Samsung SDI has won a KRW 2 trillion-class supply contract for lithium iron phosphate (LFP) batteries for energy storage systems (ESS). This is the first time Samsung SDI has secured a large-scale order for LFP batteries.

Samsung SDI announced on the 10th that it had signed a contract with a major U.S. energy infrastructure development and operation company to supply LFP batteries for ESS. Supply will begin in 2027 and continue for about three years, and the company explained that the contract size is well over KRW 2 trillion. The name of the contracting company is not disclosed at its request.

Samsung SDI plans to produce LFP batteries by converting lines at its local U.S. plant. The company intends to convert some lines at its Indiana plant, which is being built and operated jointly with Stellantis, to an ESS-use LFP production system.

ESS is an electricity storage system regarded as a facility that complements renewable energy sources such as solar power, where electricity is generated intermittently. In particular, ESS is drawing attention as a way to address power shortages at data centers in the era of artificial intelligence (AI).

The ESS market has formed around LFP batteries, in which Chinese companies are specialized, rather than ternary (NCM, NCA) batteries where Korean companies have strengths. This is because LFP batteries offer superior safety and cost competitiveness compared with ternary batteries. According to global research firm BloombergNEF (BNEF), LFP accounts for more than 90% of the global ESS market.

The three major Korean battery makers, which entered LFP development later, have been delivering tangible results since last year. For the battery industry, targeting the ESS market has become urgent, not only due to the growth of the AI industry but also because of the electric vehicle “chasm” (stagnant demand).

LG Energy Solution has secured a series of large ESS orders, starting with a KRW 1 trillion-class contract in March last year with the U.S. subsidiary of solar company Hanwha Qcells. In August this year, it signed a KRW 6 trillion ESS battery supply contract with Tesla. SK On secured its first ESS order in September by signing an ESS battery supply contract of up to KRW 2 trillion with U.S. renewable energy company Flatiron. All of these are for LFP batteries, and with Samsung SDI’s latest contract, observers say all three companies have now established a foothold to catch up.

A Samsung SDI official said, “Starting with this contract, the company will further expand the supply of ESS products that excel in safety, performance, and price competitiveness.”

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