SK On has secured half of the volume in a major public energy storage system (ESS) contract in South Korea, attracting significant industry attention. This impressive performance marks a dramatic turnaround, providing crucial references for the company’s expansion into the North American market.
SK On plans to leverage its recently established 2 trillion KRW (about 1.35 billion USD) local supply chain to accelerate its push into the global ESS market.
Industry sources reported on Tuesday that SK On is in talks with several U.S. clients for ESS supply contracts exceeding 10 gigawatt-hours (GWh). The company aims to secure up to 20 GWh in ESS contracts this year, ramping up its expansion into the North American ESS market.
In a recent development, SK On demonstrated its growing influence by winning over half of the total volume (284 MW out of 565 MW, or 50.3%) in the second round of bidding for the ESS centralized contract market.
This success represents a significant turnaround after failing to secure any contracts in the first round. The win is particularly noteworthy as it provides SK On with valuable references in the large-scale public ESS project sector, where the company previously had limited experience.
Industry experts predict that SK On will use this contract as a springboard to accelerate its penetration of the North American market. The ESS market is experiencing rapid growth, driven by surging electricity demand from artificial intelligence (AI) data centers in the U.S. and expanding renewable energy policies.
SK On has been laying the groundwork for its entry into the North American ESS market. Last year, the company signed a 1 GWh ESS supply contract with U.S. renewable energy developer Flatiron, marking its official entry into the local market. Additionally, SK On secured the right of first negotiation for Flatiron’s potential 6.2 GWh project planned by 2030.
The company has recently accelerated its supply chain development. Seojin Global, a subsidiary of Seojin Systems, announced a 1.9424 trillion KRW (about 1.3 billion USD) ESS component supply contract with a major domestic battery manufacturer, now confirmed to be SK On.
Under this agreement, Seojin Global will supply key ESS structures, including battery racks and DC blocks (20-foot container-based ESS modules), to SK On. These components will be integrated with SK On’s U.S.-produced lithium iron phosphate (LFP) batteries to create comprehensive energy storage systems.
Seojin Global plans to operate an additional production line dedicated to SK On, alongside its existing ESS facility in Texas. This partnership allows SK On to secure a stable local supply chain through long-term contracts with U.S.-based suppliers.
Earlier, SK On also signed a memorandum of understanding (MOU) with domestic cathode material producer L&F to supply cathode materials for North American LFP batteries.
Industry insiders emphasize that the success of large-scale ESS projects often hinges on a stable component supply chain. The company’s commitment to long-term procurement of essential ESS components has led some analysts to speculate that additional North American contracts may be imminent.
An industry representative noted that large ESS projects typically require a secure supply chain from the outset. SK On’s long-term component procurement contracts suggest they may be positioning themselves for future opportunities in the North American market.
SK On plans to begin mass production of LFP batteries for ESS in the U.S. in the second half of this year by retooling its production lines. As the electric vehicle (EV) market experiences a slowdown, the company aims to leverage the North American ESS market as a new growth driver.
