Second-life battery storage – posturing by the electric vehicle industry or a genuine solution to energy problems?

What are second-life battery storage systems?

A second-life battery storage system refers to the repurposing of EV batteries. During the lifespan of an electric vehicle, the battery gradually loses its capacity over the years and many charging cycles. As such, it can no longer provide the required range or performance to power the vehicle. Even though these batteries are no longer suitable for use in a vehicle, they still hold a great deal of potential. 

Rather than disposing of these batteries, the remaining capacity can instead be used for alternative applications. And this is where the concept of second-life battery storage systems comes into play. The batteries are removed from the electric vehicles, tested, and then combined to create stationary energy storage systems. 

The energy storage capacity or condition of a battery, also known as its “state of health”, is influenced by its cyclic and calendar aging. Calendar aging describes the natural deterioration and loss of capacity that a battery experiences over time. Cyclic aging refers to the number and types of charge cycles the battery has been exposed to and the way it has been used.

The benefits of second-life storage systems

EV batteries offer a valuable pool of resources, even when they have reached the end of their useful life in an electric vehicle. Their ability to store and dispense energy remains far beyond their first use in vehicles. The basic principle behind second-life batteries and the repurposing of EV batteries is heavily based on the concept of sustainability, which encompasses economic, environmental, and social dimensions. 

The environmental benefits of second-life storage systems

One of the key benefits of second-life battery storage systems is their contribution to environmental sustainability. This is especially clear when we consider the fact that repurposing old lithium-ion batteries reduces the demand for new batteries, and thus helps to preserve the valuable resources required for their production. This in turn considerably reduces CO2 emissions – one of the main causes of climate change. The batteries become part of what is known as the circular economy. 

The economic benefits of second-life storage systems

Repurposing EV batteries by giving them a second life is also beneficial for economic reasons, as they are considerably cheaper than first-life batteries. Second-life batteries have already covered the majority of their amortization costs during their first usage, so companies and consumers can cut costs by repurposing these batteries. 

In addition, giving batteries a second life also helps to delay the battery recycling phase, which is currently very expensive. Instead of recycling batteries as soon as they reach the end of their first life cycle, they can be repurposed. On the one hand, this delays the point when battery recycling is needed; on the other hand, by almost completely repurposing the batteries, the cost of manufacturing cells is minimized. 

Further economic benefits of second-life batteries include:

• Increasing domestic value creation, as companies can utilize local resources rather than having to import new batteries or raw materials.
• Maximizing the value of the batteries over their entire life span

The social benefits of using second-life battery storage

Second-life batteries offer additional social advantages that can have a positive impact on both individuals and the wider society. As the procurement of second-life battery storage is cheaper, it makes the storage technology accessible to the wider society. The residual value of the batteries also increases, so even electric vehicles themselves can become more affordable. 

Furthermore, the second-life battery circular economy creates jobs. Yes, there are job losses associated with electric mobility, but second-life batteries will help to create new jobs. From the collecting and preparing of used batteries to their reuse in new applications, there are lots of associated employment opportunities. 

Other social benefits of second-life battery storage include: 

• Improving the infrastructure in less developed countries, as regions with unreliable electricity supplies can utilize second-life batteries as cost-effective energy solutions.
• Taking responsibility for the future by adopting a more sustainable approach and maximizing resources.

Potential applications for second-life batteries

Potential applications for second-life batteries range from use in private households to industrial solutions to network services. Here are some examples

• Home energy storage for private households, e.g. to optimize energy usage.
• Commercial and industrial storage applications, e.g. to cap peak loads or to optimize energy usage.
• Electricity grid storage, e.g. for primary balancing power or energy trade.

The challenges relating to second-life battery storage

The idea of giving a second life to batteries from electric vehicles appears highly attractive and very promising at first glance. Yet, despite all the potential, using second-life batteries is not without its challenges.

• A lack of trust and concerns around safety, and the resulting lack of willingness for customers to pay for them, lead to low revenues.
• Volatile, limited return flow quantities in second-life batteries that are hard to predict.
• Increased disassembly and inspection costs due to a lack of data provision.
• A lack of data transparency and consistency in the value of the batteries.
• High costs associated with manufacturing the electricity storage system.
• Complex module integration due to the varying cell designs, cell chemicals, and states of aging across different modules that can be hard to consolidate into one system.
• Competition with new cell chemicals, such as LFP (lithium iron phosphate), which can be used to create first-life batteries that are both cheaper and safer.
• Lack of clarity over how and whether different batteries can be combined.

Solutions for the future of second-life battery storage systems

There are already some innovative solutions and approaches being used to overcome the challenges listed above. The most important elements include: 

• Product service systems
• Effective ecosystems
• Digital technologies

Product service systems as a circular value proposition

Product service systems (PSS) are key when it comes to overcoming the challenges in this area. They offer three different approaches – product, use, and result-oriented PSS – and play a considerable role in improving the battery storage solutions. 

In addition to the actual product, product-oriented PSS provide customers with additional services such as maintenance contracts and warranties. This reduces the risk of battery failure and increases customer confidence in the product, as customers are protected against defects or faults through these additional services. 

Use-oriented PSS lease or hire batteries, with the manufacturers retaining ownership of the batteries themselves. Result-oriented PSS go one step further. They are designed as “energy as a service” products, whereby the customer only pays for the actual energy throughput. Each of these variants considerably reduces customer concerns about the longevity and functionality of the batteries, as the customers do not own the batteries themselves. 

PSS are also contributing to the circular economy as they facilitate a smooth recirculation of the batteries, as well as ongoing maintenance and repairs. They provide confidence, increase consumers’ willingness to pay, and, as such, help support a more efficient and sustainable use of battery resources.

Digital technologies for data processing

Besides PSS, digital technologies are also decisive for the entire lifecycle of batteries. They serve to make the PSS “smart”. Advanced data analysis techniques allow for constant monitoring and predictive maintenance to meet customers’ safety requirements. 

Digital technologies guarantee continuous data gathering throughout the lifespan of the batteries, both during their first-life use in electric vehicles and in their second-life as battery storage applications. Here it is important that the data from the entire value chain, i.e. from the production of the cell to its recycling, is captured and shared so the processes in the various stages of the batteries’ lives can be simplified.

Legal framework conditions, such as the EU Battery Directive, are shaping the landscape of the technologies that are required for the repurposing of EV batteries. So, for example, from 2027 it will be mandatory to provide a battery passport containing information about CO2 emissions, contents, the social impact of raw material extraction and technical data, as well as the battery capacity.

Relevant digital technologies include:

• Digital Twins: Use of real-time data to simulate the condition, position, or functionality of a battery in a virtual environment so a predictive pattern of behavior can be derived.
• Artificial intelligence: Can be used to optimize battery monitoring and testing, as well as for data analysis and maintenance.

An effective ecosystem

The circular ecosystem is based on an integrated system of stakeholders and processes, which are aimed at extending the life cycle of batteries. The most important aspects within a circular ecosystem for second-life batteries are: 

• Expanding the procurement sources by falling back on so-called “zero-life batteries”. Although these batteries are not used for their original applications due to production faults or surpluses, they are suitable for second-life use due to their new condition. 
• Cooperation between OEMs and battery manufacturers has a central role to play. While the battery manufacturers come up with the design for the first life of the battery, they should also take into account the required criteria for the second life in the sense of the “design for reuse” concept. This includes the option for automated disassembly. 
• Sharing important information about the batteries within the ecosystem, e.g. about the state of health (SoH), to promote the circularity of the batteries. 
• Close cooperation with recycling firms and facilities, as these stakeholders will receive a large proportion of the old batteries in the future. 
• Legislators, who are in a position to drive forward the second-life industry through legal regulations, such as battery standardization or an obligation for second-life use. 
• Technical support, such as improving data capture and integration into data analytics applications for data monitoring. The condition and performance of second-life battery storage systems can therefore be monitored and optimized. 
• Introducing return logistics, using systems and processes to ensure that batteries that have reached the end of their life cycle in vehicles are promptly returned and prepared for their second-life use. 
• Close contact with end consumers to gain trust and to overcome any concerns customers may have about second-life batteries. 
• Cooperation with partner companies, such as those providing PV plants or charging infrastructure, to facilitate additional product solutions. 

Case Study: MHP for the future of second-life battery use

The second-life approach has the potential to considerably increase the lifespan of lithium-ion batteries while also minimizing their impact on the environment. In order to give old batteries a second life, information is required about the current state of these batteries. This information, provided through data, also needs to clarify whether a repurposing of EV batteries is safe and economical. 

That is why MHP is conducting research into a digital twin, which could be used to continuously monitor a battery’s status across its entire lifespan without any high diagnostic costs. This would in turn simplify the recirculation processes and help to limit transaction costs. 

Another important topic is the battery passport, which is due to become obligatory as a result of the EU Battery Directive. It is designed to standardize the sharing of relevant battery information. This will lead to an increase in data transparency within the value creation chain. The actual design and configuration of the battery passport remains unclear, but MHP is already working on its implementation. 

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Summary: Second-life battery storage – potential versus challenges

Can rejected EV batteries become an important piece of the energy revolution puzzle? Although the batteries are no longer suited for use in vehicles, they still hold considerable residual capacities that can be utilized. The benefits range from environmental aspects, such as reducing carbon emissions and the use of resources; to economic aspects, such as cost savings and domestic value creation; to social aspects, including access to energy storage systems across the wider society and job creation. Despite these numerous advantages, there are also challenges, such as the lack of trust amongst consumers and the unpredictable and deficient return flows. 

Three key elements offer hope when it comes to overcoming the complex challenges facing second-life batteries: PSS, advanced digital technologies, and an efficient ecosystem. MHP is playing a key role in helping to resolve these challenges, in particular through its groundbreaking research into digital twins for EV batteries, as well as our dedicated work regarding how the battery passport can be implemented.

Second-life battery storage – FAQs