Used EV batteries repurposed for grid and data center energy storage
Used EV batteries can be readily repurposed for grid and data center energy storage with little quality degradation relative to new batteries and are still 30%+ cheaper even with high margins
EV batteries are retired when they fall below 80% capacity. At that point, they can’t reliably meet the insanely high performance required from a Tesla or Rivian driver expecting 0-60mph in 2 seconds. Howeover, they can readily handle the far lower stress requirements of storage.
The acquisition costs just have to be a bit above what recycling companies pay, which can be anywhere from negative to $24/kWh with a typical figure around $5-10/kWh. Then with a little bit of testing and touch-up, they can be deployed on the grid for ~$125/kWh.
B2U has been taking advantage of this for a while and has had no problems with the used batteries’ quality or durability after five years of operation, even with first generation batteries like that of the Nissan Leaf that were far lower quality than those produced today.
Despite that juicy margin profile, radically expanding demand for storage and the supply of second life EV batteries just now starting its exponential ramp, only three companies operate in this space.
Two are startups and the other Redwood Materials. Redwood partnered with Crusoe to rapidly expand its initial 12 MW microgrid operating with 99.2% uptime and has so far found this business far more attractive than the painful economic realities of recycling. Redwood’s operational effectiveness and access to capital shouldn’t be taken lightly. They also currently collect 70% of disposed batteries. However our research suggests battery collection doesn’t appear to benefit from economies of scale as the batteries are shipped to your doorstep either way and there’s more than enough supply to go around.
This market will soon be massive, is grossly underappreciated, and none of these competitors are at large scale yet.
A new startup could introduce novel approaches to cheaply test the batteries’ state of health and to rejuvenate it without taking it apart. For instance, it could use ultrasound technology and machine learning to diagnose battery health and detect defects without taking the cells apart. It could then use software to operate the cells with better state of health first in order to make equalize their performance at the pack-level, which extends battery lifespan. Finally, some technologies show promise of being able to rejuvenate cells in situ without material disassessembly, effectively enabling third life usage. Together, advancements like these could plausibly extend battery lifespan to say 15 years while maintaining high depth of discharge.
B2U
Redwood Materials
Moment Energy
https://www.canarymedia.com/articles/energy-storage/b2u-used-grid-batteries-texas-expansion
https://www.nature.com/articles/s41467-024-54641-z
https://advanced.onlinelibrary.wiley.com/doi/10.1002/adma.202522927
