Samsung SDI and LG Chem, the nation’s leading battery makers, are expected to benefit most from the emerging energy storage system industry as the government plans to raise electricity prices next year.

ESS is a device that stores electricity during low demand to provide when the demand is high. Despite its energy efficiency, it has not grown in the domestic market yet due to its high installation cost and the low price of industrial power.

However, the industry is expected to thrive next year with the government’s plan to raise power prices, high electricity demand from fast emerging nations and Japanese nuclear accidents.

“Smart grid projects are expected to kick into high gear in 2014 due to the rise in electricity prices, not only in Korea but also in many other countries including the United States, Japan and Germany,” said John Seo, an analyst at Seoul-based Shinhan Investment. “As secondary batteries are an inevitable part of ESS, the demand will sharply rise.”

A nation’s two leading battery makers Samsung SDI and LG Chem are expected to benefit the most. Sales in secondary batteries for ESS will rise 260 percent to 270 billion won ($254.9 million) for Samsung SDI and 214 percent to 150 billion won for LG Chem, an industry source said.

This year, Samsung SDI closed deals with the U.S.’ Xtreme Power, Germany’s Younicos and Italy’s Loccioni to supply ESS. LG Chem also signed contracts with Germany’s SMA Solar Technology and the U.S.’ Southern California Edison.

The global ESS market is projected to generate 23 trillion won ($22 billion) with demand to reach 49 gigawatts by 2020, according to research firm Pike Research.

By Shin Ji-hye
(shinjh@heraldcorp.com)