New markets for old batteries

Second-life batteries can be used in an extensive range of stationary storage applications, with automakers already exploring value streams and modes of entry to the energy storage industry. Second-life batteries are already being deployed in the industrial and commercial sectors, where the financial cost of new batteries is a key barrier to customers. The opportunities that the storage industry offers also enables automakers to capture the value stream in-house, effectively accelerating the industry’s growth.

Market drivers

The introduction of supportive government policies, combined with public demands to mitigate climate change, act as effective drivers for the production of EVs. Globally, cumulative sales of fully electric and plug-in hybrid vehicles exceed five million sold to date. As this market continues to grow and mature, the potential second-life battery storage capacity is huge. Several GWh of second-life batteries are expected to become available in the next 15 years. The fact that the major EV automakers active in the European market cover their batteries with warranties over eight years essentially guarantees that they will retain 70-80% of their original rated capacity at end-of-life. Therefore, they can continue to provide services in stationary storage applications for up to 30 years.

Second-life batteries could also improve the capex of storage applications up to tenfold. The capital cost of first-life lithium-ion battery solutions is a barrier to deployment in the residential and small commercial sectors. Some developers in the UK energy storage market are already using second-life batteries in C&I applications to drive down costs.

Industry challenges

Despite the benefits and potential for second-life batteries in energy storage applications, there are significant challenges to exploiting the expected volume of decommissioned batteries. These include a lack of standardization generally, and specifically in communication protocols. There are also technical barriers associated with the variations of battery cells, shapes, chemistries, capacities and sizes, in addition to challenges with the accessibility of data.

Furthermore, decisions will need to be made about whether to invest in remanufacturing second-life batteries or opt for direct redeployment. While direct redeployment uses the original battery pack, remanufacturing (or reconfiguration) requires a cell quality selection process that results in enhanced battery pack quality. The cost difference between the two options can differ in favor of direct re-use, but remanufacturing has a higher quality output and overcomes several technical barriers. We expect that remanufacturing, if it can be standardized, is likely to be the best way to create value from second-life applications and overcome some of the challenges.

Establishing partnerships

As early as 2009, Nissan and Sumitomo announced plans in Japan to establish a second-life battery business model through their joint venture, 4R Energy Corp. Today, many more automakers are developing and exploring partnerships in readiness for the growth of second-life battery applications on a global scale. Primarily, automakers focus around six key applications, summarized in the table to the lower left. Partnerships between automakers and utilities are becoming a common approach to bring the required expertise and increase efficiency in deployment, operation, and maintenance.

About the author

Abhishek joined Delta-EE in 2019, after 10 years with Jaguar Land Rover. Most recently he had been Product & Programme Manager for Energy Services in eMobility. Abhishek holds a BEng(Hons) in Automotive Engineering Design from Coventry University, and is Honorary ex-Chairman of the Coventry IMechE Automotive Division.