LG Energy Solution (373220.KS) will supply energy storage system (ESS) batteries to Google. As U.S. Big Tech firms rapidly execute investments in artificial intelligence (AI) data centers, demand for stable energy supply chains has increased, bringing LG Energy Solution's ESS business into full swing.
In particular, LG Energy Solution will have all five of its North American ESS production bases up and running once construction is completed this year. As order wins are steadily secured in line with this, the company is expected to move beyond merely filling the electric vehicle gap to establishing ESS as a stable source of revenue.
According to the battery industry on the 15th, LG Energy Solution will supply ESS batteries for the "Steel River Energy Center," a solar energy infrastructure project that Google is building in Mississippi County, northeastern Arkansas.
The Steel River Energy Center is a solar energy hub that Google is building with Cypress Creek Energy, an independent renewable energy power producer. Construction is scheduled to proceed with a target of operation in 2029, building a total of 2 gigawatt-hours (GWh) of ESS. The scale of the ESS is expected to expand to 2.9 GWh. Google described it as "the largest solar and ESS project in its global portfolio."
Google will use the power generated at this facility to operate nearby data centers. LG Energy Solution's order is estimated at 300 billion to 400 billion won based on 2.9 GWh. The company plans to supply "JF2 DC Link," a lithium iron phosphate (LFP)-based ESS solution, from its North American production bases.
LG Energy Solution produces ESS batteries in Holland, Michigan; L-H Battery Company in Ohio; Ultium Cells in Tennessee; and NextStar in Canada, and will begin ESS battery production at its Lansing plant in Michigan within the year. The company aims to expand its global ESS production capacity to more than 60 GWh by the end of this year, of which it plans to build more than 50 GWh in North America.
Based on these investments, LG Energy Solution is absorbing rapidly growing ESS battery demand. In May this year, it won a project worth $1.6 billion (about 2.4 trillion won) from DTE Energy, the largest energy company in Michigan. The battery industry sees ample potential for LG Energy Solution's ESS order rally to continue. This is because expanded AI data center investment by U.S. Big Tech firms such as Google and Meta has sharply increased power consumption, rapidly growing demand for ESS.
According to market research firm Bloomberg New Energy Finance (BNEF), Google's power consumption rose 37% last year from the previous year, while Microsoft's also increased 24%. Google, Meta, Amazon and Microsoft accounted for 49% of renewable energy contracts signed by companies worldwide last year, reflecting heightened power demand.
