Involves the deployment of utilized electric vehicle (EV) batteries into stationary battery energy storage systems (BESS). Last week (3 April), the German company Fenecon announced the official commencement of operations at its manufacturing facility in Lower Bavaria, which focuses on this precise endeavor.
The newly established facility, spanning 24,000 square meters and representing an investment of approximately US$30 million, is dedicated to producing BESS units tailored for residential, commercial, and industrial (C&I) applications. These units will utilize “new obsolete electric vehicle batteries,” indicating that the majority of second-life systems incorporate batteries initially intended for EVs but never utilized on the road due to manufacturing or warranty issues.
For the C&I units ranging from 82kWh to 1,288kWh, Fenecon specified that only new electric vehicle batteries sourced from renowned German premium vehicle manufacturers will be utilized. Additionally, the company is in the process of establishing a facility in South Carolina, USA, driven by the surplus of EV batteries in the region and the escalating demand for large-scale energy storage solutions.
Potential Threat to Second-Life Economics due to Declining Battery Prices
Nevertheless, the market prices for new batteries have experienced a significant decline recently, a trend that coincided with a publication by Energy-Storage.news.
This downward pricing trend prompted a response from the Finland-based company Cactos, which adjusted its strategy to focus more on recycling as opposed to its previous approach predominantly centered on second-life applications.
Prior to Cactos’ strategic shift, a recycling firm from an unspecified location underwent a change in ownership, raising uncertainties regarding the continuity of its operations.
In a related development, the CEO of Germany-based Stabl, Dr. Nam Truong, disclosed that the company’s systems were priced at €400-600 per kWh. This revelation underscored a comparison between Stabl’s C&I-sized units and 20-foot DC blocks designed for the US grid-scale market, a comparison that retains relevance despite the differing target markets.
Balancing Performance and Cost-Effectiveness
Critics of the practice of repurposing EV batteries for stationary ESS have long argued that the technical complexities involved make it challenging to achieve cost-effectiveness at scale. This sentiment has been echoed by industry sources in the European lithium-ion gigafactory and EV battery technology sectors during recent discussions with Energy-Storage.news.
The integration of batteries with varying models, chemistries, and states-of-health (SOH) in a cost-efficient manner at scale poses a formidable challenge for battery management systems (BMS), according to industry insiders. Even Dr. Truong from Stabl acknowledged the performance challenges faced by the second-life sector due to these complexities.
Alternatively, recycling presents a near-term advantage by reintroducing local materials directly into the regional supply chain (provided domestic recycling capabilities exist).
Advantages of Second-Life Energy Storage
Despite the complexities and challenges, second-life energy storage companies often offer higher prices for used batteries compared to recyclers. A North America-based second-life energy storage source revealed that while recyclers typically pay US 8 per kWh for batteries, second-life firms are willing to pay around US 30 per kWh.
Moreover, deploying EV batteries in second-life energy storage systems contributes to the development of a local supply chain by alleviating the demand for new batteries. Additionally, it prolongs the lifespan of batteries that will eventually undergo recycling, offering them “another few years’ life.”
As the prices of ESS units utilizing repurposed EV batteries are expected to decrease in line with new battery prices, the competitiveness of second-life solutions hinges on the adjustment of marketplace prices for used batteries, which surged during the 2022 price spikes.
Buyers of second-life energy storage solutions consider factors beyond price, such as potential advantages like quicker delivery times amid battery shortages and global supply chain disruptions. Furthermore, opting for second-life BESS can lead to improved environmental ratings for real estate, potentially unlocking green financing opportunities.
On a broader scale, second-life energy storage contributes to reducing battery-related waste, CO2 emissions, and battery recycling costs. Consequently, the deployment of second-life BESS systems is anticipated to expand alongside the increasing adoption of EVs.