The final stop for EV batteries from Hyundai, Kia, Toyota, Nissan and BMW? The grid

The BMW i3.
BMW
The BMW i3.

For years, the vision for handling older electric car batteries that are no longer capable of storing their original charging capacity is that they should live on, storing energy in various ways for the power grid. Given that not that many electric vehicles are on the roads just yet, that has been more of an idea than a reality.

But as the volume of electric vehicles continues to grow — especially in China — and governments implement mandates around recycling EV batteries, automakers are beginning to develop new partnerships with energy storage developers and starting to test out unique projects. The next couple of years is the time for automakers, battery manufacturers, energy storage services companies, policymakers and utilities to figure out how this ecosystem will work.

"The total capacity of second life EV batteries in 10 years will dwarf the capacity of energy storage as an overall market," said Greensmith Energy CEO John Jung. "There is a big market coming."

Greensmith Energy, which was acquired by Finnish power company Wartsila last year, recently announced plans to work with Korean automaker Hyundai to repurpose Hyundai EV batteries for grid services. The partners say they will use batteries from Hyundai’s Ioniq Electric and Kia Soul Electric to store energy for applications such as microgrids, mining operations or improving the efficiency of power plants.

Hyundai already has built a one megawatt-hour demonstration project of the battery tech at a factory for its steel-making subsidiary. The companies say they plan to create a "continuous global supply chain" that will move EV batteries from manufacturing to auto use to stationary storage to recycling.

The vision is that an electric vehicle can use its batteries for eight to 10 years, with some 80 percent of its battery life left over at the end of that period. Those used batteries could then provide lower power services such as storing energy for the power grid for another few years.

Back in 2011, only 38,000 electric vehicles were sold globally, according to Bloomberg New Energy Finance. Compare that to the first quarter of 2018, when 292,000 electric vehicles were sold, and you can see the growth rate beginning.

Greensmith Energy's grid project for a utility in California.
Greensmith Energy
Greensmith Energy's grid project for a utility in California.

Of course, Hyundai isn’t the only automaker interested in this growing market. Almost all the of the top vehicle and battery manufacturers are investigating it.

Toyota plans to install batteries from used electric and hybrid vehicles at 7-Eleven stores in Japan next year. Nissan has been working with Sumitomo Corp. (in a joint venture called 4R Energy Corp.) to develop processes that will take batteries from the Nissan LEAF and refurbish and sell them to be used again in EVs or for lower-energy applications such as forklifts, street lights or golf carts.

BMW has worked with PG&E on a project that used batteries from BMW Mini E’s to provide demand response services for the utility (in addition to a group of plugged-in BMW i3’s). The German automaker received another grant to expand this project and also has broader plans to reuse i3 batteries for stationary storage applications.

But right now, automakers’ largely efforts are exploratory, said Bloomberg New Energy Finance energy storage head Logan Goldie-Scot. "I think second life is of interest to automakers and battery makers as they look further ahead, rather than to address an issue that is coming right now," Goldie-Scot said.

The two biggest motivators for automakers is the growing large size of the stationary storage market, and government mandates that will dictate electric vehicle battery recycling, Goldie-Scot said. Europe already has such rules, and China plans to implement battery recycling rules in August to keep them out of landfills.

In Europe, companies have moved a little more quickly. A German integrator called Belectric recently commissioned a series of projects in the U.K. and Germany that are using thousands of electric car batteries, representing 40 megawatt-hours, from different manufacturers. 

Yet, because of the early stage of the market, a lot of uncertainties still surround second-life batteries. There’s a lack of data for how used electric vehicle batteries will perform and last in stationary storage applications, said Goldie-Scot. In addition, at some point the electric vehicle and stationary storage markets could diverge around what type of batteries are best suited for these applications. That could upend an emerging ecosystem.

While most agree that having a "circular economy" approach to energy storage is needed, the devil will be in the details for how much money such an end-to-end system can save (or cost) auto and battery makers.

For example, Greensmith’s Jung said that four years ago the company was looking at how to reuse BMW i3 batteries, but found that the price of new batteries was dropping so quickly, and the performance was getting so much better, that it didn’t make economic sense back then to reuse those batteries.

But "it makes sense today," Jung said. "As this scales today and the electric vehicle industry has the buying power, consuming most of the world's li-on battery production, that opportunity is going to grow even further," he said.