LG Energy Solution Skips Third ESS Central Contract Market Bid...Opts for “Focus on Priorities” Over Cutthroat Competition

[Financial News]  LG Energy Solution did not participate in the third competitive bidding round for the central contract market for energy storage systems (ESS). The decision is reportedly based on the assessment that excessive price competition in the first and second rounds drove unit prices down to levels at which profitability would be difficult to ensure.
LG Energy Solution said in a statement on the 5th, “We would like to inform you that we did not participate in the call for bids for the third central contract market round.” It added, “This is a strategic decision to improve operational efficiency and mid- to long-term competitiveness with limited resources and personnel, based on ‘focus on priorities,’ rather than securing short-term volumes through price competition.”
The industry points to the price competition in the first and second competitive bidding rounds as the main reason for the decision. The assessment was that the bid prices in those rounds would not only make it difficult to secure immediate profitability but could also weigh on stable business operations over the medium to long term.
According to industry sources, the central contract market’s average bid price fell from the 30-won range per kWh in the first round to the 20-won range in the second. Both rounds’ bid prices are considered far below viable levels when compared with the prices at which the country’s three battery makers—LG Energy Solution, Samsung SDI Co., Ltd., and SK On—sell ESS products in the United States.
For this reason, after the second round, battery makers and industry associations also discussed the need for measures to prevent excessive cutthroat competition. A battery industry official said, “It is true that the industry broadly agrees that continuing the kind of price competition we are seeing now simply to secure volumes would make it difficult to achieve profitability and could also hamper stable, long-term business operations.”
The official noted, “LG Energy Solution’s decision is an example of the excessive price competition and declining profitability that have long been cited as problems in the central contract market.” The official added, “For the domestic ESS industry to continue growing, it is necessary to focus on creating an environment that strengthens companies’ business competitiveness and investment efficiency, rather than becoming fixated on short-term price competition.”
LG Energy Solution rejected interpretations that it was giving up on bidding after the third round or scaling back domestic investment. The company explained, “For competitive bidding rounds after the third, we will decide whether to participate after comprehensively considering market conditions and business circumstances.” It also stressed, “We plan to continue our efforts to revitalize the domestic battery industry ecosystem, as well as investment related to the development and production of next-generation products, with the Ochang Energy Plant at the center.”
LG Energy Solution plans to prioritize fulfilling, without disruption, the volumes it secured in the first and second central contract market rounds and projects it has already secured, including the government’s “AI-Enabled Distribution-Grid ESS Deployment Support Project.” At its domestic production hub, the Ochang Energy Plant, the company is conducting research and development (R&D) on next-generation products, including sodium-ion batteries for ESS, and building production lines. It is also preparing to mass-produce tabless LFP 2170 cylindrical batteries in the first half of next year.
The company is also broadening its ESS business from a focus on battery supply to energy solutions such as system integration (SI), AI-based operations, and virtual power plants (VPPs). LG Energy Solution has operated distribution-grid-connected ESS and VPPs in Jeju Province since 2024. In July this year, it was selected as the operator of the “AI-Enabled Distribution-Grid ESS Deployment Support Project” and plans to operate 140 megawatt-hours (MWh) of ESS in the Honam region for 20 years starting in 2027. In North America, it provides integrated solutions—from design to operations and maintenance—through its SI subsidiary Vertech.
LG Energy Solution said, “We will continue to grow as an energy platform company that combines our competitive battery cells with battery management system (BMS) and AI-based operational technologies to provide differentiated solutions that help customers operate ESS more safely and efficiently.”
[email protected] Kim Dong-chan Reporter