Second Life: Carmakers and Storage Startups Get Serious About Reusing Batteries

Batteries still have a lot of life in them after being swapped out of EVs. Why not use them on the grid?

Batteries aren’t dead when they come to the end of their useful life in an electric vehicle.

Reused or “second-life” lithium-ion batteries still have a lot of juice left in them, but so far the concept of using these batteries in stationary applications has yet to gain real market traction. New research, growing automotive industry interest and an expanding startup ecosystem suggest that that could now finally be changing.

“There’s definitely an uptick in the number of companies that are now trying this and getting serious about it, and I think it’s becoming pretty clear what the main obstacles are that remain,” said MIT researcher Ian Mathews, who recently published a study on the economics of second-life battery systems coupled with grid-scale solar installations. “It’s a very interesting time.”

EV batteries are typically replaced after they lose around 20 percent of their capacity, which means that there’s still up to 80 percent capacity remaining that can be used for stationary storage applications. Tapping into that remaining battery life has the potential to cut costs and greenhouse gas emissions, but it comes with several challenges.

Retrofitting lithium-ion batteries for reuse requires extensive testing and upgrades to ensure that the product will perform reliably in its new role. The nascent second-life battery market also needs a steady battery supply, customer demand and access to funding in order to be successful.

Solutions are within reach, with a growing group of technology startups and major automakers working to advance the second-life battery segment as EV sales continue to increase.

Dane Parker, chief sustainability officer at General Motors, said in an interview at the company’s EV Day event earlier this year that creating a circular supply chain for EV batteries is one of the company’s central efforts to reduce its environmental footprint. He said GM designed its new Ultium battery pack with second-life applications in mind and is currently working with partners to develop a business case around battery reuse.

“We actually believe it’s very viable,” he said of second-life batteries. “If you design them with that purpose…it becomes much easier to integrate later. And we’re doing that right now.”

Automakers under pressure to unlock value in used batteries

GM isn’t the only EV maker that’s looking closely at the second-life battery space. Nissan was one of the first major automakers to pilot second-life EV batteries in a grid-scale storage installation in 2015. That same year, BMW tested used batteries in demand response events during an 18-month pilot project in partnership with Pacific Gas & Electric.

Also in 2015, Daimler AG announced plans to build a 13-megawatt-hour second-life battery storage unit at a recycling plant in Lünen, Germany. Daimler subsidiary Mercedes-Benz Energy teamed up last year with Beijing Electric Vehicle, one of China’s largest EV makers, to build an energy storage system that uses retired EV batteries.

While it hasn’t ventured into the stationary storage space directly, American electric truck startup Rivian designed its battery packs from the outset to make end-of-life repurposing as easy as possible. Electric bus manufacturer Proterra took the same approach.

Automakers are “really, really interested” in second-life battery applications “because they know they have this huge store of value that is potentially going to come back to them when they have to take batteries out of cars,” said MIT’s Mathews. “They know the cost of recycling is going to be huge for them if they’re mandated to recycle these batteries, which they already are in some places.”

China and California already have EV battery recycling policies in place or under development. Repurposing EV batteries allows automakers not only to immediately generate additional revenue but also to delay when they need to take the batteries apart and recycle the materials.

The economic case for second-life batteries
Automakers aren’t the only companies paying attention to second-life batteries. A growing number of project developers are also starting to see second-life battery storage as a way to bring down the capital costs of commercial- and grid-scale battery installations, according to Mathews. This marks a shift away from the smaller residential and off-grid battery applications repurposed batteries were initially being tested for.

A study published in Applied Energy by Mathews and five other current and former MIT researchers concluded that lithium-ion batteries could have a profitable second life as backup storage for grid-scale solar photovoltaic installations, where they could operate for a decade or more in this less-demanding role.

The study results are based on a rigorous review of a hypothetical grid-scale solar farm in California, using real-world data on solar power availability, battery degradation and other factors. Mathews and his co-authors determined that a system of second-life battery installations coupled with a 2.5-megawatt solar project would be a profitable investment if the reused batteries were 60 percent or less than the original battery price. A separate McKinsey analysis found that second-life batteries could offer a cost advantage of 30 to 70 percent over new battery alternatives by the mid-2020s.

The same McKinsey report found that the supply of second-life EV batteries could surpass 100 gigawatt-hours per year by 2030, with the potential to meet half of the forecast global demand for utility-scale energy storage in that year.

Source: McKinsey, Second-Life EV Batteries: The Newest Value Pool in Energy Storage

Both the McKinsey and MIT studies note several challenges in repurposing EV batteries that must be overcome to unlock this new pool of battery supply.

California second-life startups gain momentum