LG Chem Ltd. (Seoul, South Korea) announced the conclusion of an agreement for the supply of 140 GWh of renewable energy for its cathode-materials factory (Leyou New Energy Materials) in Wuxi, Jiangsu Province, China from the local wind and solar power sales company Yunfengxin Energy.
The capacity of 140 GWh can power approximately 30,000 households for a year, which can supply all electricity required by the cathode materials factory in Wuxi. The deal was reached as a power purchase agreement (PPA), in which eco-friendly electricity generated through wind and solar power is supplied directly to the factory without an intermediary. LG Chem is the first Korean company operating in China to use this form of agreement.
PPA allows the supply of electricity at a fixed price through a direct agreement with the power company. Compared to other ways of supplying renewable energy, such as purchasing renewable energy certificates (REC) or generating power independently, PPA provides stable supplies of energy at an affordable cost and is recognized universally as a measure of reducing carbon emissions.
LG Chem’s Wuxi cathode material factory is projected to operate solely using renewable energy from 2021, reducing 100,000 tons of carbon emissions compared to the conventional use of industrial power.
To achieve over 90% carbon neutrality in China for battery materials, including precursors and cathodes, LG Chem plans to review the transition of its precursor factory in Zhejiang Province to renewable energy through a PPA by 2021, in addition to the Wuxi cathode materials factory this year.
“Since the manufacturing processes for precursors and cathodes produce minimal carbon emissions, we can achieve over 90% carbon neutrality by transitioning the power source to renewable energy,” explained an LG Chem associate.
To respond to the rapidly increasing demand for battery materials with the growth of the electric vehicle market, LG Chem has collaborated with Huayou Cobalt, the No. 1 cobalt refining company in the world, to establish a precursor factory in Quzhou, Zhejiang Province, and a cathode materials factory in Wuxi, Jiangsu Province with an annual production capacity of 40,000 tons. Both factories started full-scale operations at the end of 2019.
Precursors are raw materials used for cathodes produced by amalgamating elements such as cobalt, nickel, and manganese. Combining precursors with lithium produces cathodes, which become the core component in batteries.
The entire volume of precursors and cathodes manufactured in LG Chem’s Quzhou and Wuxi factories are supplied to the Nanjing battery factory (for small batteries, electric vehicles, and ESS) and the Wroclaw battery factory (for electric vehicles) of LG Energy Solutions.