|2011-06||Final Report: Economic Analysis of Deploying Used Batteries in Power Systems |
Abstract: The objective of this study is to explore the various possible markets for the secondary use of Li-ion batteries removed from electric or hybrid electric vehicles (EVs or HEVs) after they can no longer conform to vehicle specification but still have substantial functional life. This report is the first phase of the study, and the scope is limited to secondary use of Li-ion batteries in power system applications. The primary focus of this report is the cost competitiveness of these batteries for power grid applications.
Original equipment manufacturers such as General Motors, Nissan, and Toyota offer long-term warranties for the battery packs in their vehicles. The expectation is that once battery efficiency (energy or peak power) decreases to 80%, the batteries will be replaced. The rationale is that a 20% reduction in the vehicle range, imposed by the decrease in efficiency, would be unacceptable to consumers. Based on various forecasts for market penetration of plug-in hybrid electric vehicles (PHEVs) and EVs over the next 10 years, it is estimated that a large number of PHEVs and EVs will be approaching the 80% battery efficiency level by 2020. These batteries can be recycled or used in other less demanding applications provided a business case can be made for their secondary use.
For this economic analysis, data have been gathered on the projected cost of new batteries in 2020 and the projected supply of HEVs, EVs, and PHEVs over the next decade. These data were then used to determine the potential supply of batteries for secondary use and the acceptable refurbishing costs. Based on this, a proposed sale price for the secondary-use batteries has been developed. This price and the system prices for various grid applications were used to calculate potential benefits. In this analysis, the battery pack was assumed to have a lifetime of either 5 or 10 years because the secondary life is dependent largely on application.
The applications that offer the most attractive value proposition for secondary use of EV batteries over the entire range of value and cost assumptions used in this report include area regulation, transmission and distribution (T&D) upgrade deferral, and electric service power quality. Those applications should be targeted for additional in-depth analysis and initial deployment of used EV batteries as they become available in the market. However, these markets will presumably not be enough to absorb the entire volume of secondary-use EV batteries predicted for 2020 and beyond.
The cost of the applications is determined by the cost of the used batteri operation and maintenance (O&M) costs. The transportation cost will depend on whether used batteries are treated as hazardous materials or hazardous waste. When calculating the cost of a particular application, the peak power requirement and the energy capacity of the storage system were defined based on similar real-world applications. For applications requiring high energy capacity, the dominating costs are the cost of the used batteries and the cost of the transportation (if treated as hazardous waste); for applications requiring high-power, the balance of system cost and the O&M costs dominate the overall system cost.
Synergies, understood as the net benefit from using the same battery system for multiple applications at a given location, were also investigated. Selected combinations of applications must be compatible in terms of size, power-to-energy ratio, duty cycle, operation profile, and involved stakeholders. In some cases, the energy consumed/generated while charging/discharging the battery provides multiple benefits that can be directly aggregated. In other cases, battery use in one application precludes simultaneous use in another so that assumptions or simulations of how the system would be operated are required.
Individually, neither the energy time shift nor the electric supply capacity nor the renewables capacity firming applications appear as strong candidates for profitable secondary use of EV batteries. Peak versus off-peak price differentials and the cost of used batteries are crucial elements whose evolution will determine whether those types of applications could generate a positive net return by 2020. Their low power-to-energy ratio makes for expensive system installation costs which, in turn, hurt their profitability. “Stacking” energy time-shift and capacity applications only builds an attractive business case under optimistic assumptions regarding peak–off-peak price differentials, avoided capacity costs, and system costs.
A business case begins to emerge when applications with a low utilization factor, like voltage support (only a few hours over the entire operating life of the system), are combined with applications that increase the utilization factor of the system (e.g., T&D upgrade deferral and/or electric supply capacity). Then financial justification exceeds that of individual applications. Residential or commercial and industrial customers using battery energy storage for managing time-of-use tariffs and demand charges would only use them during the summer. An aggregator that would coordinate the needs of multiple customers and manage the operation of the energy storage device would be a good option for optimizing the value of such battery systems throughout the whole year.
Time of use energy management (peak shaving) is the most promising application for community energy storage (CES). Time of use energy management makes great sense where communities install energy storage systems controlled for peak shaving and indirect benefits to the distribution and transmission system such as upgrade deferral, and reserve supply capacity, may be realized. Where markets allow aggregation and smart grid communication infrastructure is implemented between utilities, ISOs, and CES systems, ISOs could aggregate and control CES units to provide several ancillary services.
|Narual, C., |