In the latest update of Circular Energy Storage’s data on the lithium-ion battery end-of-life market we conclude the that over 1.2 million tonnes of waste batteries will be recycled in 2030. Although it sounds like a massive number, the recycling industry is in fact well prepared and will most probably fight for the volumes.
This is good news for the energy storage industry, as it is for all other businesses placing lithium-ion batteries on the market. More competition means better prices and hopefully both better service and more efficient processes. The so often quoted “lack of recycling” can be removed from the list of concerns anyone might have when investing in lithium-ion batteries.
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So with that in mind for energy storage professionals, what else could possibly be worth to know about a market one will mostly deal with first in five or even ten years?
In fact there are at least three important things which are worth bringing to management’s attention today.
The recycling opportunity
For most European and North American companies recycling is a cost. Often for good reasons. First of all we are used to pay to get all kinds of stuff out of the building and retired batteries are normally no different. The recycling process requires a thorough disassembly of the packs and that special measures are taken for safe transportation. If the value from the recycled material doesn’t cover the costs it’s hard for any player to pay for the batteries, no matter how hard to competition might be.
But recycling of batteries in a 50MWh energy storage plant is very different from recycling of batteries from power tools, e-bikes or even electric cars.
50MWh equals about 250-300 tonnes of battery cells, depending on which chemistry has been used. That’s in fact more lithium-ion batteries than what many large battery collectors ever have had in their warehouses. And they are in one place to which they have been moved as batteries, not waste. To recycle 250 tonnes of batteries today can cost anything between €250,000 to €1 million.
But essentially the material is valuable, at least when it comes to NMC batteries which in fact can yield as much as they might cost users to recycle them. How much of it that’s left on the table comes down to efficiency and customer leverage. Most probably few energy storage companies would be interested in getting into recycling themselves. But there is too much value at stake to not as early as possible sit down with potential recyclers and understand how both parties can save costs and thus increase incentives on both sides. A good example of this is how French energy company Engie partnered with the large material producer and recycler Umicore and placed an energy storage system on Umicore’s premises. When the batteries finally die they need to go nowhere.
The second life opportunity
So far the experience is that batteries placed in electric vehicles will outlive the vehicles. At least this is true for privately owned cars. For commercial vehicles batteries might be changed several times and often when the battery still has significant capacity left, only just not enough for the application they are in. This opens up the opportunity to reuse the battery in energy storage systems as well as other less demanding applications such as support to EV charging or back up power. The opportunity here is of course mostly about price. The advantage of using an already used battery is that the alternative value that come from recycling is fairly low which takes down the floor for how much somebody can accept to get rid of it.
Today there are several companies that have started to use second life batteries in energy storage systems. Many share positive experiences with very little degradation of the batteries and good performance. In some cases it might as well be the only batteries a company can find. When the car makers, together with forklift, bus and truck manufacturers now rapidly are scaling production there will many times be supply shortages, making it potentially hard for companies to write orders in the 100MWh range as they are either too small or too big for battery manufacturers. When second life batteries start to come back this might be an option.
Still this requires that it’s possible to get hold of second life batteries. Today an issue is the ownership which stays with the owner of the car. This makes the market extremely fragmented and hard to navigate. This can be addressed by talking to OEMs and fleet owners and work out business and ownership models when the batteries are placed on the market. The thing is, when the battery has been placed on the market it is too late to do something.
The second life threat
The potential of second life is not something we only see in the western world. The indisputable leader in the field today is China with more than half of all batteries becoming available for second life. In a program where the biggest telecom tower operator, China Tower, are working with around 20 car and battery makers, more than 3GWh of used EV batteries have been repurposed and used as back up power in the base stations. The agreement has made several recycling companies investing in battery pack production and they are now both material and battery vendors. With a steady stream of batteries to reuse we start also to see international movements. Last week Chinese battery maker BYD partnered with the Japanese trader Itochu to build energy storage systems based on second life batteries. The goal is to supply systems not only in China but primarily in Southeast Asia, Japan and the US. They will however not necessarily sell the systems but are aiming for an energy-as-a-service model where the systems are rented based on the their capacity, something which can be done when investments in batteries are significantly lower.
Today China is a powerhouse in the battery world with more than two thirds of the world’s production of lithium-ion batteries. That Chinese companies may take the same position in second life is not too far-fetched. But with service models, instead of sales of batteries, they are bypassing not only manufacturers and installers but potentially the entire energy storage industry.
This might be a remote and even unlikely future. However it shows how concerns of what will happen with ESS and EV batteries in ten or twenty years time might be worth to worry about already today.