[Edaily Reporter Kim Hyung-il ] iM Securities issued a positive assessment of SK Innovation(096770), noting that its subsidiary, SK On, has signed its first supply contract to enter the U.S. energy storage system (ESS) market. Accordingly, the firm maintained its “Buy (BUY)” investment rating and target price of 190,000 won.

On the 1st, Jeon Yu-jin, an analyst at iM Securities, stated, “SK On has signed a supply contract with NeoVolta, a U.S. ESS company, for a total of 9 GWh of lithium iron phosphate (LFP)-based ESS,” adding, “This is encouraging as it marks the first step toward entering the U.S. ESS market.”

SK On signed the ESS supply contract with NeoVolta on the 31st of last month. The units will be produced at a plant in Georgia, U.S., and supplied over a five-year period from 2027 to 2031. iM Securities estimated the contract value at approximately 1.5 trillion won.

NeoVolta is expanding its business scope from residential ESS to commercial, industrial, and utility-scale ESS. In January of this year, the company established the joint venture “NeoVolta Power” with LONGi and PotisEdge and agreed to build a 2 GWh battery energy storage system (BESS) facility in Georgia. The company plans to expand its production capacity to 8 GWh in the future.

iM Securities analyzed that under this contract, SK On will supply LFP battery cells, and NeoVolta will assemble them into packs for sale to U.S. power grid and power generation projects.

SK On has set its ESS order target for this year at 20GWh. With this 9GWh contract with NeoVolta, the company has secured 45% of its annual target. This figure excludes the 1GW contract with Flatiron Energy.

Researcher Jeon stated, “With about four months remaining this year, activity in securing new ESS orders had been limited, but this contract has fulfilled 45% of the target,” adding, “If SK On signs an additional 9 GWh contract for direct sales within the year, it will meet the majority of this year’s order target.”

The growth potential of the U.S. ESS market was also cited as a positive factor. Analysis suggests that while ESS demand is increasing alongside the expansion of U.S. artificial intelligence (AI) data center power plants, efforts to exclude Chinese-made power equipment and ESS from the U.S. market are intensifying.

Researcher Jeon analyzed, “As the supply of non-Chinese ESS becomes tighter, SK On—which possesses surplus production capacity—is in a position to expect a relative spillover effect from new orders,” adding, “This NeoVolta contract is an example demonstrating that supply opportunities are expanding even for latecomers like SK On due to the shortage of non-Chinese ESS.”

However, he assessed that this ESS contract alone is unlikely to alleviate market concerns regarding the merger between SK On and SK ie technology. This is because financial burdens, such as SK On’s poor profitability and rising debt, remain.

Researcher Jeon noted, “This contract is absolutely insufficient to alleviate investors’ dissatisfaction and anxiety regarding the support for SK On and SKIET,” but added, “It is a positive development in that it marks the first step toward entering the U.S. ESS market.”

He went on to highlight several investment points that remain valid: improved refining margins and a strong lubricants market in the second half of the year; improved performance at SK E&S driven by rising wholesale electricity prices (SMP); the SK Group’s expansion of investments in AI data centers; and the potential for SK Innovation to enter the U.S. energy sector.