SK On wins first major U.S. ESS contract for 1GWh project

Expansion of SK On in the U.S. Energy Storage Market

SK On has made a significant breakthrough by securing a large-scale Energy Storage System (ESS) project in the United States. This marks the company’s first major contract for ESS batteries since its launch in 2021, signaling a strategic shift towards expanding its presence in the American market.

On the 4th, SK On announced that it had signed an agreement to supply a 1GWh-scale ESS with Flatiron Energy Development, a renewable energy company based in Colorado. ESS systems are crucial for managing the intermittent nature of solar and wind power, which generate electricity unpredictably. Under this deal, SK On will provide container-type ESS products equipped with lithium iron phosphate (LFP) batteries for a Massachusetts-based project set to commence in 2026.

In addition to this, SK On has gained the right to priority negotiations for a 6.2GWh-scale ESS project that Flatiron is developing across multiple states, including Massachusetts, by 2030. The collaboration between the two companies includes plans for SK On to supply up to 7.2GWh of ESS products from 2026 over a four-year period. The total value of the contracts is estimated at 2 trillion Korean won.

Focus on Local Production and Advanced Technology

To meet the growing demand, SK On plans to begin mass production of LFP batteries specifically designed for ESS in the second half of next year. As part of this initiative, portions of the electric vehicle battery production line at SK Battery America’s facility in Georgia, U.S., will be reconfigured into an ESS production line. This move aims to establish a robust local production system that can quickly respond to customer needs.

The decision to invest in local manufacturing aligns with broader industry trends where ESS is becoming a key growth area for battery companies. As the electric vehicle market faces challenges such as demand stagnation, the ESS sector is emerging as a vital avenue for future expansion.

Strategic Vision and Market Positioning

In July, Lee Seok-hee, CEO and President of SK On, emphasized the company's commitment to entering the U.S. ESS market. He stated, “We will actively enter the growing U.S. ESS market to expand our business areas.” This reflects a clear strategy to diversify SK On’s operations and capitalize on the increasing demand for energy storage solutions.

Choi Dae-jin, Head of SK On’s ESS Business Division, highlighted the company’s focus on securing more customers through its advanced battery technology and local production capabilities. He said, “Going forward, we will secure additional customers based on our advanced battery technology and local production capabilities to further strengthen our position in the North American ESS market.”

Future Prospects and Industry Impact

With the recent contract and ongoing efforts to expand production, SK On is positioning itself as a key player in the U.S. ESS market. The company’s focus on LFP batteries, known for their safety and longevity, further strengthens its competitive edge. As renewable energy adoption continues to rise, the role of ESS in stabilizing the grid becomes increasingly important.

SK On’s success in securing these contracts underscores the growing importance of energy storage in the transition to a sustainable energy future. By leveraging its technological expertise and local production capabilities, the company is well-positioned to meet the evolving demands of the market and drive long-term growth.