LG Energy Solution said on May 28 it signed a $1.6 billion supply contract for energy storage systems (ESS) with U.S. utility DTE Energy. Total supply volume is 6 GWh and the supply period is about 2 years. The deal is a large supply order secured by LG Energy Solution in the North American ESS market and is directly linked to its localisation strategy centered on Michigan.

DTE Energy is a diversified energy company headquartered in Detroit, Michigan, and is the state’s largest power utility. It has about 2.3 million electricity customer households in southeastern Michigan and about 1.3 million natural gas customer households. Annual revenue is about $15.8 billion. It has recently been pursuing expanded renewable energy and investment in grid modernization.

Through the contract, DTE Energy plans to carry out a total of 8 grid buildout projects, including an Oracle AI data center to be newly built in Salem Township, Michigan. AI data centers operate large-scale servers and cooling facilities around the clock, resulting in high power use and frequent load fluctuations, making ESS-based power stabilization necessary. The ESS to be supplied will also store electricity generated from renewables such as solar and wind and supply it during peak demand hours, in addition to controlling data center power loads.

The supplied volume will be produced mainly at the Holland, Michigan plant, which began mass production of large-scale ESS batteries in June last year, the first in North America. LG Energy Solution is operating and building 5 North American ESS production bases, including its Holland and Lansing plants in Michigan, NextStar Energy in Canada, an Ultium Cells plant in Tennessee, and an Ohio joint venture plant with Honda. At the Ultium Cells Tennessee plant, it is also converting to an LFP (lithium iron phosphate) line for ESS.

LG Energy Solution plans to expand global ESS production capacity to more than 60 GWh by the end of this year. More than 50 GWh of that will be concentrated in North America. The company’s cumulative ESS orders stood at about 140 GWh as of last year.

DTE Energy CEO Joy Harris (조이 해리스) said, "Through cooperation with LG Energy Solution Vertech, we have come to build more ESS projects in the Michigan area." She added, "We expect it will contribute to expanding local jobs, improving customer power reliability and expanding clean energy investment, and will also help Michigan establish itself as a center for technological innovation and economic opportunity."

Park Jae-hong (박재홍), head of LG Energy Solution Vertech, said, "It is meaningful to supply locally produced ESS by working with DTE in Michigan, our key U.S. production base." He added, "We will contribute to stabilizing the U.S. power grid and creating jobs by expanding our North American ESS business through our localisation strategy, and we will also work to accelerate growth in the North American market."