If Cats Have Nine lives, an EV Battery Should Get at Least Two: A Second Life for Used EV Batteries
As the solar industry matures, there’s been an increased focus on recycling solar panels at the end of their life. Now, with electric vehicle (EV) adoption growing exponentially, people are also considering ways to recycle used vehicle batteries — or even better, reuse them.
When EV battery capacity drops to about 70% or less, a battery is considered to be at the end of its useful EV-powering life. The International Council on Clean Transportation estimates that by 2030, 1.2 million EV batteries globally will reach their end of life; that will increase to 14 million by 2040 and 50 million by 2050. In California alone, it’s estimated that 45,000 EV batteries will be retired by 2027.
The environmental consequences of sending all of those batteries to end up in landfills as hazardous waste is staggering. Battery recycling is one option, but there are upcycle options available as well. You’ve probably heard that it’s always best to reuse or repurpose, then recycle. That’s true for EV batteries as much as for anything else. The good news is that there are very effective applications for used EV batteries even when they are no longer useful in an electric vehicle — known as “second-life batteries.”
How EV batteries can be reused
Although a battery at 70% of its capacity translates to reduced range and performance for a car, bus, or truck, it can still store energy in a building or other facility for years.
Second-life batteries can be used in more places than you might think:
- Buildings: The most obvious way to use second-life batteries is for residential and commercial energy storage, especially when coupled with solar. Batteries can provide resilience and help manage an organization’s utility bills. Energy can be stored in the battery at times of the day when power from the grid is cheaper and then be discharged for use by the building at times when power is more expensive. Batteries can also help facilities reduce their demand charges, which can account for 30% to even as much as 70% of a facility’s utility bill. In places with net energy metering, batteries can add to the value of solar by allowing buildings to use more of the power they generate from their solar panels rather than exporting it to the grid.
- Utility-scale solar farms: Multiple second-life batteries stacked together at solar farms can help power communities when the sun goes down — which is also when people come home and energy demand increases.
- EV charging stations: Yes, second-life EV batteries can be used to charge EVs! The city of Nottingham, England, is using second-life batteries in a two-way EV charging system that charges a municipal fleet while also helping power the electric grid.
- Streetlights and elevators: Nissan is powering streetlights in Japan with second-life EV batteries, and Renault is using them as backup power for elevators in Paris.
The benefits of reusing EV batteries
Creating a circular economy for any product brings numerous benefits. These are the primary ones for EV batteries:
- Lowering costs: Given the current high cost of new or recycled batteries, a second-life battery has significant potential to be a cost-effective option for homes and businesses. The market for second-life batteries is still in its infancy, so estimates vary on how big the cost savings will be; as the market matures, economies of scale will help keep prices down.
- Reducing environmental impact: Reusing batteries reduces the need for environmentally damaging mining and also keeps batteries out of landfills, which reduces toxins in landfills. While the lithium-ion batteries in EVs can be recycled, we can significantly extend their life by reusing batteries before they head to recycling. Researchers at Cornell University found that the carbon footprint of standard EV batteries can be reduced by up to 17% if they are reused.
- Easing supply issues: Mining the metals and minerals in EV batteries is difficult, and currently, much of the mining is concentrated in a few geographic areas, some of which employ child labor. With global lithium supplies increasingly under strain, it will be challenging for supplies to keep up with demand as EV adoption increases. Second-life batteries will ease the pressure on supplies, giving us time to both ramp up environmentally sound mining and develop new battery technologies.
Financing challenges for reusing EV batteries
All of this sounds great, but reusing EV batteries is not without its challenges. Many of these are financial. Certain limitations in the way the U.S. tax code is currently written might unintentionally exclude second-life batteries by preventing them from accessing tax credits, putting them at a disadvantage relative to new batteries that do qualify for these tax benefits.
In the current tax code, used equipment is not eligible for tax credits. The code was written in this way to avoid double-dipping of the tax credit, once for the new equipment and another time for the same equipment when it’s used again for the same kind of application. When these rules were written, no one considered that in the future there might be a situation in which the batteries would be new for an EV but then repurposed in a completely different application for a stationary facility.
Additionally, questions remain about applying the domestic content bonus adder for the Investment Tax Credit (ITC) to second-life batteries. When you remove a battery from an EV and place it into a different configuration and hardware, does that constitute a manufacturing process or mere assembly? The answer to this question will affect whether second-life batteries are eligible for the ITC bonus adder.
Ushering in new era for used EV batteries
To mitigate the potential waste caused by millions of retired EV batteries, it’s crucial that we overcome these challenges. CollectiveSun is collaborating with a number of organizations to move this effort forward.
One of these is ReJoule, a leading second-life battery company. ReJoule has already received a grant from the California Energy Commission for two pilot projects now being implemented at the American Museum of Ceramic Art in Pomona, California, and the nearby California Botanic Garden. In addition to lowering energy costs for both facilities, the systems will provide 24-hour critical load resilience; this is key for the Botanic Garden’s repository of rare native seeds, which must be kept cold at all times with no interruption.
Based on the company’s work with these projects, ReJoule is in negotiations with the Department of Energy (DOE) for a grant to pilot reusing EV batteries on several long-duration energy storage projects for nonprofits in underserved communities. Two are affordable housing facilities in Petaluma, California, and Santa Fe, New Mexico; both projects will incorporate solar along with the second-life batteries. The third project is for a workforce development campus in the Red Lake Nation in Minnesota. Adding a second-life battery system to the existing solar at the site will help the Red Lake Nation achieve their goal of energy independence.
Because the DOE grant covers only about 50% of the project costs, CollectiveSun is working with ReJoule to create a financing solution that supports second-life batteries for these projects. The projects will serve as models that can be replicated across the U.S. for both building and financing large projects that reuse EV batteries.
To ensure that the financing models work, CollectiveSun has joined a consortium of nonprofits and manufacturers in signing a letter to the Treasury Department that advocates for including manufactured second-life batteries in the battery module manufacturing tax credit. Because the ITC’s domestic content bonus adder is calculated based on each component’s percentage of a project, and batteries are an expensive project component, including second-life batteries could help a project qualify for this adder. This would make many more projects economically viable.
The future looks promising for second-life EV batteries, and CollectiveSun will continue working with collaborators to ensure that this future materializes. If you’re wondering whether second-life batteries will work for your solar project, don’t hesitate to reach out to CollectiveSun.
