As global uptake of electric vehicles continues to grow, a new opportunity is emerging for the utility sector. This is the opportunity of stationary storage powered by used EV batteries.
According to McKinsey, this storage opportunity could exceed 200 gigawatt-hours by 2030.
“During the next few decades, the strong uptake of electric vehicles (EVs) will result in the availability of terawatt-hours of batteries that no longer meet required specifications for usage in an EV. To put this in perspective, nations like the United States use a few terawatts of electricity storage over a full year, so this is a lot of energy-storage potential. Finding applications for these still useful batteries can create significant value and ultimately even help bring down the cost of storage to enable further renewable-power integration into our grids,” according to Hauke Engel, Patrick Hertzke, and Giulia Siccardo.
Despite the ‘tough life’ to which EV batteries are subjected – extreme operating temperatures, hundreds of partial cycles a year, and changing discharge rates – these batteries can live a second life, even when they no longer meet EV performance standards.
What to do with a battery which is outside its ‘useful’ life is often a matter of choices – and comes down to disposal, recycling or reuse.
There is evidence that “reuse can provide the most value in markets where there is demand for batteries for stationary energy storage applications that require less frequent battery cycling (for example, 100 to 300 cycles per year).” This means this type of battery could provide a reliability mechanism for utilities at a lower cost than, for instance, combined cycle gas turbines. The team at McKinsey believe it also defers transmission and distribution investments, "taking advantage of power-arbitrage opportunities by storing renewable power for use during periods of scarcity, thus providing greater grid flexibility and firming to the grid.”
Challenges to repurposing
Repurposing is not without its challenges. Chief among them are the different battery pack designs, sizes, electrode chemistry and format. Designed to suit a participar EV model, refurbishing batteries is complex “due to lack of standardisation and fragmentation of volume. Up to 250 new EV models will exist by 2025, featuring batteries from more than 15 manufacturers.”
This is seconded by the falling cost of new batteries. The cheaper new batteries are, the costlier remanufacturing becomes in comparison to the decline in new manufacturing cost. Another challenge is the “immature regulatory regime. Today, while most markets have some form of regulation requiring the recycling or remanufacturing of consumer electronics in general, most markets do not have EV-battery specific requirements or delineations of responsibility between the producer and the consumer.”
This in turn creates uncertainties for OEMs, second-life-battery companies, and potential customers.
Targeted action can, however, overcome these challenges, enabling a sustainable second-life-battery industry to emerge. And in fact, many are already being managed in this way. For instance, some automakers are designing their batteries with secondlife considerations in mind. “Nissan formalized a partnership with Sumitomo Corporation to reuse battery packs from the Nissan Leaf for stationary distributed and utility-scale storage systems. In September 2018, Renault announced its Advanced Battery Storage Programme. This collaboration involves several partners in the energy sector and is expected to result in a 70MW/60MWh used EV battery installation in Europe by 2020, the largest in Europe to date.”
Standards are being developed which essentially classify batteries based on their performance potential and classify storage applications based on their performance needs – thus creating product supply and demand transparency. According to McKinsey, “establishing a body to regularly review and refine battery standards and report annually on average cost and operating benchmarks could further catalyse growth in battery deployment.”
Further, it should be considered that “battery ownership models may evolve.” As the second life market grows, auto manufacturers may consider retaining ownership of the battery system as more attractive, due to the residual value. This in turn may see automakers less inclined to ‘give’ batteries away.
As electric vehicles continue to disrupt the automotive value chain, they are similarly impacting on the energy-storage value chain as well. Where this new opportunity may still develop is unclear, but it will certainly mean traditional positions within the value chain are going to change. SEI