LG Chem, the world's largest automotive battery maker, is entering the U.S. residential storage market through a partnership with solar installer Sunrun.
Sunrun will begin installing LG batteries for its Brightbox residential solar-plus-storage offering, available today to Hawaii residents. The company says it will continue using Tesla batteries as in the Brightbox as well, even though Tesla's proposed acquisition of SolarCity would make it a direct competitor to Sunrun.
Because the partnership is not exlcusive, LG Chem's batteries will be available to other solar installers through AEE Solar, Sunrun's solar products distribution arm. Sunrun is free to install other vendors' batteries in its storage offerings.
Since Tesla entered the residential market with the announcement of its Powerwall battery, the residential energy storage market has heated up.
Germany’s Sonnen was one of the first to enter the fray, announcing plans to enter the U.S. market in late 2015. But LG Chem’s partnership with Sunrun may be the most direct competition Tesla has in the residential battery market.
Tesla is ramping up battery production at a “gigafactory” in Nevada that it says will help lower the overall costs of its batteries, for both the electric vehicles and stationary applications. LG Chem is already the one of the largest manufacturers of lithium-ion batteries in the world. And Tesla also is in the process of acquiring solar installer SolarCity.
"Tesla makes all the headlines, but LG manufactures most of the lithium ion batteries," Ed Fenster, Sunrun’s executive chairman, told Reuters. LG's entry into the market will help bring down battery prices and help them make economic sense for more households, he said.
Sunrun has been using Tesla batteries in its solar-plus-storage installations in Hawaii (pictured above), and a company spokesperson said they will continue to use them in addition to the LG cells.
Tesla's planned acquisition of SolarCity would put it in direct competition with Sunrun, and Elon Musk is set to reveal Tesla's own integrated solar-plus-storage offering on Friday night. But mixing battery vendors is common in the electric vehicle sector, where automakers use the technique to encourage competition and lower prices.
Financial terms of the LG Chem-Sunrun deal were not disclosed.
This post has been updated to reflect comment from Sunrun.