South Korea’s Samsung SDI has made significant strides in the US energy storage market by signing its first contract to supply lithium iron phosphate (LFP) cells. This announcement, made on December 10, 2023, marks a pivotal moment for the company as it aims to solidify its presence in the growing battery energy storage system (BESS) sector.
The contract, valued at over KRW2 trillion (approximately US$1.36 billion), involves the provision of US-made LFP cells by Samsung SDI America, a subsidiary based in Michigan. The deal, which begins in 2027, underscores the company’s commitment to enhancing domestic manufacturing capabilities. Samsung SDI claims its prismatic cells have undergone several years of research and development, positioning them as a competitive choice for BESS applications.
In conjunction with this development, media reports have suggested that Samsung SDI is in negotiations for a multi-year battery supply agreement with Tesla. While this has yet to be confirmed, speculation surrounds whether Tesla is the undisclosed customer for the recent contract. The increasing demand for stationary grid storage in the US potentially opens the door for various candidates beyond Tesla, as the market evolves.
Samsung SDI is strategically retooling its electric vehicle (EV) battery production lines in the US to focus on energy storage solutions. This shift comes as competitors, also from South Korea, pivot towards domestic supply chains in response to changing market dynamics. Recently introduced legislation by the US government could impact the availability of tax credit incentives for projects using Chinese-made products, amplifying the importance of local production.
The company emphasizes its unique position as the only non-Chinese manufacturer capable of supplying US customers with prismatic cells. This advantage allows its batteries to seamlessly replace existing systems that utilize Chinese-made products. Furthermore, Samsung SDI highlights safety features inherent in its designs, including an aluminum casing and proprietary No Thermal Propagation (No TP) technology, which enhances thermal management.
In addition to cell manufacturing, Samsung SDI plans to produce complete integrated BESS solutions within the US. These products were showcased at the RE+ clean energy trade show in Las Vegas, where the company presented innovations that leverage nickel cobalt aluminum oxide (NCA) cells.
Trina Storage, a Chinese company, has also expanded its footprint in the US market through a strategic partnership with Lightshift Energy. The agreement will see Trina Storage supply its Elementa 2.0 and Elementa 2.5 BESS solutions for a portfolio of projects exceeding 1GWh. Lightshift Energy, previously known as Delorean Power, is focused on developing and operating energy storage projects in the US.
Despite the challenges posed by recent legislative measures that may restrict the use of Chinese components in US projects, Chinese companies like Trina Storage still have opportunities to meet tax credit requirements with existing projects that have made sufficient progress. Some industry sources suggest that the cost of Chinese-made batteries may still attract large customers who prioritize project timelines and budget considerations, even without tax credit support.
Trina Storage, primarily recognized as a system integrator, has utilized in-house LFP cells for projects in China while sourcing third-party components for its US operations. The company completed its first projects in the US in 2024, driven by demand from the Massachusetts Municipal Wholesale Electric Company (MMWEC), which represents multiple municipal utilities in New England.
As both Samsung SDI and Trina Storage continue to navigate the evolving landscape of the energy storage market, their recent agreements highlight the importance of strategic partnerships and local manufacturing in meeting the increasing demand for sustainable energy solutions. With the global focus on renewable energy and energy independence, these developments are poised to play a crucial role in shaping the future of energy storage in the United States.
