LG Energy Solution, Samsung SDI and SK On, the three domestic battery makers, are focusing on orders for batteries used in energy storage systems (ESS). While demand for electric vehicles is sluggish in the United States and elsewhere, the market for ESS batteries is rapidly expanding as the artificial intelligence (AI) industry grows.
According to the battery industry on the 1st, LG Energy Solution on the 27th of last month (local time) signed a contract to supply 6 gigawatt-hours (GWh) of ESS batteries with DTE Energy, the largest energy corporations in Michigan. The batteries to be supplied to DTE Energy are lithium iron phosphate (LFP) batteries, and the total contract is worth $1.6 billion (about 2.4 trillion won).
The batteries supplied by LG Energy Solution are expected to be deployed in eight key grid construction projects in Michigan, including Oracle's AI data center project. Oracle is partnering with OpenAI, the developer of ChatGPT, to build AI data centers at major hubs in the United States under the "Stargate Project."
In Feb., LG Energy Solution also signed a contract with Qcells' U.S. subsidiary to supply 5 GWh of ESS batteries.
As of the end of last year, LG Energy Solution's cumulative orders for ESS batteries totaled 140 GWh. The company has five ESS battery production bases in North America. It is mass-producing ESS batteries at its Holland plant in Michigan and its Ontario plant in Canada, and ESS lines are scheduled to come online in sequence at its Lansing plant in Michigan, the Ultium Cells joint venture plant with GM in Tennessee, and the joint venture plant with Honda in Ohio.
A LG Energy Solution official said, "We plan to expand ESS battery production capacity in North America to over 50 GWh by the end of this year."
Samsung SDI is also continuing to win ESS battery orders in the United States. Samsung SDI America, Samsung SDI's Americas subsidiary, signed a contract in Mar. with a U.S. energy corporations to supply ESS batteries. The contract is worth about 1.5 trillion won, and the company plans to supply NCA batteries and LFP batteries for four years through 2029.
In Dec. last year, Samsung SDI also signed a 2 trillion won contract to supply ESS LFP batteries with a U.S. energy-related infrastructure development and operations company.
Samsung SDI plans to produce ESS batteries at the StarPlus Energy joint venture plant it established with automaker Stellantis in Indiana. The plant had originally produced batteries for Stellantis' electric vehicles, but in the fourth quarter of last year it converted a line to produce ESS NCA batteries. In the fourth quarter of this year, it plans to add facilities to produce ESS LFP batteries.
SK On is also restructuring its business portfolio around the ESS market. SK On will convert part of the electric-vehicle line at its Georgia plant into an ESS battery facility and begin production in the second half of this year. It also plans to convert part of the line at its Tennessee plant, which became a standalone factory after parting ways with Ford, into an ESS line.
An SK On official said, "Our goal is to win orders for 20 GWh of ESS batteries by the end of this year," adding, "We are in delivery talks with multiple customers in the United States."
According to the battery industry, ESS demand in the North American market is expected to grow by nearly 20% annually through 2030, centered on the power grid.
Mirae Asset Securities forecast that this year LG Energy Solution's revenue from the ESS battery institutional sector will reach 12.1 trillion won, surpassing revenue from electric-vehicle batteries (10.2 trillion won. iM Securities also projected that LG Energy Solution's ESS institutional sector operating profit will surge from about 82.3 billion won in 2025 to about 3.6 trillion won in 2028.
Jung Won-seok, an analyst at iM Securities, said, "The basis of competition in the ESS market is being reorganized from the past low-cost procurement structure to one centered on suppliers that meet tax credit eligibility, ensure supply-chain transparency and have local production capacity," adding, "Growth in the U.S. ESS market is creating new opportunities for domestic battery companies."