SK On Targets US Energy Storage Market in Shift From EVs

SK Innovation Co.’s battery unit is in talks with several American data center and energy developers to supply batteries for energy storage systems, aiming to secure at least 10 gigawatt hours of contracts in the United States this year.

Its customers include Ford Motor Co., Hyundai Motor Co. SK On, which includes and Kia Corp., is ramping up production of lithium-iron-phosphate cells commonly used in energy storage systems to meet growing demand from AI data centers and expand renewable energy capacity.

The Seoul-based company is trying to capture the fast-growing LFP market after South Korean battery makers initially prioritized high-performance nickel-based batteries over what they saw as a low-end technology once dominated by China.

But investigations have increased since the company signed an initial deal in September to supply LFP batteries to U.S.-based Flatiron Energy Development, Choi Daejin, president of SK On’s ESS business unit, said in an interview.

Private ESS developers like Flatiron and companies that serve “hyperscalers” — tech giants like Microsoft Corp. and Meta Platforms Inc. that build large data centers — are among primary customers, he said on the sidelines of the InterBattery conference. An announcement will be made early this summer.

“Our goal is to receive orders for over 10 Gwh in the US this year, but the internal target I was given is actually much higher,” Choi said, adding that the company will shift about 20% of its 100 Gwh global production capacity to ESS cells.

SK’s move towards ESS comes as the battery industry adjusts to a slower electric vehicle transition in the US, tariff pressure increases and competition from China intensifies. LG Energy Solution Ltd. and Samsung SDI Co. are developing next-generation technologies to diversify revenue streams while also redesigning some of their EV battery lines and aim to increase ESS cell production to more than 60 Gwh and 30 Gwh, respectively, this year.

The development comes after SK ended its joint venture with Ford in December, just four years after announcing an $11 billion plan to build three battery factories and an electric pickup assembly plant in the US. This led to a loss of 3.7 trillion won, with the company laying off more than a third of the workforce at its Georgia factory. In Korea, it offered voluntary retirement packages and unpaid leave, along with up to two years of tuition support, to employees who joined before 2025.

Choi said that the ESS business will help provide a turnaround as demand for electricity from data centers and renewable energy accelerates, noting that some EV production lines in Georgia and the Tennessee site purchased from the Ford project will be converted to ESS.

BloombergNEF predicts that demand from U.S. data centers will more than double to 78 Gwh from 2024 to 2035, accounting for about 9% of the nation’s entire electricity demand and outpacing growth in electric vehicles and hydrogen. The US ESS market is expected to reach 130 GWh by 2030, from about 80 GWh currently, Samsung SDI said.

The AI-powered energy boom is just getting started, opening up opportunities for Korean suppliers as the U.S. improves its grid and buyers look for batteries made outside China, Choi said.

To gain market share from Korean and Chinese rivals, SK is relying on a safety technology known as electrochemical impedance spectroscopy, which can detect abnormal signs at least 30 minutes before a thermal event and help prevent fires in storage facilities.

The technology helped SK win more than half the volume in a 1 trillion won ESS tender from the Korean government last month, accelerating its growth in the sector.

Choi said that SK is developing a higher-performance LFP battery, aiming for mass production by 2028.

“Although we are late, we are differentiating our products to increase our appeal in the market,” he said, adding that the company plans to showcase new technologies to show that it is a serious player.

This article was generated from an automated news agency feed without modifications to the text.