Repurposing EV batteries for grid storage

Latitude Media covering the new. of the energy transition. I'm Shale Kahn, and this is Catalyst. So we do a very brief electrical inspection, something like five minutes, and we literally wheel it out to the field where we have a spot for it and plug it in. Coming up, Second Life batteries get reincarnated, so to speak.

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Okay, so as I'm sure catalyst listeners know, end-of-life batteries, particularly those coming from electric vehicles, are not really end of life. Batteries don't usually fail, they just degrade over time. And so when the battery reaches the end of its useful life in a vehicle or in something else, it's still got a lot of value. But the question is, what is the highest and best use of it at that point?

One option is refurbishment and putting it back in a vehicle or its original application, which makes sense in some very limited cases, but not usually. So that leaves two other options. One, you recycle the battery for materials and minerals. And the second is you repurpose the battery, usually as a stationary energy storage asset on the grid.

There's an economic calculus to the decision between these two that has a bunch of variables, the current value of the materials themselves, the actual processing technology, the cost of new stationary batteries, etc. And you might think that there's a right answer, and indeed many people do, and generally historically, that right answer has been recycling for material.

But that's why I found it interesting when Redwood Materials, which is the company founded by Tesla founder JB Strobel and best known as a battery materials recycler, announced a new division called Redwood Energy, where they're focused on stationary storage.

So that means they're going to take in end-of-life batteries and send them into one of two streams, either materials recycling or repurposing for grid energy storage assets. So what underlies that decision tree and what is it that unlocks the possibility of an economic second life battery on the grid. Well who better to answer that than Colin Campbell, himself a longtime Tesla veteran, but now the CTO at Redwood?

Also, before we begin, I'm hosting another Ask Me Anything episode where I answer your questions, big and small, about climatech, the energy transition, investing, et cetera, et cetera. Just email us if you want to ask a question. Thank you to all of you who have already submitted. Many great questions. We have room for more, so hit us at catalyst at latitude media.com. That's catalyst at latitudemedia.com. And for now, here's Colin. Colin, welcome. Shale, it's a pleasure to be here.

Excited to finally have you on. Uh, and to talk about what to do with end of life batteries, the various things that you can do with them. Maybe start by talking to me about from just a technical standpoint, like you get a end of life battery. I guess you tell me it probably varies based on the type of battery and the application. But I don't know, take an E V battery, for example. Like what state is it in?

when it rolls up into your factory. And what are the what are the technical parameters that you're looking at to determine its condition. Yeah. I think the state of the batteries that we received, the old electric vehicle batteries, it's it's better than you might think. Those things are incredibly highly engineered, durable objects. So from a physical perspective, um, they're usually almost new. And then from an electrical and electrochemical perspective.

Uh we receive them um when a customer might get frustrated with them typically. So that's something like uh I've lost 20% of my range or the acceleration isn't what it used to be. Uh something like 20% increase in impedance, 20% decrease in capacity is is typical for what we see. And then how different is it if it's not an EV battery? Like if you're taking, I don't know, consumer Products, batteries and things like that. Because I know you guys get a pretty wide variety of in streams incoming.

Real it's real fantasy land if you're a battery nerd to look at the stream of things that we get. It's it's literally everything under the sun. Um, you know, your pod. Toothbrushes, power banks. And those, they're so varied. There's so many of them. Um, and they're so difficult to reintegrate into a second life system. That's not something that we've looked at very closely, to be honest. Okay, so as we talk about Second Life, predominantly right now we are talking about EV batteries.

Yeah, that's right. Okay. I guess let's foc let's talk about chemistries for a second. Presumably what you're getting if it's an end of life E V battery, these are N M C chemistries that are coming in mostly. Today they're predominantly MN NMC. Um you could think of it as what we get is what was built roughly ten years ago. So we're time shifted from the manufacturing trends. Right. Okay. And then so...

Here's my the core thing I I think is interesting and I wanna understand, right? Like so at Redwood, you've been taking in all these these end-of-life batteries for for a few years of various kinds, but including the EV batteries, and historically mostly recycling them for the material value.

Now you are doing that sometimes, but sometimes refurbishing them and turning them into stationary storage assets. So talk to me at the high level through the calculus. Like you get an end-of-life battery that comes in the door. What determines which path makes sense? Yeah, we do a pretty brief inspection. So there's a a mechanical one and then there's an electrical one to check the health of the pack. So things like cell balance, impedance.

Um, you know, are all are all of the internal electronics still functioning and reporting out very detailed diagnostic data about the pack? And what we found is that if all of those lights are green. 95% of the time, the pack is going to be usable for grid scale energy storage. Um, so it's it's a pretty brief. Inspection, honestly. there's the question of I guess what you're answering right now is can you use it for grid scale energy storage?

But the other question is, should you? Right. And and that is an economic question, I guess partially a technical question, because in either case you have work to do. You can't just like put the battery back out in the field and you can't just it's not automatically recycled into materials. How do you think about the economic question, I guess, of which makes more sense to do?

When you think about the economic value of these packs, it's they don't need to have as much life left in them as you might think in order to make sense to put back on the grid. So we've fought since we have developed a really low-cost, hot swappable way of putting the packs in, the cost of integrating the packs to the grid itself is really low. The install cost, the swap cost.

And so the amount of usable life that's left in a pack doesn't need to be that high in order for it to really be valuable and economically profitable to put back on the grid. given the value of the grid services that these storage sites are are providing. I guess the The one of the questions that I imagine is embedded in there is okay, so in one path, which is the one that you've done more of historically. You break the battery down and you get a bunch of useful materials out of it. You get the

cathode active material or you reproduce cathode act active material, you get the anode material and so on. And so there, the value you're able to derive from your end of life battery is a function of the the price you can yield in the market for those materials minus your reprocessing cost, presumably. In the other context.

It is how much value is there in on the grid for doing the stationary storage asset minus again your sort of refurbishment cost. And you're competing against different things. In one case, you're competing against like uh new cathodactive material. In the other case, you're competing against new, let's say, LFP paths.

Right. And which is a has I mean, outside the US has been a falling knife of a cost, but in the US is a little more complicated because of tariffs and various things. But to a first order, like from a first principle's perspective. All else equal, would you rather just refurbish the battery to put it on the grid than to break it down to its constituent materials? Is that the right way to think about it? And you should only do the latter thing if either

the battery is incapable of being put up back on the grid because it doesn't work in one way or another or because you're in a we're in a market where like cam prices have spiked or something. Yeah. Yeah. We don't have to choose, right? So we typically will do both. We will

Send a battery out to a grid scale energy storage site to provide grid services when that is economically sensible, which is ninety-five percent of the time, and then we will go on to recover the metals value from it. So it's it's additive. We think of it as a detour. You know, we can put these batteries uh out to a grid storage pasture for a little while to really extract all of the energy storage and power delivery value that they have.

and then go on to recover the critical mineral minerals from them and and regenerate fresh cathod materials. That gets to another question, I guess, which is how much of a useful life do you expect there to be? For the grid storage asset. You've already had a 10 year useful life as in an EV, it's down to eighty percent capacity or something like that. Now you stick it on the grid. Is it another ten year useful life? Is it less? Is it more?

The life of the second life battery on the grid is it's certainly long enough to be economically valuable and that In order to make economic sense, it's really one or two years, hundreds of cycles, low hundreds of cycles. So

So for that to be true, it must be remarkably cheap to deploy, right?'Cause you're You're up against um an a new LFP project, let's say, energy storage project. Um, where I don't I don't know what the current price is, like fully delivered, but like a couple hundred bucks a kilowatt hour probably, something like that. But that has a ten year life, um, or ten year warranty life anyway.

And so presumably what you're saying is that look, take an end-of-life NMC battery, you get it very, very cheap, if not free, and then you have some cost you bear in the Which I want to talk in a second about like what you actually have to do to it. But um, you have some cost you bear and turning it back into an asset you could put on the grid. That cost must be so low. Low. that the total installed cost of the Second Life ESS battery is like.

significantly below the cost of a new de novo LFP battery today. Yeah, I mean you've you've nailed it. I I was, to be honest, always a little skeptical about second life energy storage as as a thing in the world. I was like, how can this possibly compete with a purpose-built product? uh that's really optimized for the application. And

I think it's only started to make sense in the last year from the volume of packs that are coming back. And then the other thing is we have put together, like you said, a really simple, straightforward, low cost way of integrating these packs that were originally designed for another purpose. back into the grid. And doing that very simply, very cheaply is is central to doing this well, I think.

All right, so walk me through that process. So you get you get an end of life NMC battery off of a an electric vehicle. What do you have to do to it? So we do a very brief electrical inspection, something like five minutes, cell balance, uh impedance check. And we literally wheel it out to the field where we have a spot for it and plug it in. So we are not opening up the packs. We are not.

um removing the modules. We are really using them as they were installed in the car. You can think of it really as a as a giant parking lot for electric vehicles, except there's no wheels. It's just the packs and the power electronics that went with it. Wait, so where do where's the innovation? I mean that makes it sound like you like literally anybody could just take an end of life pack and plug it into the grid and and be done. What's what's new here? What did you have to do?

You need to be really thoughtful about the high power electronics design, uh to integrate an incredibly wide variety of packs to talk to an incredibly wide variety of packs. Two. sensibly dispatch each one of them uh as part of an integrated energy storage asset to optimize their value. Um the mechanical design of the site itself to keep it low cost is is not that straightforward. Um and these are all things that that we think we've done really well.

So it's power electronics and software, basically. Like to to a first order from a physical standpoint, you're just plugging a bunch of disparate batteries into one system. To make it operate like a single cohesive grid scale energy storage asset, there's some magic in the Exactly. Coordination, all of those things.

Um, also it's not that simple to collect a whole bunch of packs like this. So this business is one that really makes a ton of sense at Redwood, you know, where we are already collecting. north of 80% of the end-of-life EV packs across the nation. Um, that's not a small feat to have the feedstock available. Uh it's really heterogeneous. It comes from a million different places. Right. Yeah. I mean just having the feedstock is clearly a A big advantage.

for you there. I mean, maybe that gets to this next question, which is how much of this can we expect? I mean, it you know, battery recycling in general has always been this interesting game of like As you said, you're 10 years behind, at least with EV batteries. And so we're today recycling the volume that we deployed 10 years ago. And so I feel like

I mean, you probably know the EV adoption curve a little better than I do, but it feels like the the sort of inflection came less than ten years ago, like somewhere in between. So like the r the real ramp in volume of end of life batteries you would have available to do this with seems like it's coming sometime in the next five years or something like that. So how mu how much volume

Do we see now? How much volume might we see? And like, if you step back, how big a player in the what ESS game do you think this can and should become? Those are exactly the right questions to ask. The future is is preordained here, right? These packs were manufactured a decade ago. Um, we know and we can predict how much energy is gonna be available for this and at what time. So today uh it's on the order of five gigawatt hours a year that's coming off the road. Globally or in the US?

US Yes. And it's on the order of uh 150 gigawatt hours a year new EV production that's going into service. And then I I think the battery energy storage that was deployed in the US last year was on the order of fifty gigawatt hours. So already coming off the road today is a is a tenth of what's being deployed. Is that five gigawatt hours rated, right? Or is that five gigawatt hours available? Great question. Uh yeah. Brand new. Yeah.

Capacity. So even though if you discount it by call it 50%, be really conservative, call it 70%, be extremely conservative. Um it's still gigawatt hours a year of useful energy. Um That's available for second life energy storage.

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Does it end up being that for Redwood, where you get a h heterogeneous stream of incoming end of life batteries, and then you have these two different places you can send them? Um Does it mostly end up being that the EV batteries primarily get deployed as second life assets on the grid and the non EV batteries all get sent to material recycling. Like is that Sort of where where we land here eventually?

I I hesitate to commit to that because I have this constitutional distaste for throwing anything away that still has useful life left in it. We're starting with what is easiest and most sensible, which is full E V packs. Um, will we ever get to old toothbrushes for grid scale energy storage? I I really doubt it. That seems unlikely to happen. But somewhere in between, um, I think there's probably a happy medium. Maybe it would make sense to repurpose.

big power banks, you know, kilowatt hour scale power banks in this kind of application. Um, that's a ways away. I I think the other thing that's important to look at is just the sheer manufacturing volume. Like look at the front end of the pipe. I think it's something like eighty percent. of the energy storage is going into EV. So that's where most of the gigawatt hours are going to come out. Um

Which is really good for grid storage because those are the packs that are gonna be easiest to redeploy. Those are the most robustly engineered packs that have a ton of useful life left in them. Um speaking of which, from a chemistry perspective, as we mentioned, right, what you're recycling now are mostly NMC batteries because they're ten years old.

As we look forward, you know, we'll start to see LFP uh EV batteries start to get recycled as well. Is there any meaningful difference from your perspective either in the economic calculus of like what you can get out of that battery at end of life, um, or in the technical process you have to run through between different chemistries or among different chemistries.

I'll start with the technical process. We're totally agnostic to chemistry type. So because of the power electronics that we've developed, we can really easily integrate um Low capacity, high capacity, high nickel, L F P um, new, old, low voltage, high voltage packs, whatever it is, um, we're we're ready to plug it in. From an economic perspective

The economics are different for LFP, but they still solve. Um the metals values are lower, uh the cycle life is different, the degradation is different, the energy value is different, but it still makes sense to deploy them on the grid used LFP pack. So the one thing we haven't talked about is like what applications on the grid make sense for these

Second life uh energy storage assets. How do you think about that? Should we think about it just like the exact same thing as a a new LFP pack that we're deploying on the grid, or is there a distinction? There's a distinction. We can certainly play in the two-hour, four-hour markets with repurposed. Uh EV packs, Second Life packs, where we see them really starting to shine, though, is in the longer duration. markets. So uh Four hours.

Eight hour, maybe longer, maybe twenty-hour. And that's because when you are using these packs at much lower than their rated current when you're discharging them more slowly, you can tolerate more than you could at the high C rates. So an impedance, imbalance, uh things like that become less relevant. And so we find it makes more sense to deploy in places with high energy and and somewhat lower power than what you might see typically.

When you say you could tolerate more, what do you what does that mean technically? Yeah, so like what what does capacity fade look like in an E V pack, right? One of the things is um cell imbalance. You know, you have a hundred battery cells stacked up in series, one of them gets a little old, gets a little weak. And so when you try to accelerate onto the freeway.

um that cell has to be limited. We have to protect the weakest cell in the link. And so you can't get the full power out, you can't get the full capacity out, in fact, at those discharge rates. But when you're discharging it more slowly, in some sense that weakness is much less relevant to the performance of the pack. Which would be true of

Not just second life packs, right? That's true in general. If you operate at a lower C rate, you can it's easier to manage, right? So what's distinct here is that you probably have more cells that are tired. so to speak, at end of life than at the beginning of life. But the reason why we don't generally do twenty hour lithium-ion de novo projects on the grid is is an economic one, right? It's just cost scale kind of linear. The better.

Right. With duration. Is that equation, is that not true with these second life facts, or is it just that it is so cheap you can afford it? That's probably the best way to think about it. We can go toe to toe with brand new lithium ion packs in the four hour market and the two hour market using Second Life Pack. But where it really starts to shine and where you really start to see um

I think just a beautiful reuse is where you have way more energy. And I think you framed it well, which is it's because the cost of that energy is lower. Right. It's not a fundamentally different equation, it's just that it's cheap enough. You can stack a bunch of things to make a eight hour, twelve hour system, whatever it is. Yeah, if you are able to

you know, integrate all of these disparate pack types, um, which again, I don't wanna trivialize that. It's it's some engineering work to get all these things to play nicely together. Um, then there's a ton of useful life left to be recovered. Okay, so this is this is fun and exciting. I guess the the higher level question is like A d at what point does it matter from a, you know, bigger picture, this will impact the market perspective?

So talk to me a little bit about volume. I mean, you mentioned five gigawatt hours total end of life batteries coming off of EVs in the in the United States, but from a Redwood perspective, like how much can you expect to refurbish and turn in DSS batteries in the near term? We think we can refurbish and deploy Gigawatt hours. Um low single digit gigawatt hours this year, next year.

It's really interesting to me that this is the first moment where this thing that has always made some philosophical sense is now starting to be something that we can have impact with in the world. We can actually deploy and and help to stabilize the grid. All right, Colin, this was fun. I'm excited to see some Second Life batteries operating on the grid, but appreciate your time. My pleasure.

Colin Campbell is the CTO of Redwood Materials. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. This episode was produced by Daniel Waldorf, mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I'm Shail Khan, and this is Catalyst.