By 2025, there will be over 3 million battery packs from electric vehicles (EVs) available to the “second life” market (according to Bloomberg NEF, quoted here). Depending on both prior and second-life usage, these packs could have 7-10 years of life still in them.
A study by Berkeley Law Center calculated that, even before then, if 50% of the battery packs on the road in 2014 in California were repurposed with 75% of their original energy capacity, that adds up to 850MWh and 425MW worth of power. The latter is almost a third of the storage capacity utilities are mandated to procure by 2020 in that state.
In other words, second-life EV batteries will likely have a big impact on the stationary (grid or home) storage scene too – by having a 2nd life in those applications.
There are already numerous examples emerging, from automakers such as Nissan and Hyundai, to new players such as Freewire (using 2nd life batteries for mobile and event charging systems). There are some nice circularities in applications such as the latter – and others – which help manage demand in the grid: using former EV batteries to ease the integration of more EVs into the electricity system.
On the face of it, it also seems like a no-brainer from an environmental perspective that we use these batteries for as long as possible, gaining as much value as possible from them, before going to the effort of recycling them or replacing them with new ones.
As usual though “on the face of it” doesn’t always reflect all the issues in play. So I’ve briefly summarised some of these below.
One of the first issues to address in second-life battery use is “direct use” vs. “repurposing”.
By direct use, I mean directly using the battery pack extracted from a car with little or no work done to dismantle or rearrange the cells and systems it contains. That’s a much easier and cheaper option than repurposing, since the latter involves breaking packs down to the cell level, testing in order to match the cells to other “like” cells, then reconfiguring them via new packaging and battery management systems. There are obviously significant labour overheads (and health and safety requirements) in undertaking that work.
A challenge in direct use is that it depends very much on good knowledge of the 1st life usage and hence the ability to match this to 2nd life requirements and expectations – and there’s generally a lack of data available around 1st life usage. Standards or systems to monitor cell-level condition and to record and store such 1st life data would be desirable. Also, to aid wide-scale repurposing, “design for disassembly” will be essential before the start of a battery pack’s manufacture.
The advantage of repurposing is that it can account for the fact that not all cells in a pack will be in the same condition when removed from the EV. In direct use, failures within a pack can mean that the whole pack is deemed unusable. Repurposing allows “bad” cells – or other sub-components – to be discarded, other cells condition-matched and hence greater certainty on 2nd life performance given. Which, in business terms, can mean the important ability to offer more secure and longer warranties.
So choices will be in part determined by 2nd usage requirements, particularly in terms of customer sensitivity to cost vs. warranty (certainty of performance). That in turn will depend on whether the customer themselves is contracted to a further party, with big penalties if things go wrong: grid services for example.
And, of course, if it costs more to repurpose a battery than simply buy a new one, particularly if that new one has better performance characteristics too, that will also work against a more costly “second life” approach. Batteries, after all, are rapidly evolving in cost and performance. In the latter respect, it’s also worth noting that as batteries degrade, they don’t just lose capacity; round-trip efficiency suffers too, which could impact the economics of a battery’s 2nd-life business case.
Whatever the history and 2nd life form of the battery, from a lifecycle emissions perspective its value comes only in part from its life extension: the type of 2nd life application is very important. As an example, batteries which enable higher self-consumption of PV can produce big gains if they eliminate or reduce the need for diesel generator backup during their extended life.
And, as with anything around energy, policy will be crucial. In the US, for example, 2nd life batteries aren’t currently treated in the same way as new systems: they are ineligible for incentives like tax credits in stationary applications. It’s a truism that policy initially tends to lag behind market innovation – though it usually reacts eventually, once obvious disparities are highlighted.
One of the more interesting examples of “Multi-life” batteries is Daimler’s “live replacement parts store” project. It’s fascinating and innovative because it’s an example where the aggregation and stationary usage of EV batteries is actually their first life, before they even go into the EV.
As well as suggesting that batteries could have (at least) three lives – pre-EV, EV and post-EV – it also means these batteries are creating value (and money) before they are even in the vehicle. It’s been suggested by various observers that the second-life/residual value of EV batteries should be reflected somehow as a reduction in the initial cost for EV purchasers, to help the economics of EVs. Usually that idea relies on a future residual value being applied to the present (with all the value discounting that entails). However “pre-life” usage, creating current value, sounds far more compelling in this respect.
Although 2nd life pushes recycling further into the future, it doesn’t remove the need for it eventually. So one interesting question is how it will impact liability for that process: will that requirement (and hence cost) pass from the automaker to the 2nd life user? Either way, how and by whom will that whole-life battery chain be monitored and enforced?
When they do eventually reach end-of-life, there are three current recycling methods:
1. Smelting, available for various types of batteries, including lithium ion. The batteries are fed into a smelter and valuable metals recovered (for example cobalt). Remaining elements such as lithium are lost to slag. That slag can find use in the production of concrete.
2. Direct recovery processes. There are various of these, involving separating components through different physical and chemical processes. Any battery grade materials are directly recovered.
3. Intermediate processes. These extract just the dangerous battery components to minimize the amount of hazardous substances that enter the environment.
The environmental balance and economics of recycling depends on the battery chemistry – in particular what the footprint of its initial manufacturing is. For example one study found that LFP-cathode batteries (used in buses by BYD for example) couldn’t avoid additional emissions under any recycling scenario. That’s because the iron materials used in those batteries are efficient to mine (so any emissions offset from recovering materials instead of mining them is less than the emissions associated with the recycling process).
Solid state batteries, much talked about for the future, will certainly present new challenges and will likely need the development of new, specialised chemical separation recycling processes.
When thinking about recycling and second life usage, there are discussions to be had around the economics and sustainability of specific elements. As an example, transport applications need energy-dense batteries. At present that means batteries that contain cobalt are desirable. By contrast, stationary energy applications can use bigger and heavier batteries without such a practical performance penalty. Hence some industry voices suggest that, since we face constraints around cobalt supply, focus for this precious resource should be on those demanding EV applications: so better to recycle cobalt for use in new car batteries than leave it in 2nd life batteries in applications where the attributes it brings are less critical.
It’s worth noting that there is already a significant “end-of-life” market for lithium-ion batteries: worth more than USD$1.3bn. Of this, $1.1bn comes from recovery of materials and around $230m from the repair and refurbishment of batteries. Asia dominates this, China holding 70% share (perhaps not surprising now that it’s forbidden the trashing of these batteries). South Korea accounts for a further 16%.
In terms of cobalt, around 14,000 tonnes were extracted through recycling in 2018 (around 12-13% of cobalt supply).
The sheer volume of EV batteries that will become available once their transport life comes to an end is going to be enormous as the EV market grows. It’s thus unavoidable that they’ll have a major impact in the future battery market for other applications too – with plenty of industry players testing the waters of this “2nd life” usage already.
As with so many other aspects of our changing energy markets though, there will be a variety of choices, impacts and market and policy challenges to be considered when making business cases for multi-life battery use.