LG New Energy acquires energy storage manufacturer NEC ES

According to industry analysis, this acquisition provides LG New Energy with an opportunity for vertical integration in the energy storage industry, making it a one-stop battery energy storage system solution provider, providing services from battery installation to complete system solutions.

NEC ES, which lost in the energy storage market, is being “taken over” by LG New Energy.

Foreign media reported that LG New Energy recently announced the acquisition of NEC Energy Solutions (NEC ES), an energy storage subsidiary of Japan’s NEC.

In June last year, foreign media said that due to the market conditions of the grid-scale battery energy storage business and the impact of the coronavirus pandemic, it did not find a suitable buyer. Japan’s NEC announced that NEC ES will no longer develop new energy storage projects and will gradually withdraw. In the energy storage business area, most employees will stay in the company to complete existing projects, and the existing battery maintenance contract will last until March 2030.

NEC ES was established in 2001, formerly known as A123 Energy Solutions of the US A123 System Company (A123 Energy Solutions). The company went bankrupt in 2012 due to continuous losses and was later acquired by Wanxiang Group for US$256 million.

In 2014, NEC spent US$100 million to acquire A123 Energy Solutions from Wanxiang and later renamed it NEC Energy Solutions (NEC ES).

At present, NEC ES has delivered a battery energy storage system with a total installed capacity of 986MW globally. Regarding why it withdrew from the energy storage field, a NEC Tokyo spokesperson said that NEC ES has not been profitable since its establishment in 2014. Although the battery market continues to grow, price competition is fierce, and it is expected that this situation will not be alleviated.

Steve Fludder, CEO of NEC ES, and Roger Lin, vice president of marketing, joined LS Energy Solutions, a US energy storage developer controlled by South Korea, in October 2020.

According to industry analysis, this acquisition provides LG New Energy with an opportunity for vertical integration in the energy storage industry, making it a one-stop battery energy storage system solution provider, providing services from battery installation to complete system solutions. LG New Energy will also seek to expand its influence in the North American battery energy storage market.

It is worth noting that foreign media reported a few days ago that the world’s largest battery energy storage system in Moss Landing, California, USA, has overheated the LG battery used, causing Vistra Energy, the owner of the energy storage project, to stop operating the project.

Due to overheating issues, LG New Energy has also recently recalled approximately 10,000 sets of household energy storage battery products in the United States. Since August 2017, there have been more than 21 fire accidents involving LG energy storage batteries. Coupled with the fire accidents of GM and Hyundai electric vehicles, LG New Energy has paid a huge recall cost.

With battery safety issues already “overwhelming”, it remains to be seen whether LG New Energy can integrate its resource advantages after taking over NEC ES, which has not been profitable for many years.