LG Energy Solution has secured an additional large-scale supply contract in the North American energy storage system (ESS) market. Building on last year's cumulative orders of about 140 gigawatt-hours (GWh), the company is continuing to win new orders this year.
On the 28th, LG Energy Solution said it signed a contract to supply ESS batteries totaling 6 GWh with DTE Energy, the largest integrated energy corporations in Michigan. The total contract value amounts to $1.6 billion (about 2.4 trillion won), and the supply period is about two years.
DTE Energy, an integrated energy corporations headquartered in Detroit, Michigan, is the largest electric utility in Michigan. Centered on the urban and industrially dense southeastern Michigan region, it has about 2.3 million electric customers and 1.3 million natural gas customers. Its annual revenue amounts to about $15.8 billion (about 21.7 trillion won).
Through this supply contract, DTE Energy plans to carry out a total of eight core grid-building projects, including the artificial intelligence (AI) data center project for global big tech corporations Oracle in Saline Township, Michigan.
Recently in North America, ESS battery demand has surged as big tech corporations ramp up construction of AI data centers and demand tied to renewable energy grows. AI data centers (AIDC) run large-scale servers and cooling facilities 24 hours a day, resulting in high power usage and frequent instantaneous load fluctuations, making stable power supply crucial.
The ESS that LG Energy Solution will supply this time is expected to stably control the power load of data centers and improve operational efficiency. The ESS supplied for this project will store and manage electricity produced by power plants and renewable energy sources such as solar and wind, and then supply it during hours of high electricity demand.
Previously, LG Energy Solution proactively responded to big tech corporations' "local procurement" demands through a North American localization strategy. The products to be supplied to DTE Energy this time will be produced mainly at the Holland, Michigan, plant, which in June last year became the first in North America to begin mass production of large-scale ESS batteries.
Currently, LG Energy Solution is operating and building a total of five strong North American ESS production hubs, including the Holland and Lansing plants in Michigan, NextStar Energy in Canada, the Ultium Cells Tennessee plant, and the joint plant with Honda in Ohio. The company is also accelerating portfolio diversification, including converting the Ultium Cells Tennessee plant's LFP (lithium iron phosphate) line for ESS.
Based on this, the company plans to expand global ESS production capacity to more than 60 GWh by the end of this year, with more than 80%—50 GWh—concentrated in North America to secure overwhelming local supply competitiveness.
Park Jae-hong, head of LG Energy Solution Vertech, said, "We are pleased to supply locally produced ESS in Michigan, LG Energy Solution's key U.S. production hub, in collaboration with DTE," and added, "By expanding the North American ESS business through a localization strategy, we will contribute to stabilizing the U.S. power grid and creating jobs, while also helping to accelerate growth in the North American market."
DTE Energy CEO Joi Harris said, "By collaborating with LG Energy Solution Vertech, we will build more ESS projects in Michigan," and added, "We expect this to contribute not only to expanding local jobs, improving customer power reliability, and increasing investment in clean energy, but also to establishing Michigan as a center of technological innovation and economic opportunity."