Plummeting battery costs have made electric vehicles (EVs) a truly disruptive technology.
In fact, EVs now use more lithium ion batteries than consumer electronics. But Bloomberg New Energy Finance (BNEF) projects EV-battery demand will rise another 25-fold by 2030 — and EVs will represent more than half of all new car sales by 2040.
This means that millions of used EV batteries will eventually be flooding the market — batteries that may have as much as 70 percent of their original power capacity, even though it can no longer meet the strict requirements for powering its car.
No wonder every major car company in the world is exploring how much value their EV battery has in its “second life.” After all, BNEF projects that over the next three decades, companies will spend some $550 billion “in home, industrial and grid-scale battery storage.”
This potential second life for EV batteries is a clean energy game changer for two reasons.
Firstly, these used EV batteries can deliver much cheaper electricity storage for renewables than is available today.
And secondly, if used EV batteries have value, then EV makers can charge less for their cars — because they can make up the difference reselling the battery later — making them even more affordable.
Together, these two factors make EVs even more disruptive than most people realize, particularly for enabling deep and rapid penetration of renewables in the 2020s.
We already knew electric cars hold the prospect of providing low-cost storage directly : by making use of the 95 percent of the time that a parked car battery isn’t being used.
Now imagine what the potential flood of millions of second-life EV batteries into the electricity storage market will mean. Already, BNEF calculates that “repurposing a battery will cost as little as $49 per usable kilowatt-hour in 2018, compared to $300 for a new battery.”
That is a game-changer.
Here are some of the companies working on repurposing old EV batteries — from Chevrolet in Michigan and Eaton in South Africa, along with Nissan in Amsterdam and Japan, and BYD in China.
The companies are testing used EV batteries for stationary storage. BMW, for instance, has completed over 18 months of testing that demonstrates its used batteries can deal with “demand response” requests from California’s Pacific Gas & Electric utility. Demand response is rewarding consumers and businesses for adjusting their electricity use during peak hours (or during times when the sun isn’t shining or the wind isn’t blowing).
In the more than 200 tests conducted, PG&E would alert BMW that the grid was short of electricity, and BMW would then signal vehicles to stop charging (thereby reducing the load). If a vehicle wasn’t plugged in or the customer wasn’t participating, then the array of second-life batteries would be used.
The test proved that used EV batteries could provide monetizable value. More than 90 percent of consumers participating in the test said they would probably participate again.
As with all other aspects of electric cars are batteries, it’s no surprise which country is leading the way on battery reuse and recycling: China.
The country has 60 percent of all global lithium ion cell production. At the same time, electric cars and buses in China alone use more Li-ion batteries than all electronic devices worldwide.
A report last November from Circular Energy Storage Research and Consulting finds that China dominates the global battery reuse market — and that near-monopoly is poised to grow in the years ahead.
So, as with manufacturing solar cells and wind turbines, the United States is poised to lose out on another rapidly growing job-creating clean energy sector.
But the good news for the entire world is that when the trickle of second-life batteries turns into a flood, the business of electricity storage and demand response — both of which enable far deeper penetration of renewable power — will never be the same.