LG Energy Solution's shares rose more than 15% following the announcement of a supply contract for energy storage systems (ESS) worth approximately 2 trillion won with a major U.S. energy company. Market expectations are growing that the increasing power demand from artificial intelligence (AI) data centers will serve as a new growth driver for the domestic battery sector.
According to the Korea Exchange, LG Energy Solution's stock closed at 442,000 won, up 58,500 won (15.25%) from the previous trading day. During the session, shares peaked at 447,000 won. Trading volume exceeded 719 billion won, ranking eighth in the KOSPI market.
The surge in stock price is attributed to the large-scale ESS supply contract with DTE Energy. LG Energy Solution announced that it signed a contract to supply a total of 6 gigawatt-hours (GWh) of ESS batteries with DTE Energy, valued at around $1.6 billion (approximately 2.4 trillion won).
DTE Energy is a major power and energy company headquartered in Detroit, Michigan. The contract will support power grid projects, including the Oracle AI data center project being developed in Saline Township, Michigan.
Market analysts believe that the expectation of LG Energy Solution's ESS batteries being integrated into the OpenAI data center infrastructure has boosted investor sentiment. As the power demand from AI data centers surges, the importance of ESS for stable power supply and load management is increasing.
On the same day, buying interest spread across the secondary battery sector. Samsung SDI initially showed weakness but recovered to close up 7.30%. Investor focus remained on LG Energy Solution, leading to increased interest across the related value chain.
Analysts are noting that this contract could signal an expansion of the ESS market for data centers beyond a one-time supply.
On the same day, Jumin Woo, a researcher at NH Investment & Securities, stated, "This BESS contract is significant as it addresses not only renewable energy integration but also the power demand from data centers. It exemplifies the potential for expanding the total addressable market (TAM) for battery energy storage systems (BESS)." He added, "New orders this year are still at an early stage compared to targets, suggesting a possibility of substantial additional orders in the second half. If orders related to data center power demand increase, it could trigger a reevaluation of stock prices."
Market attention is also focused on LG Energy Solution's competitive edge in securing contracts based on its local production system in North America. The supply will be produced primarily at the Holland plant in Michigan, which serves as a hub for ESS production in North America.
* This article has been translated by AI.
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