South Korea's ESS project is on fire again, and LG Chem is anxious.

27 energy storage systems from LG and Samsung in South Korea fire catch fire in last two years.

According to foreign media reports, a fire broke out at a solar photovoltaic power station equipped with an energy storage system (ESS) at Hadong-gun, 

South Gyeongsangnam-do, Korea at about 4.15 pm on the 21st. The 1.3 MWh lithium battery installed inside the ESS was provided by LG Chem.

The report pointed out that it was determined that the lithium-ion battery produced by LG Chem in the Ochang plant was not the battery in the Nanjing plant.

 In the past fire accidents, the batteries involved were mainly produced at the Nanjing plant.Since the recent fire occurred when the ESS was operating at 

normal speed, the industry believes that the fire is related to the operating condition of the SOC.

In response, LG Chem took emergency measures to adjust the utilization rate of ESS equipped with lithium batteries produced by the Auchang plant to 70%.

At the same time, LG Chem has reduced the SOC of ESS for battery production from its Nanjing plant from 95% to 70%.

A LG Chemical spokesman said: "We are currently investigating the cause of the recent fire. We will do our best to strengthen the security of the ESS so that

we can investigate the exact cause and take responsible measures."

The spokesperson also added that LG Chem will reduce the utilization of ESS's business premises until the investigation is completed.

As part of measures to strengthen ESS security, LG Chem is preparing to launch a product that prevents the spread of fire. Meanwhile, LG Chem plans to

conduct detailed experiments before the end of this year to find out the exact cause of the fire.

However, LG Chemical has not waited to put it into practice, and another ESS fire broke out, which caused the public and the industry to strongly question the

safety of its products.

"Although the problem can be solved by replacing the entire battery (if the problem is related to a specific battery, if the problem is not caused by the battery,

it may be more complicated." A representative of the Korean energy storage industry said that this is the industry's constant concern In the worst case, we need a more fundamental analysis of the cause of the fire and possible precautions.

It is worth noting that in the past three months, four fire accidents have occurred in South Korea. If counting from the first fire in Gaochang in August 2017,

there have been 27 ESS fire accidents in South Korea so far, of which 17 have been installed by LG Chemical's lithium batteries. This means that LG Chem's

ESS fire rate reached a staggering 63%.

A series of fire incidents forced the South Korean government to form an accident investigation committee to investigate. At the same time, the Korean

Safety Management Committee approved a policy on October 17 requiring operators to strengthen security measures in their ESS projects.

However, the fire happened on the fourth day after the policy was approved, which also made the industry doubt the effectiveness of the safety measures.

"We will investigate the cause of the recent fire and re-examine the current security measures process for any issues," a representative from the Ministry of Trade, Industry and Energy said.

On June 11 this year, the Ministry of Industry, Trade and Energy announced the results of a series of investigations on fires in South Korean energy storage power stations. The investigation report revealed that the cause of the fire mainly came from:

Four factors, including poor battery protection systems, poor management of the operating environment, negligent installation, and poor integration of energy

storage systems (EMS, PCS).

At the same time, investigations revealed that some batteries had manufacturing defects but did not cause fire during the simulation tests.

However, an investigation by the Joint Private-Public Commission found that LG Chem's batteries do have safety flaws.

The results of the investigation revealed that in early 2017, some battery packs produced by LG Chem found manufacturing defects such as poor folding

and cutting, and poor active material coating.

Investigators said that through repeated fire test more than 180 times, this kind of failure will not cause a fire, but may become an "indirect" element that

causes a fire, and it will still be dangerous if used for a long time. LG said it accepted the findings and ruled out subsequent hidden dangers.

Obviously, the lithium batteries used by LG Chem in ESS have certain safety defects, and LG Chem has also tasted the bitter results of battery safety issues.

Affected by the deterioration of the petrochemical market and the energy storage battery (ESS) fire, LG Chem's performance in the first three quarters of 2019 fell below expectations, revenue continued to grow but profits declined, and the battery business turned from profit to loss.

The performance report shows that the one-time expenses caused by the domestic ESS fire in the first three quarters of LG Chem may exceed 500 billion

won (about 3.02 billion yuan).

It is worth noting that in addition to LG Chem, Samsung SDI was also deeply affected by the ESS fire accident, which caused its operating profit in the first

three quarters to decline year-on-year.

Samsung SDI expects third-quarter revenue of 208 billion won (about 1.24 billion yuan), a 14% decrease from the same period last year. The main reasons

were the setback of its ESS business, and the huge damages caused by the ESS fire and the increase in subsequent maintenance expenses, which resulted

in damage to its profits.

It is understood that 9 of the 27 ESS fire accidents involved batteries produced by Samsung SDI.

In response, Samsung SDI stated that it will adopt a new fire control solution for its new energy storage system and existing energy storage

system. The new system is made of special chemicals and fire-proof materials. Even if a battery cell catches fire, it can quickly extinguish the flame. .

"It will be applied to about 1,000 ESS sites that use our ESS units and modules." Samsung SDI Chief Financial Officer Kwon Young-no said at a press

conference that we estimate this will cost 150-200 billion won 9.06-12.08 billion yuan).

From this point of view, Samsung SDI and LG Chemical's ESS projects have a greater risk of fire accidents, even higher than electric vehicles. This shows

that the ESS project is relatively complicated in both manufacturing and operating processes, and has high requirements on battery companies, and especially

puts product safety first.

From the technical point of view, LG Chemical, Samsung SDI, Tesla and other companies are using ternary batteries, its safety and cost compared to lithium iron phosphate have disadvantages.

The industry believes that the ESS fire accident in South Korea may have a profound impact on the energy storage battery market. In the future, the lithium

battery in the international energy storage field may shift from ternary to lithium iron phosphate, thereby providing development opportunities for Chinese battery

companies.

At present, due to the decline of subsidies and the intensification of market competition, a large number of battery companies have withdrawn from power to

shift to the electric bicycle and energy storage battery markets. Among them, the energy storage products of Chinese battery companies are mainly lithium iron

phosphate batteries, which are mainly used in power grid energy storage, communication base station energy storage and other fields.

It is worth noting that a series of ESS fire accidents in South Korea is a big wake-up call for Chinese lithium battery companies. From the use environment

and performance requirements, the performance of lithium batteries for energy storage is even higher than that of power batteries, which is a great challenge for

battery companies.