SK Seeks Significant Presence in US Energy Storage Market, Expanding Beyond EVs

SK Innovation Co.'s Battery Unit Expands into Energy Storage Systems

SK On, the battery unit of SK Innovation Co., is in discussions with multiple American data center and energy developers to supply batteries for energy storage systems (ESS), aiming to secure at least 10 gigawatt-hours (GWh) of contracts in the US this year.

SK On has been accelerating production of lithium-iron-phosphate (LFP) cells, widely used in ESS, to meet soaring demand from AI data centers and expanding renewable power capacity. The company is playing catch-up in the fast-growing LFP market, having initially prioritized high-performance nickel-based batteries.

Private ESS developers, such as Flatiron Energy Development, and companies serving "hyperscalers" like Microsoft Corp. and Meta Platforms Inc., are among the primary clients. SK On plans to shift around 20% of its 100 GWh global production capacity to ESS cells.

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The pivot comes as the battery industry adjusts to a slower electric-vehicle transition in the US, rising tariff pressure, and intensifying competition from China. LG Energy Solution Ltd. and Samsung SDI Co. are also repurposing some EV battery lines, aiming to raise ESS cell output this year to more than 60 GWh and 30 GWh, respectively.

SK On's ESS business will help drive a turnaround as electricity demand from data centers and renewable energy accelerates. The company plans to convert some EV production lines in Georgia and Tennessee to ESS. BloombergNEF forecasts demand from US data centers will more than double from 2024 to 78 GWh by 2035, accounting for nearly 9% of the country's entire electricity demand.

SK On is developing a higher-performance LFP battery, targeting mass production by 2028. The company is betting on a safety technology known as electrochemical impedance spectroscopy to win market share from Korean and Chinese rivals.