By Park Jae-hyuk
LG Energy Solution CEO Kwon Young-soo
LG Energy Solution (LGES) completed the acquisition of a 100 percent stake in NEC Energy Solutions, a U.S.-based energy storage system (ESS) integrator, from its parent, Japan's NEC Corporation, the Korean firm said Thursday.
Industry insiders estimated the size of the deal at around 50 billion won ($42 million). It is the first time LGES has acquired another company since its initial public offering on Jan. 27.
"Through the deal, LGES will accelerate its energy storage business and ultimately better provide our clients with a more comprehensive ESS program that meets the growing demand," LGES CEO Kwon Young-soo said. "We are confident we can expand on the ESS business by escalating our competitiveness in terms of quality and ultimately become a leading global player within the industry."
Last year, the battery manufacturing unit of LG Group agreed with NEC Corporation to take over NEC Energy Solutions, with the aim of expanding its capabilities in the ESS value chain.
NEC Energy Solutions was established in 2014, after NEC Corporation acquired the U.S.-based A123 Systems' ESS integration business. It has carried out over 140 projects in various countries, including the U.K., Australia and Brazil. In 2020, NEC Energy Solutions posted $207 million in sales, showing an average 60 percent annual growth rate over the past three years.
LGES plans to set up a new entity, named LG Energy Solution Vertech, which will provide customized ESS integration services for its clients, such as equipment installation, remote monitoring and scheduled maintenance.
According to LGES, global demand for standardized and fully integrated storage systems has experienced significant and sustained growth, as such systems reduce both capital equipment and site installation costs. The company said that the market also wants the world's leading battery suppliers to expand equipment and service offerings, as batteries are the most significant element for ESS.
Data compiled by battery market information provider SNE Research showed that the capacity of the global ESS industry increased to 20 gigawatt-hours in 2020 from 11 gigawatt-hours a year earlier. SNE Research expected the size to reach 302 gigawatt-hours by 2030, as it will expand annually by 35 percent on average.
