A seismic shift is underway in America’s renewable power and clean energy industry. LG Energy Solution (LGES), a world leader in battery technology, is now America’s first LFP (lithium-iron-phosphate) battery cell manufacturer to meet the needs of today’s new market in grid-scale energy storage. It’s the first time a new build-out of production is underway inside its latest state-of-the-art plant in Holland, Michigan, a hub for American battery and clean energy solutions.
This September, LGES began mass production of two world-class lines for these flagship LFP batteries, with a third set to enter production by the end of the year. This strategic build-out is on track to enable the production of a colossal 16.5 GWh annually of battery components for energy storage systems (ESS), directly contributing to America’s transition to a resilient and longer-duration energy grid. These white-roofed buildings on the Holland plants are a reflection of LGES’s emphasis on green energy, as well as its American content.
LGES’s corporate office in the Netherlands was established in 2012, focusing solely on EV battery production under its “LG Chem” brand. Although the 2022 master plan announcement of a $1.4 billion investment broadened its focus to making ESS batteries, the projected growth was well-buffered by a healthy time lag. Although its here-and-now EV market faces erratic demand and declining federal subsidies, its energy storage market partner revels in exponential growth.
“ESS was an ugly duckling for some time to LG”,
conceded LG Energy Solution Vertech chief executive Jaehong Park, LG’s proprietary in-house stationary storage affiliate. He conceded ESS’s previous disappointing financial performance compared to the market-leading EV battery segment. Despite this, owing to a four times growth in ESS production capacity compared to last year, LGES is well-positioned to benefit from a clean energy revolution.
Energy storage is not a trend, it’s a need. This LGES strategy effort acknowledges the fundamental fact about the energy grid. A battery storage system to support the United States’ growing power grid is a sure thing, despite some opposition to the Inflation Reduction Act (IRA), a controversial government program. While the number of funding for solar projects would change, energy storage projects have requested that their original IRA investment tax credit (ITC) rates remain available. This is official government confirmation of their need.
“There’s no stopgap solution to absorb build-up of surges in load”,
Park stressed, citing data centers and other bulk electricity users that have extremely high growth rates. Constructing conventional fossil-based power stations is a time-consuming process. Energy storage systems are ideal supplementary sources for intermittency-prone supplies, such as solar power, enhancing grid resilience and energy security.
“Absent [supporting policy], ESS will fizzle down but recover. It’s inevitable”,
he asserted.
The Holland plant is producing LFP battery cells using a hybrid technology that combines raw materials, a slurry coating on foils, soft mono-cell stacking, and LGES’s safety-reinforced separators (SRS) embedded, all sealed and electrolyte-filled pouches. Later summers will see the plant move into module assembly, a significant milestone on its journey toward grid-scale storage systems.
These Michigan-made battery modules will initially be shipped to LGES’s assembly plant in Arizona for complete assembly into LG Energy Solution-brand Battery Energy Storage Systems (BESS) units. One step further in localizing, LGES is gearing up a new assembly plant near Chicago, which will in turn serve its growing East Coast customer base. This strategic initiative benefits from LGES’s in-house capability, which has been hitherto accumulated under its EV partnership, and also benefits from shifting increased ESS assembly onto American soil.
LGES battery storage products, through local production of battery cells, become better prospects for aggregating valued domestic content adders in existing ITC statutes. This renders LGES’s battery storage products a very likely option as the IRA’s ultimate form becomes increasingly definitive, following its already market-leading status in American clean energy markets. Other American battery manufacturers include Lithium (Texas, with an assembly plant only), Canadian Solar’s e-STORAGE (Kentucky, under construction), and AESC (Tennessee, rebuilding for LFP).
