SK Gas, SK D&D to venture into US ESS market with Apex

SK Gas Ltd. and SK D&D Co. will build their first-ever energy storage system (ESS) facility in the US that can power 39,000 homes daily via a joint venture with Apex Clean Energy, a major renewable energy company in the US.

SK D&D announced on Tuesday that its US entity Gridflex set up jointly with its affiliate SK Gas has agreed with Apex to launch a joint venture named SA Grid Solutions in the US that will focus on the ESS business.

SK Gas and SK D&D will together invest a total of 87.1 billion won ($65 million) in SA Grid Solutions, allowing Gridflex to own a 60% stake in the JV. Apex will hold the remaining 40% stake.

With the latest investment in the US, the energy and construction subsidiaries of SK Discovery Co. are expected to gain growth momentum in the global renewable energy market beyond their mainstay gas and real estate development businesses at home.

SK Discovery is an intermediate holding company of Korea’s third-largest conglomerate SK Group.

Founded in 2009, Apex has built 40 renewable energy power plants across the US, generating a total of 8.6 gigawatts (GW). It owns a diverse clean energy portfolio, including ESS.

TEXAS AS THE FIRST PROJECT BASE

SA Grid Solutions plans to build its first ESS facility in Texas with a capacity of 200 megawatts (MW), enough to power 39,000 homes daily.

Power consumption in Texas is equivalent to about 80% of Korea’s total electricity use.

Thanks to the US Inflation Reduction Act providing handsome subsidies for clean energy use, the state’s renewable energy also accounts for more than 30% of its entire power generation, lifting ESS demand.

The SK-Apex JV plans to commence its commercial ESS operation in Texas in September this year in phases.  

SK Gas pins high hope on its first ESS business in the US for making profits with its decades-long know-how in energy trading, given that ESS business generates profits from real-time power trading.

As Korea’s leading liquefied petroleum gas (LPG) supplier, the company has been seeking to expand its liquefied natural gas (LNG) and hydrogen businesses in a bid to foster eco-friendly energy production for carbon neutrality.

SK D&D is Korea’s No. 1 ESS company, operating 29 ESS facilities across Korea, which generate 800 megawatt-hours (MWh) in total.

It will build infrastructure for the ESS project in Texas and be in charge of optimizing its operation.

The two Korean sibling firms hope to venture into other parts of the US to ramp up their ESS generation to 1 GW and unearth more renewable energy business opportunities in the world’s largest economy.  

The global ESS market is forecast to grow at about a 6% compound annual growth rate from 2023 to 2035, according to Research Nester. The market is forecast to garner revenue of $80 billion by the end of 2035, nearly double the figure in 2022.

Write to Hyung-Kyu Kim at khk@hankyung.com

Sookyung Seo edited this article.