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Applying levelized cost of storage methodology to utility-scale second-life lithium-ion battery energy storage systems

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  • Steckel, Tobiah
  • Kendall, Alissa
  • Ambrose, Hanjiro

Abstract

The dramatic increase in electric vehicle (EV) sales has led to a rapid increase in deployed lithium-ion battery (LIB) capacity over the last decade. As EV batteries age and are retired from use in vehicles, they will require management. Second-life applications are often proposed as an environmentally and economically preferable management strategy to direct recycling or disposal. In particular, the repurposing of EV LIBs in stationary applications is expected to provide cost-effective solutions for utility-scale energy storage applications. However, the adoption of second-life battery energy storage systems (BESS) has been slow. One barrier to adoption is the lack of meaningful cost estimates of second-life BESS. Thus, this study develops a model for estimating the Levelized Cost of Storage (LCOS) for second-life BESS and develops a harmonized approach to compare second-life BESS and new BESS. This harmonized LCOS methodology predicts second-life BESS costs at 234–278 ($/MWh) for a 15-year project period, costlier than the harmonized results for a new BESS at 211 ($/MWh). Despite having a higher LCOS, the upfront costs for second-life BESS are 64.3–78.9% of new systems' costs. Results for second-life BESS are highly sensitive to assumptions of discount rate, depth of discharge, and module repurposing costs. If deemed environmentally or societally beneficial, policies should stimulate the use of second-life LIBs, such as providing incentives equal to or greater than those available for first life BESS. Further work can explore comparative economics at smaller scales and quantify non-economic benefits of second-life BESS.

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  • Steckel, Tobiah & Kendall, Alissa & Ambrose, Hanjiro, 2021. "Applying levelized cost of storage methodology to utility-scale second-life lithium-ion battery energy storage systems," Applied Energy, Elsevier, vol. 300(C).
    • Handle: RePEc:eee:appene:v:300:y:2021:i:c:s0306261921007212
    DOI: 10.1016/j.apenergy.2021.117309
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    2. Pablo Carrasco Ortega & Pablo Durán Gómez & Julio César Mérida Sánchez & Fernando Echevarría Camarero & Ángel Á. Pardiñas, 2023. "Battery Energy Storage Systems for the New Electricity Market Landscape: Modeling, State Diagnostics, Management, and Viability—A Review," Energies, MDPI, vol. 16(17), pages 1-51, August.
    3. Zhang, Chenxi & Yang, Yi & Wang, Yunqi & Qiu, Jing & Zhao, Junhua, 2024. "Auction-based peer-to-peer energy trading considering echelon utilization of retired electric vehicle second-life batteries," Applied Energy, Elsevier, vol. 358(C).
    4. Bai, Hanyu & Lei, Shunbo & Geng, Sijia & Hu, Xiaosong & Li, Zhaojian & Song, Ziyou, 2024. "Techno-economic assessment of isolated micro-grids with second-life batteries: A reliability-oriented iterative design framework," Applied Energy, Elsevier, vol. 364(C).
    5. Al-Wreikat, Yazan & Attfield, Emily Kate & Sodré, José Ricardo, 2022. "Model for payback time of using retired electric vehicle batteries in residential energy storage systems," Energy, Elsevier, vol. 259(C).
    6. Ruifei Ma & Shengyu Tao & Xin Sun & Yifang Ren & Chongbo Sun & Guanjun Ji & Jiahe Xu & Xuecen Wang & Xuan Zhang & Qiuwei Wu & Guangmin Zhou, 2024. "Pathway decisions for reuse and recycling of retired lithium-ion batteries considering economic and environmental functions," Nature Communications, Nature, vol. 15(1), pages 1-14, December.
    7. Ma, Chen & Chang, Long & Cui, Naxin & Duan, Bin & Zhang, Yulong & Yu, Zhihao, 2022. "Statistical relationships between numerous retired lithium-ion cells and packs with random sampling for echelon utilization," Energy, Elsevier, vol. 257(C).
    8. Tang, Hong & Wang, Shengwei, 2023. "Life-cycle economic analysis of thermal energy storage, new and second-life batteries in buildings for providing multiple flexibility services in electricity markets," Energy, Elsevier, vol. 264(C).
    9. Gu, Xubo & Bai, Hanyu & Cui, Xiaofan & Zhu, Juner & Zhuang, Weichao & Li, Zhaojian & Hu, Xiaosong & Song, Ziyou, 2024. "Challenges and opportunities for second-life batteries: Key technologies and economy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 192(C).
    10. Gunther Friedl & Stefan Reichelstein & Amadeus Bach & Maximilian Blaschke & Lukas Kemmer, 2023. "Applications of the levelized cost concept," Journal of Business Economics, Springer, vol. 93(6), pages 1125-1148, August.
    11. Braco, Elisa & San Martín, Idoia & Sanchis, Pablo & Ursúa, Alfredo & Stroe, Daniel-Ioan, 2022. "State of health estimation of second-life lithium-ion batteries under real profile operation," Applied Energy, Elsevier, vol. 326(C).
    12. Geng, Jingxuan & Gao, Suofen & Sun, Xin & Liu, Zongwei & Zhao, Fuquan & Hao, Han, 2022. "Potential of electric vehicle batteries second use in energy storage systems: The case of China," Energy, Elsevier, vol. 253(C).

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