Batteries- The new value pool in energy storage.

As the rising uptake of electric vehicles takes charge, the availability of extra terawatt hours of battery appears to have sparked the growth of a new energy storage potential. Used batteries appear to have a growing pool of applications while bringing down the cost of storage to enable further renewable power integration into our grids.

While EV batteries are subjected to extreme operating temperature over hundreds of use cycles a year, fluctuating discharge rates, these Lithium-ion batteries are designed to sustain a decade full of lifetime usage. Even while maintaining 80% of total usable capacity, these can be remanufactured and still be able to perform well enough to serve less demanding applications, such as stationary energy storage services. This involves three distinct options: disposal, recycle, re-use.

Disposal most frequently occurs if packs are damaged or if they are in regions that lack the necessary market structure.

Recycling can make sense if the battery electrodes are made of highly valuable metals such as cobalt and nickel.

Reuse can provide the most value in markets where there is demand for batteries for stationary energy storage applications. Three applications are most suitable for this: providing reserve energy capacity to maintain a utility’s power reliability at lower cost by displacing more expensive and less efficient assets, deferring transmission and distribution investments, and taking advantage of power-arbitrage opportunities by storing power for use during periods of scarcity, thus providing better grid flexibility.

However, while unlocking this pool of resource, several repurposing challenges are faced.

The first is a large number of battery-pack designs on the market that vary in physical and chemical specifications and capabilities. Each battery is always designed by the battery manufacturer to be best suited for a particular given EV model, which increases refurbishing complexity due to lack of standardization and fragmentation of volume.

The second challenge involves falling costs for new batteries. As new batteries become cheaper, the cost differential between used and new diminishes, given that the rate of decline in remanufacturing cost is expected to lag the rate of decline in new manufacturing cost. The cost gap needs to remain sufficiently large in order to allow the performance limitations of second-life batteries relative to new alternatives.

Challenge number three concerns the nascency of second-life-battery standards. No guarantees exist regarding second-life-battery quality or performance, and few industry standards focus on battery-management systems or state-of-health disclosures, let alone standard performance specifications for a battery that is to be used for a given application.

The third challenge deals with standardization over battery life standards. Industries are starting to focus on battery management systems let alone standard performance specifications for a battery that is to be used for a particular application.

While these challenges stay at large, they can be overcome by targeted action from the suppliers, end users, and regulators in the sector, enabling a sustainable second-life-battery industry to emerge.

To start with EV manufacturers can develop batteries while keeping in mind second-life applications. This could involve formalized partnerships between companies for distribution and utility scale storage systems.

In order to maintain the price gap, in the face of falling costs for new lithium-ion batteries, companies can industrialize and scale remanufacturing processes to reduce costs.

Finally, in the absence of directive regulation over the subject of battery disposal and reusability, stakeholders have the opportunity to create an ecosystem that interconnects a value stream and business model that helps fully capture its value. This also involves manufacturers that are better aware of market demands and scope for applications suited to remanufacturing or reusability.

With a significant shift of EV vehicles into mainstream use and up to 250 new EV models expected by 2025, it is upon the corporations and their regulatory bodies to take action in order to position themselves to capture the value that second-life batteries promise.

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