South Korean battery manufacturer SK On secured its first standalone energy storage contract worth up to 2 trillion won ($1.5 billion), marking a significant milestone for the company since its establishment in 2021.
The agreement with Colorado-based Flat Iron Energy Development covers 1GWh of container-type energy storage systems for a Massachusetts project next year. SK On also gained priority negotiation rights for an additional 6.2GWh of projects scheduled through 2030, potentially expanding the total deal to 7.2GWh.
The contract represents SK On’s strategic shift toward lithium iron phosphate (LFP) batteries, a departure from the costlier nickel cobalt manganese chemistry it produces for electric vehicles. The company plans to commence mass production of LFP batteries at its US factory next year, repurposing existing production lines at its Georgia facility.
The timing coincides with explosive growth in the US energy storage sector. The nation’s energy storage market added 12.3 GW of installed battery capacity in 2024, with the market size crossing $106.7 billion and expected to grow at a 29.1% compound annual growth rate through 2034.
SK On’s entry positions it against established players including Samsung SDI, which signed a $301 million contract with NextEra Energy earlier this year. The competitive landscape reflects broader Korean ambitions in the US storage market, driven by federal incentives and surging demand from data centers and renewable energy integration.
However, the company faces headwinds. Recently announced increases in Section 301 tariffs for imported lithium-ion batteries from China, effective in 2026, will increase pricing. Additionally, interconnection queues remain bloated with unpredictable delays that make cost and timeline risk difficult to manage for project developers.
The Massachusetts project will begin deliveries in the second half of 2026, aligning with SK On’s broader localization strategy. The company elevated its ESS business division to report directly to the CEO in December, signaling management’s commitment to diversifying beyond automotive batteries.
For SK On, success in energy storage offers a hedge against temporary slowdowns in electric vehicle demand while establishing a foundation for long-term growth in a rapidly expanding market segment.
