LG Energy Solutions is building a 43GWh energy storage battery factory in the United States

A solar-plus-storage power plant using LG ES BESS equipment. Image source: LG Energy Solution

LG Energy Solution will build a new battery factory in the United States with an annual production capacity of 43GWh, of which 16GWh will be specifically for the stationary energy storage market.

The South Korea-based company said this morning it will invest 7.2 trillion won ($5.5 billion) in its production plant in Queen Creek, Arizona, USA.

Scheduled to break ground this year, the park will have two production facilities, one for cylindrical 2170 batteries targeting the electric vehicle (EV) sector with an annual production capacity of 27GWh, and the other for lithium iron phosphate (LFP) pouch cells for energy storage systems (ESS).

According to LG Energy Solution (LG ES), the LFP line will be the "world's first dedicated ESS battery production facility" and is expected to start production in 2026, a year after the EV battery production portion of the Arizona plant goes into production.

However, earlier this week another manufacturer, Pomega Energy Storage Technologies, announced it had broken ground in South Carolina on what it said would be the first US factory dedicated to producing LFP batteries for ESS.

Given that the plant is expected to start production next year, it will be ahead of LG ES's plans in this regard, although the Pomega plant's annual production capacity will be far less than 3GWh.

Pomega is a subsidiary of Turkish company Kontrolmatik Technologies, which was established late last year as a vertically integrated manufacturer of battery cells and battery energy storage system (BESS) solutions.

At the time of its opening last November, Kontrolmatik said Pomega expected to receive more than $900 million in incentives related to the Inflation Reduction Act (IRA). While the plant was planned before the IRA legislation was passed, when the legislation was completed it prompted a 50% increase in its planned annual production from 2GWh.

What is indisputable is that the IRA appears to have provided a rocket booster for the US’s ambitions to build a domestic battery value chain, particularly in battery manufacturing.

While perhaps not purely dedicated to the ESS sector, other large-scale production plants that will produce LFP cells for battery energy storage and electric vehicles are also under construction, with US startups Our Next Energy and American Battery Factory both targeting this, as well as KORE Power, which is further along with plans to build a 12GWh plant. In fact, the sites chosen by KORE and American Battery Factory are also in Arizona.

LG ES also said the Inflation Reduction Act was a key factor in the business case for its Arizona plant, allowing the company to bring production closer to expected demand for batteries for mobile and stationary applications and enabling it to build closer relationships with end customers. The ESS portion is equivalent to the 3 trillion won that Samsung Electronics plans to invest.

LG Electronics also has its own BESS solution company "LG ES Vertech" and recently acquired energy storage system integrator NEC energy solutions, and is advancing its vertical integration strategy.

(Original source: Energy Storage News Global Energy Storage Network, New Energy Network Comprehensive)