S. Korea's first US investment push opens door for K-battery ESS boom

As AI data centers proliferate worldwide, power solutions that combine gas generation with energy storage systems are emerging as a new market — and South Korea's battery industry is growing increasingly hopeful about winning additional ESS orders.

The South Korean government's decision to pursue a gas-fired combined-cycle power plant in Texas as its first strategic US investment project is further raising the odds that domestic companies will land a role in the venture.

According to industry sources, the government's first US strategic investment project — recently reported to the National Assembly — involves building a 6.3-gigawatt gas-fired combined-cycle power plant in Encinal, Texas, to supply electricity to a nearby data center complex being developed at a capacity of 5 GW.

The project, valued at 30 trillion won ($22.1 billion), is designed to meet surging power demand driven by the rapid expansion of AI data centers across the United States.

Natural gas generation, which can deliver large volumes of power reliably, has drawn growing attention in the US as a primary energy source for AI data centers.

However, AI data centers require a high level of power quality and stability: the load fluctuates sharply as hundreds of thousands of GPUs cycle on and off, and even a brief outage can trigger large-scale system failures.

That dynamic is increasing the likelihood that battery energy storage systems will be deployed alongside gas generation to manage power quality and shore up reliability.

McKinsey noted in a recent report that "generation capacity has been expanding rapidly, but supporting infrastructure such as power grids and ESS has not kept pace."

Jung Won-seok, a researcher at iM Securities, wrote in a separate report that "the trend of installing gas generation and ESS together near data centers is growing" and forecast that the combination "will become an essential option going forward."

The industry is consequently moving beyond the conventional model of pairing renewable energy with ESS, with power solutions that combine traditional generation sources such as gas plants with storage systems gaining traction.

Tesla Megapack ESS units are being installed alongside gas turbines as part of a 1.2 GW power infrastructure at Colossus, the SpaceX AI data center under development in Memphis, Tennessee.

South Korean battery makers view ESS capabilities as a key determinant of medium- to long-term growth amid the AI infrastructure buildout, and are moving to capture rising ESS demand from their US production bases.

SK On is converting some of its capacity for ESS use across four US factories — SK Battery America plants 1 and 2 in Georgia (22 GWh), a standalone plant in Tennessee (45 GWh), and the HSBMA plant scheduled to begin operation this year (35 GWh) — giving it a combined US production capacity of more than 100 GWh.

LG Energy Solution has retooled existing production lines at its Holland, Michigan plant to mass-produce lithium iron phosphate pouch batteries for ESS applications. Samsung SDI is also building an LFP battery production line for ESS at StarPlus Energy, its joint venture with Stellantis in Indiana.