SK On, the battery-making unit of Korea's SK Innovation, announced Monday that it has signed a long-term agreement to supply battery cells for energy storage systems (ESS) to U.S. company NeoVolta Power.

Under the five-year deal, SK On will supply a total of 9 gigawatt-hours (GWh) of lithium iron phosphate (LFP) pouch cells from 2027 to 2031. The batteries will be produced at SK On's plant in Georgia. The companies did not disclose the value of the contract, but market estimates put it at about 1.5 trillion won ($1.09 billion). Producing the cells in Georgia means they qualify as U.S.-made, a factor that has grown in importance as federal policy has pushed battery buyers toward domestically manufactured products.

The agreement is expected to help SK On secure a stable customer for its ESS batteries in the United States and increase production at its local facilities. It comes as the U.S. energy-storage market has been one of the fastest-growing segments of the power sector, driven by utilities adding storage alongside renewable generation and by surging electricity demand from data centers.

SK On has been expanding into the ESS market as demand for EV batteries has slowed. The company has mainly focused on high-nickel EV batteries but is now adding LFP batteries, which are widely used in ESS due to their lower cost and longer life. LFP chemistry has become the dominant choice for grid-scale storage in the United States, and most current supply comes from Chinese manufacturers — a dynamic that has pushed U.S. storage developers to seek non-Chinese cell sources.

NeoVolta Power selected SK On as a key battery supplier, citing the Korean firm's battery technology and U.S. production capabilities.

The two companies also plan to expand their partnership. SK On intends to sign another agreement this year to provide an additional 9 GWh of LFP cells. NeoVolta Power will make the battery packs, which SK On plans to purchase over five years through 2031. The additional deal would bring their total planned cooperation to 18 GWh, and whether that follow-on agreement is signed on schedule is a key milestone to watch.

"This partnership strengthens SK On's position in the U.S. battery ESS (BESS) market and brings together SK On's U.S.-made LFP battery technology with NeoVolta Power's growing energy-storage manufacturing capabilities," said Choi Dae-jin, head of ESS Business at SK On.

"We view NeoVolta Power as a strategic partner as we expand our presence in the U.S. energy-storage market. By combining our respective capabilities, we will pursue new commercial opportunities and deliver competitive BESS solutions that meet evolving market needs," Choi added.

Steve Bond, president of NeoVolta Power, said, "SK On's battery cell technology and U.S. manufacturing capabilities, combined with NeoVolta Power's energy storage expertise and manufacturing capabilities, provide a strong foundation for this strategic partnership."

"We expect this collaboration to accelerate growth for both companies in the BESS market and help address rising demand in the U.S.," Bond said.

SK On has about 100 GWh of battery production capacity in the U.S., including its plants in Georgia and Tennessee and a joint plant with Hyundai Motor Group. Beyond the NeoVolta deal, further ESS supply agreements using that U.S. footprint would indicate how quickly SK On's diversification beyond EV batteries is progressing.