Korea's US investment triggers 2nd wave of orders for ESS, power gear makers

Korea’s planned power infrastructure investment in the United States could generate a second wave of orders for Korean battery and power equipment makers, as surging electricity consumption from artificial intelligence (AI) data centers drives demand for energy storage systems (ESS) and grid equipment.

Last week, the Korean government announced its first U.S. strategic investment project, part of a $350 billion investment package. The project worth $22.3 billion is centered on building a natural gas-fired power plant in Encinal, Texas, to meet rising electricity demand from semiconductor plants and AI data centers.

The project is also expected to create additional demand for equipment needed to store, distribute and stabilize power, enabling relevant system makers to attract more orders from the world’s largest economy.

ESS is one of the largest pillar under the project. Korean battery makers — LG Energy Solution, Samsung SDI and SK On — identify ESS as their major revenue areas while the electric vehicle industry is stuck in a chasm.

ESS can store electricity when demand is low and discharge it during peak periods, helping data centers manage sharp fluctuations in power consumption and maintain a stable supply.

The need for such systems could become more pronounced around data centers that receive electricity from the new gas-fired power plant. ESS also helps stabilize power delivery between the newly built generation facilities and data centers.

Battery makers’ strategic shift toward ESS is already becoming evident.

LG Energy Solution was selected as an ESS partner for Nvidia’s AI factory program, positioning its lithium-ion phosphate (LFP)-based storage systems for AI data center applications. SK On, meanwhile, signed a 1.07 trillion won contract with POSCO Future M for LFP cathode materials, as it expands its ESS business in the U.S.

Samsung SDI is also seeing stronger demand for energy storage batteries. iM Securities expected the company’s ESS sales to rise about 32 percent in the third quarter from the previous quarter, and the firm’s sales are also projected to soar 33 percent between July and September from a year earlier on the favorable ESS market environment.

Korea’s power infrastructure investment in the U.S. could also benefit major power equipment makers here, as new power plants and data centers require transmission and distribution infrastructure, including transformers and circuit breakers.

HD Hyundai Electric, LS Electric and Hyosung Heavy Industries are among the Korean companies positioned to benefit from higher demand for high-voltage equipment. All three have expanded their U.S. orders in response to growing investment in the country’s aging power grid.

The planned investment raises expectations that Korea’s investment in U.S. power generation will lead to additional orders for Korean suppliers. As more factories and data centers are built around the project, demand for power infrastructure is widely expected to extend beyond the initial investment.

“Stable electricity storage and transmission systems are becoming inseparable parts of AI data centers,” an industry official said.

“Korea’s U.S. power investment will pave the way for such players to grab bigger orders from major Big Tech clients there.”