YONGIN — At Hyundai Engineering & Construction's "All Life Care House" in Yongin, Gyeonggi Province, on the 27th of last month, one wall of the living room was covered with what looked like decorative interior tiles. The model house was built to test zero-energy design. The tiles were in fact home energy storage systems, each containing a 3-watt vanadium ion battery, a next-generation cell. They store electricity generated by solar panels on the balcony and roof for use when needed. As renewable installations such as solar and wind power expand rapidly, energy storage systems tailored to houses are beginning to reach the market. Unlike lithium iron phosphate or ternary batteries, vanadium ion batteries use only water-based electrolytes and non-combustible materials, so they do not burn and carry no risk of explosion — safe enough to install inside a home. The required spacing between cells is also narrow, making them well suited to small spaces in dense urban areas. An official at Standard Energy, which developed the vanadium ion battery, said on the 26th that energy storage systems could be installed in ordinary homes from 2028.
The global battery market is expanding quickly beyond electric vehicles into robots, drones and energy storage. Korea's battery industry contracted somewhat after the onset of the so-called chasm, a temporary slowdown in demand, but experts say the sector could grow into a larger market than semiconductors given surging demand from artificial intelligence, robotics, drones and power grids. Korean makers are struggling against China's volume offensive, they argue, but competitiveness must be maintained even if that requires greater state support. A senior business figure said the country's resources are now too heavily concentrated in semiconductors, adding that while chips, which bring in hundreds of trillions of won a year, matter, far larger support measures are urgently needed for batteries — the country's second industry, one it must never give up.
The battery market, including energy storage, is indeed growing fast worldwide. According to global market research firm Fortune Business Insights, the market totaled $173.25 billion (about 240 trillion won) last year and is projected to reach $422.27 billion (about 585 trillion won) by 2034, an average annual growth rate of 10.45%.
Industry officials say Korea should hold its technology lead in ternary batteries, where it has built up competitiveness, while concentrating fiscal resources on next-generation fields where price competitiveness is decisive — lithium iron phosphate, sodium and vanadium ion, and solid-state batteries — and building a domestic market first.
Vanadium ion batteries cost about three times as much as lithium ion cells and have yet to become competitive. A senior battery industry official said next-generation batteries to replace existing lithium ion cells are being developed one after another as the industry's applications and importance grow, but that economies of scale large enough to bring down production costs are needed to make the new technologies competitive. The government must take the lead in forming the market first, the official said.
U.S. high-tariff policies on Chinese energy storage systems and electric vehicles are also favorable for Korea. Tariffs the United States imposes on Chinese energy storage systems are reported to exceed 40%, including duties under Section 301 of the Trade Act. China leads Korea on manufacturing costs for cells and other components, but tariffs can serve as leverage to build competitiveness further.
Systematic support measures tied to the industry's development are also expected to grow in importance. Lee Bo-ram, a research fellow at the Korea Institute for International Economic Policy, said that as battery applications widen to energy storage and robots, differentiated performance requirements by use — power density as well as energy density, safety, life span and supply chain stability — are emerging as key competitive factors. With demand industries diversifying, she said, policy must go beyond expanding production capacity and be designed more precisely around technology development, demonstration and demand creation that reflect the needs and required performance of each market. Tailored policies by demand industry, she said, should turn moves by the United States and the European Union to reduce reliance on China, amid a broader shift toward economic security, into an opportunity for Korea's battery industry. Japan's Ministry of Economy, Trade and Industry issued a "Battery and Power Source Industry Strategy" in early June this year, a revision of its earlier battery industry strategy, to strengthen competitiveness in the global market as reliance on China declines.
