(Bloomberg) -- The biggest producer of batteries for electric vehicles in Europe may branch out to build energy storage facilities for households harnessing renewable energy, amid weak demand for e-cars.
The Polish manufacturing unit of LG Energy Solution Ltd already indicated that its sales revenue from the east European country would likely drop by around a third this year to 26.5 billion zloty ($6.7 billion).
“We are considering developing LG Energy Solution Wroclaw toward energy storage,” Joanna Silska, a spokeswoman for the company in the southwestern Polish city, said by email. “Energy transformation is crucial and inevitable for European economies, therefore we’re examining the potential for investments in new manufacturing capacities.”
Europe’s EV shift has faltered due to high prices and the removal of subsidies by a number of governments. This is weighing on suppliers such as LG Energy Solution, which in 2016 announced its EV battery plant investment in Poland, with annual production capacity of 100,000 units.
A potential shift to energy storage facilities by the Korean company goes hand-in-hand with Polish government plans to subsidize such units for households. Fast growth of photo-voltaic generators in still coal-dependent Poland has led to an imbalance in the power system and forced the grid operator to cut solar output already several times this year.
Climate Minister Paulina Hennig-Kloska announced a 400 million zloty energy storage subsidy plan last week, saying it was only the “prelude” for the country’s ambitions. Poland’s bigger western neighbor Germany saw more than 500,000 residential storage facilities installed last year.
LG Energy Solution employs 6,600 people in its Polish plant, which accounts for about 40% of the company’s global revenues. In June the company temporarily suspended construction of an energy storage systems production line in Arizona, citing the need for flexibility.
Sale woes by LG Energy Solution and its peers are also starting to impact Poland’s economy. This month, the country’s central bank blamed the country’s first monthly trade deficit this year on a decline in car-part exports, led by EV batteries.
--With assistance from Maciej Martewicz and Heesu Lee.
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