South Korea is preparing to announce the winners of a major energy storage auction in February next year, as part of the country’s efforts to strengthen its electricity grid amid growing renewable energy adoption. The auction, organised by the Korea Power Exchange (KPX), will determine which companies and projects will build a total of 540 megawatts (MW) of battery energy storage systems (BESS), with a combined storage capacity of 3,240 megawatt-hours (MWh).
The auction, called the 2025 2nd ESS Central Contract Market Competitive Bidding, was first announced earlier this year by the Ministry of Trade, Industry, and Energy. It aims to secure 500 MW/3,000 MWh of storage capacity on the mainland and an additional 40 MW/240 MWh on Jeju Island, a region known for its tourism. The initiative is intended to help South Korea integrate more renewable energy into its grid and maintain stability as the share of renewable power grows.
KPX issued the official tender notice on November 27, 2025, and later conducted a briefing session for interested companies in mid-December. After registration closed, bidders had until January 12, 2026, to submit detailed proposals and business plans, with supporting documents due the following day. KPX will review the submissions and announce successful bidders by mid-February. Winning companies will then need to obtain the necessary permits for power generation before signing the contracts.
The auction rules set clear requirements for project size and type. On the mainland, facilities must have an output between 10 MW and 100 MW, while on Jeju Island, the range is 10 MW to 40 MW. All proposed storage systems must be new and standalone, meaning they cannot be combined with other energy generation facilities. Certain combinations of battery technologies, such as mixing nickel manganese cobalt (NMC) with lithium iron phosphate (LFP) or with flow batteries, are not permitted.
KPX will evaluate bids based on both price and non-price criteria. Non-price considerations include fire and facility safety, emergency response plans, the contribution of the project to grid stability at its connection point, and its support for the domestic energy storage industry ecosystem. The equal focus on price and technical factors is expected to encourage high-quality projects that meet safety and operational standards.
South Korea’s central contract market for energy storage is still relatively new. Its first auction, held in 2023, awarded a 15-year contract for a 60 MW/260 MWh BESS project on Jeju Island. That project was designed to help manage demand peaks and integrate renewable energy into the local grid more efficiently.
The government’s push for large-scale energy storage aligns with its renewable energy targets. Installed renewable capacity in the country is expected to increase from about 30 GW in 2023 to nearly 122 GW by 2038. To support this expansion, officials estimate that around 23 GW of short-duration and long-duration storage will be needed.
In the past, private companies faced challenges recovering investment costs for energy storage projects due to market design limitations. Growth also slowed after government-subsidised commercial and industrial storage programs ended in 2018, partly due to safety concerns following a number of battery fires. However, global interest in energy storage and the growing need for grid support have renewed focus on large-scale BESS projects in South Korea.
The upcoming February announcement will mark a significant step toward the construction and operation of these large storage systems. It will also highlight which companies are actively participating in South Korea’s expanding energy storage market and their role in supporting the country’s renewable energy transition.
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