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How To Trade The U.S. Election

How To Trade The U.S. Election

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LG Chem Makes Big Move In U.S. Energy Storage Market

No matter how a utility generates electricity, whether with fossil fuels, solar or wind, there will always be the need for backup power. That means a kind of duplication – not necessarily doubling generating capacity, but having backup systems to provide power when the primary systems aren’t enough.

Those backup systems can be expensive, and utilities have been expressing increasing interest in batteries, not stopgap generators, for a less costly solution that’s also more environmentally friendly.

A sign that utilities are serious about battery backups is the decision on Tuesday by AES Energy Storage, based in Arlington, Va., to buy 1 gigawatt-hour worth of inexpensive lithium-ion batteries from LG Chem Ltd. of Seoul. That’s enough electricity to power 100,000 homes in the United States.

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LG Chem said it will provide the batteries for a project led by AES by 2020 in sales worth hundreds of millions of dollars, though didn’t disclose the specific value of the transaction.

AES’ plan is to package the LG batteries into large banks to provide clean electricity to a utility or a factory when other sources of energy aren’t available. These banks of batteries, also called battery farms, will use software tailored to provide energy for as little as 30 minutes or as long as four hours, depending on the need.

AES isn’t new to this kind of project. For several years it has set up energy storage systems (ESS) in the United States – in Ohio, Pennsylvania and West Virginia – as well as in Chile. All told, the companies’ existing farms so far have installed or are installing batteries with a combined capacity of about one-third of a gigawatt.

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“LG Chem has succeeded in setting up a milestone by signing such a large contract for the first time in the world,” said Lee Ung-beom, the president of LG’s energy storage division. As a result, he said, LG Chem will be able to expand production of mid-size and large batteries for ESS, eventually eclipsing its production of batteries for electric vehicles (EVs), which so far has been its largest division.

“We will lead the global ESS battery market along with the market for EV batteries,” Lee said.

If Lee is correct, LG Chem could end up being a global giant in energy storage. AES President John Zahurancik says the industry is “definitely moving to a new level this year” and that his company’s purchase from LG Chem represents a “vote of confidence” in the technology.

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For the immediate future, though, ESS won’t be widely available on a consumer level, such as serving as a backup for a residential rooftop solar system. What AES and LG Chem are involved in is the wider grid, whose operators must constantly adjust output to meet shifting demand for electricity at different times of any given day. And properly configured batteries can manage these shifts automatically.

As a result, AES can assemble huge banks of LG Chem batteries ready for sale to large utilities for installation on the grid so power is available at a moment’s notice. On one AES web page, the company promotes its Advanceon storage system as “the complete alternative to peaking power plants.”

Zahurancik said there seems to be no end to the growth potential to ESS. “The projects are generally getting bigger, they’re getting longer in duration, and they’re happening in more markets around the world,” he said.

By Andy Tully of Oilprice.com

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  • GerardF on December 20 2015 said:
    .. or maybe 100's of billions of KRW.
  • GerardF on December 20 2015 said:
    Article states :

    "LG Chem said it will provide the batteries for a project led by AES by 2020 in sales worth HUNDREDS of BILLIONS of dollars, though didn’t disclose the specific value of the transaction".

    I assume there is a typo there, and this should be 100's of MILLIONS ?
    (Still an impressive project).

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