Korea weighs non-lithium battery quotas, incentives for distribution grid ESS
The Korean government is pushing to significantly expand the introduction of non-lithium batteries in the 2nd AI distribution grid ESS construction project, aiming to overcome fire risks and enable long-duration discharge.
Our take
How is Korea planning to mitigate lithium-ion battery fire risks in DER projects?
The Korean government's proposed quota system and bonus points for non-lithium ESS in the 2nd AI distribution grid project, particularly in Jeju (2-3 out of 7 lines), signals a strategic shift to mitigate fire risks and enhance grid stability for high renewable penetration.
The proposed measures directly address the critical challenge of integrating intermittent renewable energy sources by promoting safer, longer-duration storage. By creating dedicated quotas and incentives, the government aims to de-risk the initial market entry for non-lithium technologies, which typically face higher upfront costs but offer superior safety and operational characteristics for grid-scale applications, especially in areas with high curtailment like Jeju. This policy reflects a strategic choice to prioritize grid reliability and safety over immediate cost savings, leveraging government support to foster a nascent industry.
What the source says
- The Ministry of Climate, Energy and Environment is expected to prioritize non-lithium next-generation batteries for 2-3 out of 7 candidate lines in Jeju, effectively creating a quota system for non-lithium facilities.
- A plan to grant separate bonus points to operators applying non-lithium technology in the mainland line call for proposals is being strongly considered.
- The Korea Energy Agency will conduct a call for proposals for the 2nd AI distribution grid ESS project in September 2026.
- The government is internally reviewing a new, large-scale next-generation battery support project specifically targeting Jeju for 2027, separate from the 2nd AI distribution grid project.
- an industry official An industry official stated that specific discussions emerged at a working-level consultation that about 2-3 lines in Jeju will be allocated as a non-lithium quota during the 2nd project call for proposals.
- Kim Seong-hwan Minister Kim Seong-hwan of the Ministry of Climate, Energy and Environment has consistently emphasized the need for fire safety and long-duration, long-life batteries, reflecting his strong policy will in the non-lithium expansion trend.
- The policy aims to fundamentally block the thermal runaway fire risks associated with lithium-ion batteries.
For investors — Investors and operators in the Korean DER market should anticipate increased government support and market opportunities for non-lithium ESS technologies, particularly in Jeju and for projects focused on grid stabilization, potentially shifting investment focus from traditional lithium-ion solutions.
Watch: Announcement of final detailed guidelines for the 2nd AI distribution grid ESS project call for proposals, including specific non-lithium quotas and bonus point criteria.
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