By Jason Deign
Lithium-ion’s potential to dominate the stationary storage battery sector may be stronger than previously thought, according to the implications of a new study.
Research published last week by the analyst firm Bloomberg New Energy Finance (BNEF) shows a glut of second-hand lithium-ion (Li-ion) batteries from the auto industry could cut battery storage costs significantly.
By 2018, says Used EV batteries for stationary storage: second-life supply & costs, the cost of repurposing batteries for second-life applications could go down to as little as USD$49 per kWh.
This compares to a cost of roughly $300 per kWh for new batteries at the moment, and $160 for lowest-cost battery chemistries such as the zinc hybrid cathode technology being commercialised by Eos Energy Storage.
Given that BNEF expects around 10GWh of capacity from used electric vehicle batteries to be entering into the stationary storage market by 2025, second-life applications could deal a real blow to the prospects for non-Li-ion chemistries.
“This does move the goalposts”
“This does move the goalposts for what an energy storage technology will have to compete with,” admitted Colin McKerracher, manager for advanced transport insight at BNEF.
“The sheer scale of manufacturing puts [Li-ion] pretty far ahead for quite a while. We believe it will significantly lower the average cost of stationary storage projects.”
Currently, BNEF estimates repurposing second-hand batteries costs about $100 per kWh, or a third of the cost of new batteries. This cost will roughly halve in the next two years due to economies of scale and improved learning.
Present second-life volumes are low, however, and will remain so until a significant number of electric vehicles are on the road with batteries that need replacing.
Nevertheless, between now and 2025 BNEF forecasts 95GWh of storage capacity will come out of the electric vehicle market. That is 60 times the world’s current installed electrical energy storage capacity, McKerracher said.
Volumes affecting price by 2020
“Around 2020 we do expect volumes to come on and affect the price of batteries going into stationary storage,” he said.
Ultimately up to around a third of all used electric vehicle batteries could end up being used for stationary storage, BNEF predicts.
Just how significantly this cut-price capacity might affect the dynamics of the stationary storage industry will depend on a number of factors.
The first is that the price reductions will only apply to batteries, which themselves are only a part of total energy storage system costs.
This means technology developments in other areas, such as inverters, could also have a similar or greater impact in overall system costs.
Acceptance of second-life batteries
All other things being equal, though, second-life batteries would still contribute to significant price reductions. Potentially more important is what kind of acceptance second-life batteries will have in the market.
This depends not just on cost but also on factors such as performance and warranties. On performance, said McKerracher, the current generation of electric vehicle batteries is exceeding expectations.
“So far batteries have held up well, with reduced degradation,” he said. “Most of what we are forecasting is reduced capacity, not catastrophic failure.”
Regarding warranties, it is still too soon to tell what kind of guarantees manufacturers will offer on second-life batteries.
However, McKerracher hinted that carmakers would most likely play it safe in order to avoid problems with products carrying their brands. This could mean some manufacturers might shy away from repurposing.
Tesla, for example, is most likely to prefer recycling batteries to feed demand for new Powerwalls. A number of other car firms, though, seem more committed to going down the second-life route.
The price of new batteries
None of this would seem a major barrier to second-life battery adoption in stationary energy storage. The one thing that could ultimately stymie the second-life market, though, is the price of new batteries.
Beyond around 2022, it is possible that reductions in the price of new batteries might wipe out the cost advantage of using second-life units. But there is a great deal of uncertainty over exactly when that might happen, BNEF notes.
And the decision over whether used batteries should be repurposed for second-life applications or recycled into new units may depend on the evolution of commodity prices for materials such as cobalt and lithium.
“If commodity prices do not rise, recycling would remain a cost for battery owners and the second-life market could grow significantly, with repurposers being paid to take batteries,” said the BNEF report.
For now, though, “the second-life industry must establish itself soon before new battery prices drop even lower and begin to compete,” said BNEF.
Most auto companies are indeed taking an active interest in second-life applications. “In the last six months there have been a lot of announcements,” McKerracher said. “I expect we will see a lot more of that.”