SK On lands 9 GWh ESS battery deal in US, nine times last year's contract

Five-year deal signed with NeoVolta Power

US ESS contract grows from 1 GWh to 9 GWh

Additional 9 GWh partnership targeted by year-end

Combined total could reach 18 GWh if deal closes

Georgia factory output, customer diversification expected to benefit

Choi Dae-jin, head of SK On's ESS business division (right), and Steve Bond, president of NeoVolta Power, pose for a photo after signing a supply contract for ESS battery cells at SK On's Gwanhun Campus in Jongno-gu, Seoul, on Thursday. [SK On]

SK On has secured a 9 GWh battery supply contract for energy storage systems (ESS) in the United States — nine times the volume of its first US ESS deal signed last year. The agreement marks a step forward in the company's push to broaden its portfolio beyond electric vehicle batteries into the fast-growing ESS market while locking in stable output for its American factories.

SK On announced Monday that it signed the ESS battery cell supply agreement with US ESS firm NeoVolta Power on Thursday at SK On's Gwanhun Campus in Jongno-gu, Seoul. Choi Dae-jin, head of SK On's ESS business division, and NeoVolta Power President Steve Bond attended the signing ceremony.

NeoVolta Power is a manufacturing subsidiary established by NeoVolta — a NASDAQ-listed company focused on residential ESS — to enter the large-scale ESS market. The subsidiary operates a production facility in Pendergrass, Georgia, and is expanding output of commercial, industrial and grid-scale ESS systems.

Under the agreement, SK On will supply a total of 9 GWh of lithium iron phosphate (LFP) pouch-type battery cells over five years, from 2027 through 2031. The batteries are to be produced at SK On's factory in Georgia.

The deal is the largest ESS contract SK On has secured in the United States. The confirmed volume under a supply agreement signed with US renewable energy developer Flatiron in September last year stood at 1 GWh. The new contract secures a long-term supply relationship nine times that size in a single deal.

The agreement carries added significance given that battery makers have been struggling to maintain factory utilization rates amid slowing EV demand. SK On has built its business around high-nickel batteries for electric vehicles but has been expanding its product lineup to include LFP batteries to target the rapidly growing North American ESS market.

The two companies are also pursuing a further expansion of their partnership. SK On plans to supply an additional 9 GWh of LFP cells for ESS to NeoVolta Power through a separate contract to be signed by year-end. Under the arrangement, SK On would supply the cells, and NeoVolta Power — which operates an ESS production facility in the United States — would assemble them into packs and deliver the finished systems back to SK On.

If the additional contract is concluded, the total battery volume covered by the two companies' partnership would rise to 18 GWh. The plan envisions expanding the collaboration beyond a simple supply relationship into a broader ESS business partnership spanning both cells and packs.

An aerial view of SK Battery America's factory in Georgia, the US subsidiary of SK On. [SK On]

SK On already has a substantial manufacturing base in the United States. Its combined US production capacity — spanning its wholly owned SK Battery America plant, the SK On Tennessee factory, and the HSBMA joint venture with Hyundai Motor Group — stands at around 100 GWh. The new contract is expected to boost utilization rates at its US factories while diversifying demand beyond electric vehicles.

SK On is also expanding its ESS business in South Korea. In the second round of the country's ESS central contract market tender announced in February, the company secured 284 MW out of a total 565 MW on offer, capturing 50.3 percent of the available volume.

In June, SK On held an ESS event in Texas for local customers and unveiled its ESS product brand "GridOn." The company plans to leverage its US production base to target the ESS market, where demand for locally sourced supply is high.

"This contract will serve as an opportunity to further strengthen SK On's position in the US ESS market," said Choi Dae-jin, head of SK On's ESS business division. "We will continue to expand new customer relationships and business opportunities based on our local production capabilities and battery solutions tailored to customer needs."

NeoVolta Power President Steve Bond said the partnership was built on SK On's battery technology and US production capabilities combined with NeoVolta Power's ESS manufacturing expertise. "We expect this collaboration to help us effectively respond to growing demand in the United States and accelerate the expansion of both companies' ESS businesses," he said.

kwater@heraldcorp.com