Economic viability of reconditioning 2nd life lithium ion batteries for grid services

N. Horesh, C. Quinn, A. Tong, H. Wang, R. Zane, J. Quinn
Colorado State University-Fort Collins,
United States

Keywords: battery, model, techno-economics, grid storage, energy arbitrage


The rapid adoption of electric vehicles will result in a large number of Li-ion batteries available for 2nd life use. A major technical challenge of utilizing 2nd life batteries is the diversity of health due to different use scenarios and intrinsic characteristics. A technological solution is needed for wide utilization of 2nd use batteries, which has a rapidly growing demand of 95GWh to be extracted by 2025. This work investigates the sustainability of a novel reconditioning process coupled with an energy storage facility which would provide energy services to the electrical grid. The work focused on understanding the economic viability of different technology solutions that integrate reconditioning and grid energy services. The work includes investigating the revenue potential from energy arbitrage in the real time market at 9452 electrical nodes in the western US. The results from this work are coupled with a discounted cash flow rate of return analysis which is used to understand the economic viability of reconditioned and new Li-ion batteries. Results show the batteries output from a reconditioning facility into an energy storage system must generate $194 per kW-year which is dramatically less than that of a system that uses new Li-ion batteries, $253 per kW-year. Based on historical market revenues and market sizes in the US, the reconditioned batteries in an energy storage system are shown to be economically feasible in 63% of frequency regulation, 18% of transmission congestion relief, and 16% of demand charge reduction markets but not economically feasible in spin/non-spin reserve, voltage support, and energy arbitrage markets. Current work is focused on understanding what research and development must be done for the reconditioning technology to be economical in more grid applications.