SK On has secured a large-scale Energy Storage System (ESS) project and will aggressively enter the North American ESS market with locally produced lithium iron phosphate (LFP) batteries. The contract volume is estimated to be up to 7.2 gigawatt hours (GWh), with industry estimates placing the contract size around 2 trillion won.
SK On announced on the 4th that it has signed a supply contract for 1 gigawatt hour (GWh) of ESS with the renewable energy corporation Flatiron Energy Development, headquartered in Colorado. SK On will supply container-type ESS products with LFP batteries for the Massachusetts project promoted by Flatiron in 2026.
SK On also secured a 'Right of First Offer' for a 6.2 GWh project that Flatiron is pursuing in the U.S., including Massachusetts, by 2030. Accordingly, the two companies will supply ESS products of up to 7.2 GWh over four years starting in 2026 through discussions.
SK On will begin mass production of ESS-dedicated LFP batteries in the second half of next year. To this end, it plans to convert some production lines for electric vehicle batteries at its SK Battery America plant in Georgia into ESS lines. The goal is to quickly establish a local production system to respond promptly to customer demand. SK On will apply price-competitive and stable LFP pouch batteries to the ESS products, which have fewer size and weight constraints compared to electric vehicles.
SK On's ESS products are characterized by high space efficiency with stacked pouch batteries and the application of high-voltage modules. Typically, ESS products require rack unit designs to secure a certain voltage. SK On offers a customized system by flexibly configuring and expanding capacity with a module-based design, which is smaller than racks.
Solutions to prevent heat diffusion to adjacent modules and an Electrochemical Impedance Spectroscopy (EIS)-based battery diagnosis system have been applied to ensure a high level of safety. EIS is a technique that sends a small electrical signal to the battery, analyzes the internal resistance and reaction characteristics to diagnose the battery's status.
Lee Seok-hee, CEO of SK On, noted at the SK Innovation corporate value enhancement strategy briefing held in July that the company would actively enter the rapidly growing U.S. ESS market to expand its business scope. This contract is seen as an achievement following SK On's elevation of its ESS business unit to a direct organization under the CEO in December of last year to strengthen its business capabilities.
SK On is expected to accelerate stable growth by reinforcing its product lineup and business portfolio through the production of LFP batteries for ESS, effectively responding to the slowdown in electric vehicle demand. Plans for domestic production of LFP batteries are also being established to respond to the long-term battery ESS project scheduled for the end of this year in South Korea. Additionally, SK On has completed the development of LFP battery technology for electric vehicles and is in discussions on orders with multiple automakers.
Choi Dae-jin, head of SK On's ESS business unit, stated, "This contract is significant in that SK On has simultaneously expanded its battery chemistry and business portfolio, and we will continue to secure additional clients based on advanced battery technology and local production capabilities, further strengthening our position in the North American ESS market."
Jonathan Poor, Chief Operating Officer of Flatiron, said, "Collaboration with a global battery company that possesses technology and local production capability is strategically important, and we look forward to continuing our cooperation in multiple scheduled projects through this partnership with SK On."
Flatiron, founded in 2021, is a renewable energy developer specializing in the development and operation of large-scale ESS projects. It oversees the entire process of ESS projects from site acquisition to design, construction, and operation, mainly in North America.