Addressing Battery Second-Life Challenges From the Ground Up
In a white paper titled “Second-life EV batteries: The newest value pool in energy storage,” McKinsey predicted that the strong uptake of electric vehicles (EVs) would make terawatt-hours of batteries that no longer meet EV usage specifications available for low cycling frequency applications, such as stationary storage.
Source: McKinsey
In theory, second-life batteries allow companies to reserve energy capacity to maintain a utility’s power reliability, defer transmission and distribution investments, take advantage of power-arbitrage opportunities, and improve grid flexibility. With more electrification applications becoming mainstream, these opportunities will extend beyond EV batteries.
But reusing cells isn’t as simple as popping them into a different application and flipping the switch.
Repurposing a Tesla battery pack isn’t much more than a cottage industry — even though the volume suggests that it should be a big and profitable business. Repurposing custom battery packs from a piece of lower-production volume equipment (e.g., for industrial or medical applications) is even more impractical and almost always economically pointless.
But all is not lost. We need a new mindset and technologies to address this white elephant in the room. Let’s start by understanding the challenges.
The challenges of repurposing batteries for second-life applications
The existing mindset and approach to battery design and usage make second-life applications cumbersome, expensive, hazardous, and impractical. Here’s why they are such a hot potato problem that everyone talks a good game about, but few jump into action:
Battery packs are monolithic and come in many sizes, electrode chemistries, and form factors — custom manufactured to meet specific requirements. The lack of standardization drastically increases refurbishing complexity.
The nascent second-life battery market doesn’t have industry standards for resource management, guarantees for quality, or guidelines for state-of-health (SoH) disclosures to ensure that a repurposed battery pack is suitable for a specific application. It’s the wild west.
While it may be possible to build a second-life market around a high-volume battery solution (e.g., Tesla car batteries,) it’s impractical for lower-volume ones (e.g., custom-designed battery packs for medical and industrial equipment.) When the complexity of a solution increases as we head into the long tail, the second life value goes down.
Implementing standards doesn’t address batteries already in circulation. It’ll take significant time to pass relegations and even longer for standardized batteries to become available at a volume that makes large-scale second-life applications economically viable.
Any activity that involves handling batteries is dangerous. Issues from risks of electrocution and health concerns associated with heavy metals and carcinogen substances to a raging battery fire make battery recycling businesses unattractive and almost uninsurable.
We’ve been dealing with used lithium batteries more like nuclear waste than other high-value assets (e.g., real estate) — treating them as a problem we must pay someone to make them go away. The value of batteries as an asset isn’t achieved via a functioning market where we can make decisions based on data available throughout an asset’s lifecycle.
Of course, we can’t solve the second-life challenges overnight. But we can do so with a short-term approach and a long-term solution to repurposing batteries, increasing their useful lifespan, and reducing the environmental footprint of electrification.
A short-term solution for battery second-life application challenges
The shortest path to repurposing discarded batteries at scale is making it possible to mix and match packs, modules, and cells of any age, chemistry, and SoH in an energy storage solution.
Sounds simple? Why hasn’t it already been done?
The answer is also simple. Nobody has gone down this route because the concept isn’t feasible with today’s technologies, which require battery packs to contain cells of identical chemistry and similar SoH.
Most battery management systems simply don’t have the capability to gather granular data and make it available in a useful format. Even if we can get such information, the complexity of sorting and matching cells will make the process economically not viable.
But software-defined batteries (SDBs) render the problems of mixing cells and the lack of physical and chemical standardization non-issues. Here’s a highly simplified explanation of how an SDB pack built on the Tanktwo Battery Operating System (TBOS) handles this challenge:
When a battery pack built on TBOS switches from the standby mode to the charging/discharging stage, the software detects and gathers data from all the cells in the system. The algorithm controls cell selection to create a string that can meet the performance requirements based on each cell’s characteristics.
Instead of implementing a costly and elaborate process to sort and select cells (and still discarding many at the end,) TBOS makes it possible to put (almost) any used cells in second-life applications to make repurposing batteries a cost-effective business model.
Moreover, battery pack modules with some dead or dying cells remain perfectly useful since TBOS automatically rearranges connections such that the dead cells don’t render an otherwise perfectly functional series of cells unusable.
The long-term solution is simple: Eliminate the second-life mindset
Batteries are expensive assets, but we aren’t treating them as such. When a battery pack can no longer meet the specifications of the original application (but is too expensive to be dumped in a landfill,) we say, “Hey, let’s find a sucker application.” That doesn’t make sense.
Let’s take real estate as an example. A building’s original design has ground-level retail, 6 floors of office space, and 14 floors of apartments. The pandemic hit, and nobody was renting offices. You wouldn’t use the 4 vacant office floors to stash trash when demand plummeted! Instead, you’d convert those floors to residential use.
From a building’s grand opening to the end of its useful life, a series of parameters (e.g., usefulness, liquidity, interest rates, monetary value, etc.) determines its application. Instead of a “keep or toss” mindset, the owner would (re)evaluate its usage constantly to maximize the value along a continuum throughout the building’s lifecycle.
But we aren’t applying this mindset to batteries. People drive an average of 40 miles a day, so almost 90% of a Tesla battery pack goes unused on a daily basis. It’s like designing a 90% vacancy rate into the business model of an apartment complex. The capital efficiency of today’s lithium battery solutions is abysmal.
The difference is that you can manually crank the numbers on a real estate property. But not with millions of cells in a battery ecosystem. We need the ability to collect real-time data and perform battery analytics to optimize minute-to-minute resource allocation.
Granular management logic will change how we handle battery packs. Instead of “keeping or tossing” them like expensive disposable paper cups, we can treat cells as assets with monetary values on a continuum, cradle to grave.
TBOS’s battery analytics provides a value index at every moment of a cell’s life. By treating batteries as an asset with a known value at any point in their lifecycle, we eliminate the hot potato second-life problem (i.e., finding suitable usage for cells no longer fit for the original application without knowing what they’re still good for.)
Instead, a battery pack built on TBOS can constantly adapt based on utility, purpose, value, and designation reassessment. We can match cells in an ecosystem with demands based on their SoH. Plus, data analytics from SDBs can make the constant re-evaluation and redeployment possible to optimize how we use each cell.
The problem goes away when we stop flying blind.
Transitioning from second life to cradle-to-grave
Whether we like it or not, we have a hot potato problem due to all the used batteries already in circulation. The good news is that we can put TBOS on top of virtually any existing battery packs to generate data insights and enable the flexibility to mix and match cells of any age and chemistry.
Corporations can also retrofit existing equipment with TBOS-driven SDBs cost-effectively to start building an ecosystem to transition from a second-life mindset to a cradle-to-grave approach.
Lastly, product builders can incorporate SDBs into their designs (which also helps lower R&D costs and shorten development cycles) to make the second-life challenges a thing of the past from the get-go.
