January 15, 2025
Lithium batteries are enabling the global energy transition to electricity in many industries and are experiencing explosive growth in demand across applications and regions. As several gigawatt-hour factories launched in recent years begin to supply new batteries at scale, a second-life battery economy has emerged and is growing dynamically.
The lower price of a recycled lithium battery pack brings major sustainability benefits: avoiding emissions of the energy needed to produce new batteries, delayed recycling and diverting waste. The main challenge in reusing batteries lies in trust: in the absence of a mandatory digital battery passport, there is a lack of transparency about the first life application of non-new batteries.
By means of officially approving a supplier of battery storage systems The city of Phoenix is running on recycled lithium batteries and building confidence in second-life battery energy storage. The success of this project laid the foundation for scaling up the repurposing of batteries in electrification projects by other departments and municipalities.
“Recycled batteries are a perfect solution [for battery storage systems]save costs and contribute to sustainability and our circular economy goals,” said Amanda Jordan, Circular Economy Project Manager for the City of Phoenix.
Challenges: Cost of new versus used batteries
A significant increase in the production of lithium-ion batteries for electric vehicles, energy storage for utility-scale renewable energy generation, and multiple other applications, home and community solar, power tools, and electric mobility, formed a large and dynamic growing second life battery market.
Unlike previous generations of batteries, lithium cells and packs have a much longer lifespan and their performance changes over their life cycle. The push for sustainable use of resources, the economic need to maximize equipment use and the abundance of batteries suitable for second-life applications created a new second-hand battery market with multiple business opportunities, supported by battery repurposing and recycling experts such as Bluewater Battery Logistics.
Indeed, years of expertise in various battery applications are needed to deal with nuanced battery performance requirements and capabilities of battery packs with different chemical composition, health status, capacity, etc.
It’s always a good idea to think about reusing batteries before recycling them, but good business terms are non-negotiable. Reused batteries should not be more expensive than new ones. In fact, they should be at least 30-40% cheaper. Having a foreign partner with lower labor costs can make or break the deal in some cases.
| Material value in Li-ion batteries, 2022 prices |
Another important calculation when reusing versus recycling is the price of black mass and recovered materials, and the cost of extraction.
For example, LFP batteries provide less yield of valuable metals compared to NMC. In fact, they have a negative recycling value, meaning you have to pay to recycle them. This drives the value of reusing LFP cells at the end of their life (with at least 60% SOH) and extending their life as long as possible. The value of recovered materials from NMC cell recycling can in some cases exceed the resale value for new applications.
However, the biggest challenge in the second life battery economy is the lack of transparency and standards. This new market requires vendor validation and new trust mechanisms to reduce the costs of testing and recertifying cells and provide a seamless flow of batteries from one application to another.
Solution: Recycled LFP cell manufacturer becomes an official supplier to the City of Phoenix
The City of Phoenix’s Office of Environmental Programs developed the program Sustainable purchasing policy promoting the purchase of products and services that have a lower impact on human health and the environment compared to competing products or services that serve the same purpose, while remaining fiscally responsible (starting with traditional factors, such as product price and performance) .
As one of the nation’s fastest growing cities, Phoenix’s demand for resources such as water and energy is expected to grow significantly in the coming years. A sustainable purchasing policy enables the purchase of more sustainable products that have a reduced impact on the environment and are made from recycled products or can be easily recycled at the end of their life. These actions move the city closer to achieving its 2050 sustainability goals, while also supporting a city-wide culture of sustainability.
Bluewater Battery Logistics helps OEMs and battery users reuse and recycle lithium forklift batteries. After testing and evaluating the batteries, the waste cells are sent for hydrometallurgical recycling. Cells with at least 60% SOH (more often, EV batteries are retired after dropping below 80% SOH) are finding new applications.
“Bluewater Battery evaluates a number of variables to find the optimal way to reuse the batteries for a second life and minimize environmental impact,” explains Steve Feinberg, CEO of Bluewater. “We look at the condition of the cells, the geographic location for minimal shipping and the expertise of our partners to reuse batteries.”
The new life of the batteries in secondary applications depends on how they perform in tests of voltage, Ah capacity and various health parameters (SOH).
The story of an 80V 360Ah LFP forklift battery began in a Hyster E55XN Class I ride-on forklift, operating in a fruit producing company’s packaging facility in Washington State, USA. The demo battery came back with many years of life left in each cell, but with no chance of being reused in a new forklift battery.
Fortunately, Bluewater found a second life application in solar panel battery storage, part of the city of Phoenix’s pilot project.
Jordan’s team has successfully completed a pilot project using reconditioned lithium batteries to provide energy storage for solar panels to light South Mountain Park in the summer of 2024. The biggest concern has always been the batteries’ resistance to the Arizona heat, but the LFP lithium cells in energy Solar panel storage have shown sufficient resilience and are expected to continue to operate reliably for another ten years.
“The positive outcome of this project has paved the way for the mass use of second-life lithium cells as energy storage for renewables (in Arizona),” Jordan said.
Recycled batteries help achieve one of the KPIs of the circular economy projects: waste reduction. “This is a great example of a secondary waste stream diverted from landfill, and is also a cost-saving mechanism that contributes to our sustainability goals,” said Phoenix Chief Sustainability Officer Mark Hartman.
A city’s supplier database is a public register as well as a network for other city managers, providing information on available and tested sustainable solutions, which are also cost-effective.
Business case for the Second Life lithium battery
The total of 80 kWh of battery energy storage was deployed at 5 locations, including 4 solar energy locations and one emergency power backup. 1.9 tons of CO2E were saved from solar power generation (compared to average emissions from the Arizona grid) and 13.5 tons of CO2E were avoided in the production of replaced new batteries.
More importantly, the business case for the use of recycled batteries is proven, and a verified recycled battery supplier is endorsed by the City of Phoenix, based on the validity of the results and user feedback.
The energy transition, which plays a crucial role in the fight against climate change, is made possible in many ways by lithium battery technology. Reusing lithium cells at the end of their life, from first life to a less demanding second life, not only creates a huge amount of waste. The dynamic second life battery market is driving the creation of new businesses and driving down the price of solar energy for small rural solar power plants, community solar grid and MWh installations in commercial and industrial locations, further driving the adoption of renewable energy sources accelerated.
This case study was provided by Bluewater Battery Logistics.