The ESS War AI Data Centers Ignited — What the LFP Three-Way Order Race and the Third Central Contract Market Auction Reveal

What is in focus: the third Central Contract Market auction for ESS and the three battery makers

Korea’s ESS (Energy Storage System) Central Contract Market has entered a phase of expansion ahead of its third auction in September 2026, and the results of the first two auctions show that the formula ‘ESS = LFP’ is not yet settled in the domestic market. In the first auction, the Samsung SDI consortium, backed by NCA (nickel-cobalt-aluminum) prismatic batteries, took the largest volume; in the second, SK On did. This article organizes this trend in the order of auction structure, the three companies’ strategies, and ESS fire-safety patents.

Start with the industry context. According to a September 7, 2026 report, the third auction is expected to be announced in September, is worth about 1 trillion won, targets volumes for supply in 2028, and an expansion to 1 GW or more is under review. An earlier August 26 report said the third auction was likely to be 1 GW or more, about twice the previous auctions, and that the project value could reach about 2 trillion won. Size estimates therefore differ between reports and must be confirmed by the official notice. The government is pursuing ESS expansion of 2.2 GW or more by 2029, and about 1.13 GW was reported to have been secured through the first and second auctions.

Expectations that the spread of AI data centers and the expansion of renewables will increase demand for grid stabilization are cited as the backdrop to this market’s growth. The tension is “who will capture this demand”. This article answers the question: “What practical changes does the expansion of the ESS Central Contract Market demand of the three battery makers’ competitive landscape and their facility and safety investments?”

Basic principle: a water tank for electricity and the marketplace that buys it

Put simply, an ESS is “a giant water tank for electricity”. If intermittent sources such as solar and wind are connected directly to the grid, voltage and frequency can fluctuate the way water pressure surges in a pipe. An ESS stores surplus power and releases it when supply falls short, keeping this pressure steady. The ESS Central Contract Market is a system in which the government and the Korea Power Exchange buy this storage capacity through auctions; for operators it is a route to securing revenue through predictable contracts.

Battery chemistry choice can also be explained by analogy. If ternary chemistries such as NCM and NCA are “light but sensitive sprinters”, LFP (Lithium Iron Phosphate) is closer to “a heavy but steady long-distance runner”. The common explanation is that despite lower energy density, it is thermally stable and long-lived, and is therefore preferred for stationary ESS where weight is not an issue.

Domestic auction results, however, moved differently from this generalization. In the first auction (563 MW), finalized on August 1, 2025, the Samsung SDI consortium took 6 of 8 projects, the LG Energy Solution consortium 2, and SK On none. Reporting at the time described as an ‘unexpected result’ the fact that Samsung SDI, using ternary batteries rather than the industry-mainstream LFP, won so many contracts. This suggests that in this market, not only price but non-price factors such as safety and contribution to domestic industry can decide the outcome.

Comparison: snapshot of the three Korean battery makers’ ESS strategies

The table below refills the original table with content confirmed through each company’s announcements and press reports. Auction shares are reported figures and may differ from official tallies.

Item	LG Energy Solution	Samsung SDI	SK On
1st auction (563 MW) result	2 of 8 projects	6 of 8 projects	0
2nd auction (565 MW) share	14%	35.7%	50.3%
Cumulative share, 1st + 2nd	19%	56%	25%
Cells for domestic auctions	Building an LFP line at Ochang (operating 2027, 1 GWh expandable to 5 GWh or more)	NCA prismatic made in Ulsan, preparing LFP mass production	Seosan LFP 3 GWh (expandable to 6 GWh depending on orders)
ESS products and technology	Liquid-cooled thermal management, BMS with real-time voltage and temperature monitoring	SBB (Samsung Battery Box, 20-ft container, NCA or LFP prismatic), module-level direct-injection extinguishing (EDI)	LFP pouch cell at 500 Wh/L exhibited, CTP, immersion cooling, EIS-based anomaly detection 30 minutes ahead
Raw material sourcing	10-year supply of 80,000 tons of lithium carbonate from Smackover Lithium (from 2029)	Not confirmed in public materials	Domestic sourcing of cathode, electrolyte and separator

What this table says: Samsung SDI (6 of 8) took the most volume in the first auction and SK On (50.3%) in the second, splitting cumulative shares at 56%, 25% and 19%. All three are expanding LFP capacity, but they are taking clearly different paths in cell form factor (prismatic vs. pouch) and in the layer of safety technology (extinguishing, thermal management, early detection).

There are also changes from the original in the table. The original gave LG Energy Solution’s lithium counterparty as ‘Smakover Lithium’, but the name in the company’s announcement is ‘Smackover Lithium’. On September 1, 2026, the company announced a contract with Smackover Lithium in Arkansas, USA (a joint venture of Standard Lithium and Equinor) to receive 80,000 tons of lithium carbonate over ten years starting in 2029, and said it would use it for LFP and ternary batteries for EVs and ESS.

Patent perspective: non-price evaluation and ESS fire-safety rights

The expansion of the ESS market brings competition over the scope of rights concerning fire and thermal-runaway risk. The August 26 report said that expanding non-price evaluation items and introducing a minimum price floor were being discussed to curb excessive below-cost competition. The heavier the non-price items weigh, the more directly safety technology ties to auction competitiveness, and the more the FTO (freedom-to-operate, infringement review) of that technology turns into business risk.

A verified example patent: LG Energy Solution’s US12283671B2 (“Energy storage system including superabsorbent sheet”) claims priority from Korean application KR10-2020-0024461 (February 27, 2020), was filed in the US on November 5, 2020, and was granted on April 22, 2025. According to Google Patents its legal status is Active and its anticipated expiration date is August 26, 2042, and its family list shows WO2021172697A1, EP3955371B1, JP7167361B2, CN113795967A, KR102900071B1 and others.

Gist of the claims (restated): Claim 1 combines multiple sub-ESSs made of battery modules and racks, a housing that accommodates them, a sensor detecting temperature and/or smoke, a first blocking sheet interposed between adjacent sub-ESSs, a fire-extinguishing device supplying extinguishing agent into the housing, and a cooler supplying cooling water to the blocking sheet. The blocking sheet is limited to an absorbent sheet containing absorbent fiber capable of absorbing and holding 20-200 g of cooling water per 1 g.

Insight: ESS safety patents divide into the layers of ‘detection, blocking and extinguishing’. SK On’s EIS-based early detection in the table sits in the detection layer, Samsung SDI’s module direct injection (EDI) in the extinguishing layer, and the absorbent sheet of the LG Energy Solution patent above closer to the blocking layer. Even under the same heading of ‘ESS fire safety’, the layers where rights attach differ, so a design-around in one layer can still collide with patents in another. That is why, when safety technologies are bundled into an auction proposal, FTO should be checked separately for each layer.

Avoidance points: Claim 1 above requires both a numerical limitation on the absorbent sheet’s absorption (20-200 g per 1 g) and a ‘cooler supplying cooling water to the blocking sheet’. A structure that uses a non-absorbent blocking material such as a ceramic or insulating board, or that does not supply cooling water directly to the blocking material, leaves room to literally lack an element.

Design-around scenario (counterargument): However, if an absorbent slightly outside the range achieves substantially the same function (blocking heat propagation and holding cooling water) in the same way, it may become subject to a doctrine-of-equivalents analysis. Also, moving detection and extinguishing logic into software can keep a distance from this patent but may collide with other patents in the detection layer, so the judgment requires directly comparing the claim language case by case.

Limitations and outlook

The optimistic scenario is that the ESS Central Contract Market becomes a stable source of demand and raises utilization of the three Korean makers’ LFP lines. There is also a contrary scenario. If below-cost competition intensifies as reported, profitability may fall even for winning bids, and in overseas ESS markets, where they compete with more price-competitive Chinese companies, domestic auction volumes alone may not be enough to close the cost gap.

The strategic alternative is to differentiate not on price but on reliability metrics such as fire safety and life warranties, and to build pre-emptively the underlying safety technologies into a patent portfolio organized by the detection, blocking and extinguishing layers. In a market where non-price evaluation carries more weight, this portfolio can become the basis of auction scores.

Practical action: Once the third auction notice is published, planning and IP staff should first check the non-price evaluation items and safety certification requirements, divide their ESS fire-response technologies into the detection, blocking and extinguishing layers, and prepare claim comparison charts against representative patents in each layer such as US12283671B2.

Items requiring verification

• The confirmed size (MW), project value (reports differ between about 1 trillion and about 2 trillion won) and notice schedule of the third auction
• The figure in official government documents for the 2029 ESS expansion target (2.1 GW in the original, 2.2 GW or more in reports)
• Primary sources for the original’s Samsung SDI 700 Wh/L prismatic LFP and LG Energy Solution mixed air/liquid cooling
• The claim scope of domestic family members of US12283671B2 such as KR102900071B1
• Whether each of the three companies will bid in the third auction and the volumes proposed

Sources

1. ZDNet Korea, “ESS Central Contract Market awards finalized – landslide for Samsung SDI” (2025-08-01)
2. Money Today, “Government to greatly expand ESS market; third auction likely 1 GW or more” (2026-08-26)
3. Sidae Ilbo, “Three battery makers reignite order race ahead of third ESS auction” (2026-09-07)
4. Samsung SDI press release, “Samsung SDI presents AI-era vision at InterBattery 2026” (2026-03-02)
5. Newspim, “SK On unveils technology detecting ESS fires 30 minutes ahead; presents immersion cooling and CTP battery strategy” (2026-03-11)
6. LG Energy Solution Battery Inside, “LG Energy Solution signs long-term lithium carbonate supply contract with US-based Smackover Lithium” (2026-09-01)
7. Google Patents, US12283671B2 – Energy storage system including superabsorbent sheet (LG Energy Solution)