The government-led ESS (Energy Storage System) auction market is set to double in size. As the era of ESS projects expanding to GW (gigawatt) scale officially begins, concerns are raised that institutional measures are needed to eliminate overheated low-price bidding wars.
According to the energy industry on the 26th, the Korea Electric Power Market Operator under the Ministry of Climate, Energy and Environment is seriously considering announcing a 3rd Central Contract Market ESS auction with a scale of over 1GW as early as next month. The first and second auctions were both approximately 560MW (megawatts).
The government appears to be reflecting the surge in electricity demand driven by the advent of the AI (artificial intelligence) era and the trend of expanding renewable energy generation. Solar and wind power, for instance, experience fluctuations in generation depending on weather and time, making energy storage media like ESS batteries essential. In fact, the share of domestic renewable energy generation was 9.7% last year, with the government planning to raise this to over 30% by 2035. Accordingly, the government has a strategy to deploy ESS with a total capacity of 23GW by 2038. The upcoming 12th Basic Plan for Electricity Supply and Demand may include even more aggressive targets.
For domestic battery giants LG Energy Solution, Samsung SDI, and SK On, this is an auction market they cannot afford to miss. The government plans to invest a total of 40 trillion won in ESS projects by 2038. While the first and second auctions were reported at around 1 trillion won each, the third auction could reach the 2nd trillion won range. With electric vehicle front-end demand currently passing through a temporary slowdown phase, ESS is playing the most crucial breakthrough role for the battery industry.
Industry focus is on establishing a virtuous cycle structure leading from "auction → contract award → profit generation → reinvestment." This is because excessive "self-harming" price competition occurred among the three major battery companies during the first and second auctions. Hence, there are urgent calls for measures such as expanding the weight of non-price evaluation criteria and introducing a minimum price system starting from the third auction.
A climate ministry official stated, "The volume and timing of the 3rd ESS auction are currently under discussion," adding, "Once specific details are finalized, they will be announced through the Korea Electric Power Market Operator."
in INDUSTRY
