LG Energy inks $1.6B deal to supply ESS batteries to U.S. utility firm

LG Energy Solution has signed a $1.6 billion contract to supply 6 gigawatt-hours of energy storage system (ESS) batteries to DTE Energy, one of the largest utility companies in the United States and the biggest power provider in Michigan, the Korean company said Thursday.

The batteries will be delivered over the course of two years. DTE Energy will use the batteries across eight grid infrastructure projects, including a new AI data center that Oracle is building in Saline Township, Michigan. The Oracle facility is to be used by OpenAI, the developer of generative AI ChatGPT.

Demand for ESS batteries is expected to surge as Big Tech firms accelerate AI data center construction across North America while renewable energy adds to grid needs. The batteries LG Energy Solution is supplying will help stabilize the power load at data centers and store energy generated from sources such as solar and wind for release during hours of peak demand.

LG Energy is tailoring its service to Big Tech's demands for local sourcing with a localization strategy. The batteries for DTE Energy will mainly be produced at its plant in Holland, Michigan, which began mass production in June of last year.

LG Energy operates five ESS production bases in North America, including the Holland and Lansing plants in Michigan, the Ultium Cells plant in Tennessee and NextStar Energy in Canada. At the Tennessee plant, it is converting an EV battery line into one for the lithium iron phosphate batteries used in ESS.

The company plans to raise its ESS production capacity to more than 60 gigawatt-hours by the end of this year, with over 80 percent of that — about 50 gigawatt-hours — concentrated in North America.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.

BY NAM YOON-SEO [[email protected]]