# South Korea ESS Battery Prices Surge as LG Energy Solution Withdraws Reduced competition in government auctions drives up battery supply costs for energy storage projects. - **Source:** [Kyunghyang](https://www.khan.co.kr) - **Published:** 2026-11-10 - **Topic:** [Business](https://brifing.si/c/business) - **Original article:** - **On Brifing:** https://brifing.si/s/343d0587-fd9b-4b82-9afd-9367458ec299 ## Market Dynamics Shift The South Korean Energy Storage System (ESS) market is witnessing a significant shift in pricing power. With LG Energy Solution opting out of the third government auction, the number of major suppliers has dropped to two. Industry observers anticipate that battery supply prices could rise by 30% to 40% compared to previous rounds. ## Auction Bidding Trends In the latest government central contract auction, battery manufacturers submitted bids significantly higher than in previous cycles. While the first and second rounds were characterized by aggressive price competition, the current environment reflects a seller's market. Final results are pending, but initial reports suggest a sharp upward trend in proposed supply costs. ## Scale of Procurement The government aims to secure 7.08 GWh of storage capacity in this third round, which is larger than the combined volume of the first two auctions. With a total project budget estimated at 2 trillion won, the scale highlights the national effort to manage surplus renewable energy through long-term, fifteen-year supply contracts. ## Competitive Landscape Changes Previous auctions saw prices drop as low as 20 won per kWh due to intense competition among the three major battery firms. Now, Samsung SDI and SK On remain the primary suppliers. Evaluation criteria favoring domestic industry contribution make it difficult for cheaper Chinese alternatives to enter, further reducing downward pressure on pricing. ## Profitability Over Volume Battery manufacturers are prioritizing profitability over aggressive market share expansion. With SK On reporting operating losses and LG Energy Solution focusing on strategic concentration, firms are avoiding deficit-prone contracts. Selling ESS batteries at fair market value has become essential for these companies to maintain financial stability amid challenging global market conditions. ## Impact on Developers The burden of rising battery costs is shifting toward power generation project developers. While auction bids have not increased at the same 30-40% rate as battery costs, developers are absorbing significant expenses. This cost pressure could eventually influence electricity rates if the government passes these higher procurement costs to the public. ## Long-term Supply Concerns The government plans to install 156 GWh of ESS capacity by 2036, requiring approximately 15 GWh of batteries annually. However, the combined production capacity for LFP batteries by the three major firms remains below 10 GWh. If price competition continues to decline, the market may face severe supply shortages in future years. ## Future Market Outlook The selection of preferred bidders is expected later this month, which will clarify the actual price impact. LG Energy Solution stated that future participation depends on market conditions and management strategy. The industry is now closely watching whether the government can maintain its ESS expansion goals without compromising the financial viability of suppliers. ## Sources covering this story - https://www.khan.co.kr/article/202611101448001/?utm_source=khan_rss&utm_medium=rss&utm_campaign=total_news — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._