• Jaehong Park, CEO of LG Energy Solution Vertech, interviews with Energy-Storage.News and explains the advantage of vertical integration.
• LG Energy Solution Vertech is leveraging its technology leadership to shape a strategy that views energy as more than just a simple commodity.

LG Energy Solution established a new company named LG Energy Solution Vertech in 2022 after acquiring NEC Energy Solutions (NEC ES), a leading specialist in ESS system integration based in the U.S. Since then, LG Energy Solution Vertech has provided complete energy storage solutions and services as the U.S. energy storage division of LG Energy Solution, streamlining customers’ experiences with a one contact, one contract approach and solutions that include full warranties, lifecycle services, and advanced hardware and software.

Recently, Jaehong Park, CEO of LG Energy Solution Vertech, spoke with Energy-Storage News, a media outlet covering news in the energy storage sector. He discussed LG Energy Solution Vertech’s market strategy, emphasizing the benefits of its vertically integrated approach and its holistic perspective on energy.

This approach harnesses the synergy between the two companies, which enables LG Energy Solution Vertech to provide comprehensive energy storage solutions to the US energy market while utilizing LG Energy Solution’s knowledge and superior technology. He said that LG Energy Solution’s decision to acquire NEC ES stemmed from the recognition that the energy industry goes beyond products to include warranties, long-term services, and more, emphasizing that the primary benefit of LG Energy Solution Vertech’s vertically integrated approach is the ability to streamline project delivery through single-contract agreements.

“As a simple battery supplier, it is difficult to address customer pain points,” Park said. “By acquiring NEC ES, LG Energy Solution has been able to evolve into a solution provider rather than just a supplier.”

Battery storage costs used to be USD 1,000 per kWh. However, after LG Energy Solution bid on and developed a project with Southern California Edison (SCE), the world’s largest power company, it achieved substantial cost savings, which now offers prices below USD 200 per kWh. Furthermore, while initial commercial standardization of ESS solutions used 40 feet containers for deployment, today’s standard configuration employs 20 feet ISO containers, capable of storing over 5MWh of energy.

The increasing demand for data centers – and with them, power – due to the spread of artificial intelligence (AI) is creating significant opportunities in the U.S. market. California used to lead the ESS market from 2017 to early 2018, but today the U.S. energy market is shifting to include new markets.  

Park noted that while the growth of these data centers is undeniable, “there are still many projects in an undeveloped state,” emphasizing that most of these projects do not yet address energy concerns proactively. Energy storage could neatly address the energy challenges posed by data centers, and LG Energy Solution Vertech is actively exploring on this trend.

LG Energy Solution Vertech leverages NEC ES’s proprietary software suite, AEROS™, which optimizes the use of ESS assets for revenue improvement and cost saving. Anticipating continued volatility in wholesale electricity prices in future commercial markets, LG Energy Solution Vertech is developing software to maximize its ability to capture this volatility through energy trading or arbitrage.

LG Energy Solution Vertech began proactively pursuing localization in the U.S. market even prior to the initiation of the Inflation Reduction Act (IRA). LG Energy Solution has already forged partnerships with U.S. OEMs and operates local production facilities, establishing a strong competitive position. Park also expressed optimism about sustained market growth, citing expectations of robust local energy demand in the U.S.

Meanwhile, at the RE+ 2023 exhibition, LG Energy Solution highlighted the advantage in the ESS market through its expertise with LFP battery cells and noted that manufacturing products in the U.S. would qualify them for investment tax credits. In fact, as of December last year, LG Energy Solution had already received reservations for system integration orders totaling more than 10GWh from customers in North America.