to strengthen their competitiveness in prismatic batteries. Samsung SDI has focused on producing prismatic batteries since 2009. LG Energy Solution and SK On, which built their businesses around pouch-type batteries, are also moving quickly to expand their product lineups to include prismatic batteries.
The key is to turn growing ESS demand into actual orders and increased market share. While Chinese companies have dominated the market with the price competitiveness of LFP (lithium iron phosphate) batteries, Korean companies are seeking opportunities to expand their businesses in the United States.
An industry source said, "Chinese battery makers have dominated the market so far with a low-price offensive based on LFP, but Korean battery makers are now pursuing a resurgence in the U.S. market based on prismatic batteries. Starting next year, the Korean industry's market share, led by prismatic batteries, is expected to begin a gradual rise."
[email protected] Kim Dong-ho Reporter